SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number
GEOTEC THERMAL GENERATORS, INC
(Name of Small Business Issuer in Its Charter)
FLORIDA 59-3357040
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1615 S. Federal Highway, Suite 101, Boca Raton, Florida 33432
(Address of Principal Executive Offices)(Zip Code)
(561) 447- 7370
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Securities Exchange Act of
1934:
Title of Each Class Name of Each Exchange on Which Registered
None None
Securities registered under Section 12(g) of the Securities Exchange Act of
1934:
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class)
Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
State registrant's revenues for the year ended December 31, 1999 -$0
State the aggregate market value of the voting stock held by non-affiliates of
the registrant on March 31, 2000 computed by reference to the closing bid price
of the Geotec Thermal Generators, Inc. Common Stock as reported by OCTBB on that
date $5.00): $22,313,875
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of the registrant's Common Stock, par value
$.001 per share (the "Common Stock"), as of March 31, 2000, was 20,737,775.
Transitional Small Business Disclosure Format (check one):Yes No X
DOCUMENTS INCORPORATED BY REFERENCE
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PART 1
ITEM 1. DESCRIPTION OF BUSINESS
1. General
The Company was incorporated in the state of Florida in February 1998 to provide
services in the energy industry. The Company's offices are located at. 1615 S.
Federal Highway, Suite 101, Boca Raton, Florida 33432. The telephone number is
(561)447-7370 the fax number (561)447-7371 and the e-mail address is
[email protected]. The Company has plans to begin full operations in the
second quarter of 2000.
The Company has obtained a ten-year exclusive license to market and sell a
unique oil treatment service to customers in North, Central, and South America.
This technology, Gas Generators(TM) (or the "Generators(TM)"), is designed to
produce a thermo-chemical treatment of oil and gas wells, designed to restore
and increase output capacities, thereby enabling increased production of oil.
The proprietary technology was developed by the former Soviet Union Military
Research and Production Facility, FR&PC ALTAI, for the USSR Ministry of Geology.
This increase in oil production can be measured in barrels per year, with one
barrel of oil valued at approximately US$22.25 as of December 1999. The Company
was granted an exclusive license to import the Generators(TM) for use in the oil
and gas exploration industry in August 1997 and three subsequent contracts
comprise the patent ability, long-term agreement and transfer of technology.
2. Background
FR&PC ALTAI, a Russian military research and production facility, manufactures
many technologies, from atomic-size diamond powders and nitrogen air bag
technology to advanced military weapons and rocket fuel. Their firm has been
developing and manufacturing the Generators since the early 1970's
(experimentation on 6500 wells prior to 1986, and subsequent commercialization
with an additional 30,000 wells since 1986.) and have continued to refine the
technology, striving to make the Generators suitable for all geological
conditions to depths of 22,000 feet.
The USSR Ministry of Geology approached FR&PC ALTAI in the 1970's to resolve the
problem of under-productive oil wells, and then to design an economical process
that would increase the commercial growth of oil and gas inventories while
simultaneously raising the efficiency of oil, gas and input wells. Upon
evaluating the filtration properties of the rock formations in various
formations, they identified the problem of rock formations suffering typically
irreversible changes during the operation and servicing of the wells.
The current model, PGDBK Generator, has been activated in more than 30,000 wells
since its development. For example, in the Tyumen oil basin in Russia, the
result was an additional extraction of 295 million tons of oil (i.e. 2.36
billion barrels of oil, when valued per barrel at $15.25, is approximately US$36
Billion).
Using the Generators in the Aktyubiinsk region, several oil wells that had been
considered to be "exhausted" have been revived, with their capacity greatly
increased. The additional extraction from the successfully treated wells has
averaged 12,000 barrels of oil per year/per well (US$183,000). Wells in specific
fields have yielded results averaging 125 barrels per day increase. Once a well
is treated, the service benefits can last from several months up to several
years, depending on the geological characteristics of the area and several
technical characteristics at the site.
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3. Generator(TM) Technology/Applications
PGDBK Gas Generators(TM) perform an advanced well stimulation process designed
to increase oil and natural gas output. The technology has been proven to be
safe and effective throughout regions of Asia and Eastern Europe. Compared to
similar services, such as hydraulic fracturing or acidizing, the Generators are
much more effective and safe, and much less costly. The Generators(TM) were
developed utilizing a method of bed fracture with the pressure of a solid,
pulsating propellant charge. The Generators(TM) do not contain explosives and a
combustion blast does not occur, which is obviously important for governmental
safety and environmental considerations.
Customers best suited for using the Generators(TM) are sites with high pressure,
oil-rich levels where filtration properties of the local rock
formation/structure have undergone irreversible changes, thereby causing the
well to become non-producing or inactive. More than twenty-five years of Russian
service experience has provided the Company with data that verifies the
Generators(TM) utilize a process which is a clean, safe, economical and
environmentally-sound procedure which is capable of creating the rebirth of
non-producing wells.
Until now, comparative services have been cumbersome and costly. However, the
Generators(TM) do not require any pumps or other compressor-type machinery,
which can be prohibitive, as they are often bulky and difficult to use. This
makes the Generators(TM) ideal for regions/sites, which are difficult to access
due to certain geological properties and characteristics.
The reduced cost to operators is profound when compared to conventional
hydraulic fracturing methods. The procedure is relatively simple, and easily
handled by small personal units. The entire Generator treatment process can be
completed in several hours, and always less than one entire day. The hydraulic
fracturing process typically takes several days due to its complexity, and in
difficult scenarios, the process has been known to take weeks with substantial
cost to obtain noticeable results at a much lower success rate and yield than
the Company's exclusive technology.
4. Patents and Trademarks
The Company's believes that the technology and resulting processes and methods
developed by FR&PC ALTAI have not been discovered/utilized by any other
competitors on an international basis. As such, the Company intends to file
several US and international patents on several composite materials, and on the
use characteristics of the Generators(TM) for oil, gas and water wells. In
addition, confidential and proprietary information owned by the Company, will
also be protected by Confidentiality Agreements and Employee Contracts, designed
to cover all proprietary technology and other confidential information.
Trademarks and trade names will protect both the Company and the Generator(TM)
registered names.
5. Vendors, Suppliers, Distributors, Customers
The Company and management have spent considerable time, effort, and expense in
developing strong relationships and alliances with several organizations
involved in the energy industry throughout the world.
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The Company's exclusive Gas Generators(TM) Development Agreement, with FR&PC
ALTAI, signed in 1997, includes a long-term Technology Agreement for ten years,
with a ten-year renewal option. The exclusive service areas presently encompass
North, Central, and South America. Of the 2.9 million oil wells in the US and
Canada, it is estimated that the majority of the wells contain the general
geological criteria necessary to allow successful treatment from the Company's
exclusive Generators(TM) technology.
The Company will purchase the generators through a Russian company, which
regulates the sale and subsequent use of the technology. In 1993, Russian
President Boris Yeltsin established Rosvooruzhenie, a government-controlled
company to import and export military type technology. In August 1997, it was
reorganized into the Federal State Unitary Enterprise, State Company,
Rosvooruzhenie and has become the largest trader in Russia, controlling more
than 90% of the country's exports of weapons and military type equipment, by
dealing with over fifty different countries. All of the Company's Generators(TM)
will be imported to the United States by Rosvooruzhenie.
The Company retains the right to decline to treat any well, designed for
instances when a particular well does not meet the Generators(TM) requirements
for successful treatment. The Company estimates that eighty percent (80%) of the
stripper wells in the US and Canada are candidates to be successfully treated
with the Generators(TM) process. This procedure is scientific in nature with the
ability to calculate the success potential and yield for any well with the
proper data inserted into formulas that comprise the body of knowledge for use
of the PDGBK gas generators.
The first order of generator sets have been shipped from Russia to the Company's
US warehouse. The Company is required to purchase a minimum of 5,000 generators
over the next ten years. A total of 1,000 generators is required to be ordered
in the first two years, with a minimum of 500 units per year in the subsequent
eight years.
A team of FR&PC ALTAI scientists is scheduled to join the Company's US treatment
team for purposes of treating initial wells. Upon completing each of the initial
treatments, the wells will again be analyzed to obtain data that may help
increase oil production. Also, during the treatments, the Company's technical
personnel will be trained to safely and effectively conduct the entire
procedure, from assembly and ignition down to data collection.
6. The Market: Target Customers and Marketing Strategy
There are 2.9 million oil and gas wells in North America, 2.5 million wells in
Central and South America and over 6.0 million wells in non-exclusive areas
world wide. The Company believes a substantial portion of these wells will
benefit from stimulation with the PGDBK Generators(TM). Of the number
stimulated, FR&PC ALTAI has determined an average success rate of 70% for oil
wells and 90% for gas wells.
Short Term Strategy
The Company has determined that its Generator(TM) services can be
provided at an almost negligible cost when compared to the profit
potential available for oil and gas wells, with a high rate of success.
This success is documented though results -- evidenced by the Russian
certification of the Generator(TM) process, which shows a 65%+ success
rate of first 6500 well treatments during the product development
stage, which was concluded in 1986.
The Company will not benefit from its process unless the Generator(TM)
well treatment is successful. The Company will treat a well for the
first $40,000 of increased production of new oil or gas, or two months
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of increased production, whichever is less, as produced by the
Company's treatment process. Thereafter then split all oil or gas
revenues thereafter with the well perator. (The revenue sums are
subsequent to the land lease override and state production taxes, which
generally account for 20% of the gross production.) As an example, if
the oil well is producing 2 barrels per day before treatment, and
produces 10 barrels of oil per day after treatment; then the Company
would receive two months production increase, or in this case, the
first $40,000 of 80 barrels per day (100 less the 20 barrels for the
land lease and state production taxes) or about $1260 per day for 32
days. The Company would then receive the revenue from the 50 barrels
per day or about $365,000 (calculated at $25 per barrel) over the next
10 months, or $344,000 for the first year. Subsequent years would yield
a declining production curve, which is typical of wells, starting at
about $300,000 per year.
As with any well treatment procedure, this process works for a specific
period of time. The Company will subsequently re-treat the well, as in
the example cited above, for $10,000, or two month's of increased oil
or gas production, whichever is less, then split the gross revenues
with the well operator, less the land lease override and state
production taxes. Well treatment will be made available as long as, in
the Company's opinion, there remains a substantial opportunity to the
increase well production and oil or gas output.
The Company anticipates expanding its sales and technical staff upon
receipt of additional financing, and plans to continue contracting with
several oil well operators and energy companies throughout the US.
Generator(TM) treatment service will initially be performed in the US
and Canada, for the near term, with oil and gas wells that have limited
or no production. Of the 2.9 million wells in the US and Canada, 2.5
million wells are inactive or are very low producers. The Company
estimates that at least two-thirds of these wells are owned by small or
intermediate-sized companies, comprising 50% of the oil and gas
production in the US and Canada.
Long Term Strategy
Company's management feels that a great opportunity exists with large
oil and gas companies in the US, Canada, and offshore wells. The
Company does not believe that all large oil well companies will provide
a percentage of the oil to be produced at the current pricing of oil
and gas. Rather, the Company believes it will receive a fee for its
Generator treatment services, often as high as $1,000,000 per treatment
for offshore wells. Many offshore oilrigs have greater than five wells,
drilled below the ocean, and therefore the process may produce a
revenue stream without oil override contracts in these instances.
It is the Company's strategy to separate itself from any other company
using inert gases that are pumped into a well, similar to hydraulic
fracturing, with the same 20-30% success rate. It is also the Company's
strategy to differentiate itself from any other company utilizing gas
generator technology by:
a. Patenting the case-less gas generator which can be custom fitted
to the oil producing zone height at the well site
b. Patenting the length between and sequence of the gas igniters, as
well as their location inside the propellant
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c. Patenting the pressure sequence of gases as produced by location
of the gas igniters;
d. Emphasizing the proprietary nature of the gas propellant
materials, and their method of production
e. Patenting the use of the Generators(TM)in several different forms
with several well whole temperatures and conditions
The Company intends to maintain a high level of secrecy regarding the
production and use of Generators(TM) following the acquisition of the
technology from FR&PC ALTAI. The Company may transfer a portion of the
manufacturing technology to another part of the world such as the
Middle East; however, all production technology is not anticipated to
be transferred outside of one production facility in the US.
7. Competition
Several companies have been involved or are currently involved in some type of
gas generating stimulation. The Company believes that the current gas generation
technology in use today, while somewhat effective, is inferior to the Company's
Generator(TM) technology, as it is more expensive and has not compiled the same
success rate. The following companies provide minimal competition:
Servo-Dynamics, Inc., Schlumberger Technology, Compulog PST, and Oryx Energy
Company.
8. Government Regulations
Jurisdiction for importing the Generators(TM) into the US for use in the oil and
gas industry is within the scope of the Bureau of Alcohol Tobacco and Firearms
(ATF). This agency requires the Company to be licensed under 27 CFR Part 55. The
Company has met all the pre-qualifications, and has been issued the necessary
importing license.
Oil Industry Regulation
General. Political developments and federal and state laws and
regulations (and orders of regulatory bodies pursuant thereto) will
affect the Company's oil and natural gas services from time to time in
varying degrees. In particular, federal and state tax laws and other
regulatory laws relating to the petroleum industry, and changes in
those laws and the underlying administrative regulations, govern a wide
variety of matters, including the drilling and spacing of wells on
producing acreage, allowable rates of production, marketing, pricing,
prevention of waste and pollution and protection of the environment.
Such laws, regulations and orders may restrict the rate of oil and
natural gas production below the rate that would otherwise exist in the
absence of such laws, regulations and orders and may restrict the
number of wells that may be drilled on a particular lease.
Price Regulations. Effective January 28, 1981, Congress abolished all
federal controls on the price of domestically produced oil. Since that
date, competition and supply and demand primarily have affected the
price of oil. Sales of natural gas by the Company's partners will be
subject to regulation of production, transportation and pricing by
governmental agencies. Generally, the regulatory agency in the state
where a producing gas well is located supervises production activities
and, in addition, the transportation of natural gas sold intrastate.
Since the adoption of the Natural Gas Policy Act of 1978 (the NGPA),
the Federal Energy Regulatory Commission (AFERC) has regulated the
price of intrastate as well as interstate gas.
The NGPA is a complicated and lengthy piece of legislation. It provides
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for wellhead price controls for specified time periods, decontrol of
certain prices depending on location, depth or time of production,
emergency allocation authority, curtailment of deliveries to certain
consumers coupled with preferential delivery status to other consumers,
incremental pricing to large industrial consumers, refunding with
interest as to receipts in excess of the ceiling prices, and
substantial penalties (both civil and criminal) for violations of the
NGPA. Complex pricing provisions of the NGPA include approximately
thirteen major pricing categories.
Certain states have adopted legislation which has the effect of setting
a ceiling price for certain natural gas sold under existing contracts
and not committed or dedicated to interstate commerce before enactment
of the NGPA. The United States Supreme Court upheld the
constitutionality of that type of state-mandated price control by
Kansas. The pricing categories referred to above represent maximum
authorized prices. A natural gas purchaser does not necessarily pay
those prices, which are generally affected by the level of competition
in the area, the availability of pipelines and markets, and the price
ceilings under the NGPA.
State Regulation. State statutory provisions relating to oil and
natural gas generally require permits for the drilling of wells and
also cover the spacing of wells, the prevention of waste, the rate of
production, the prevention and clean-up of pollution and other matters.
Possible Legislation. Currently there are many legislative proposals
pertaining to the regulation of the oil and natural gas industry,
including decontrol of natural gas prices and modification of
legislation affecting pipeline companies. Any of such proposals may
directly or indirectly affect the activities of any Company. No
prediction can be made as to what additional energy legislation may be
proposed, if any, nor which bills may be enacted nor when any such
bills, if enacted, would become effective.
Regulation of the Environment. The exploration, development, production
and processing of oil and natural gas are subject to various federal
and state laws and regulations to protect the environment. Various
state and governmental agencies are considering, and some have adopted,
other laws and regulations regarding environmental control that could
adversely affect the activities of the Company. Compliance with such
legislation and regulations, together with any penalties resulting from
noncompliance therewith, will increase the cost of oil and natural gas
development, production and processing. Certain of these costs may
ultimately be borne by the Company. Management does not presently
anticipate that compliance with federal, state and local environmental
regulations will have a material adverse effect on capital
expenditures, earnings or the competitive position of the Company in
the oil and natural gas industry.
The preceding discussion of regulation of the oil and natural gas industry is
not intended to constitute a complete discussion of the various statutes, rules,
regulations or governmental orders to which the Company's operations, services,
and revenues may be subject.
9. RECENT EVENTS
The Company has begun marketing and signing up well operators for it proprietary
process. The Company has several well operator contracts. These contracts
represent companies with over 2,500 wells to be treated. The Company is
compensated for the well treatments based upon success and yield increases. The
well operator pays the Company $40,000 or two month's increased production,
whichever is less. After this initial payment, the Company also receives 50% of
the increase in production, paid monthly. (these sums do not include the land
lease overrides or state [production taxes, which generally comprise about 20%
of the total yield.) For example, if a well is producing 3 barrels of oil per
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day, prior to treatment, the Company is only paid a production override above
the 3 barrels per day. If, in this example, the production increase to 103
barrels per day, the Company would receive approximately 40 barrels per day
after the first two months, when considering the land lease override and state
production taxes.
ITEM 2. DESCRIPTION OF PROPERTIES
PROPERTIES
The Company currently leases facilities consisting of approximately
2,700, square feet of office space in Boca Raton, Florida pursuant to a five
year lease, with initial monthly base rental amount of $5,300, inclusive of
taxes, operating expenses for the common area of the building, maintenance,
janitorial services and electricity.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's Common Stock is traded on the OTCBB under the symbol
"GETC." The following sets forth the range of high and low closing bid prices
for the Common Stock as reported on NASDAQ during each of the periods presented.
The quotations set forth below are inter-dealer quotations, without retail
mark-ups, markdowns or commissions, and may not necessarily represent actual
transactions.
Period High Low
1999
----
Fourth Quarter $9.00 $3.50
2000
----
First Quarter $7.75 $3.25
The Company believes that as of April 6 there were approximately 139 record
holders of the Company's Common Stock. The Company believes that there are
substantially in excess of 300 beneficial and round lot holders of the Company's
Common Stock.
The Company has not paid any cash dividends on its Common Stock and
currently does not expect to declare or pay cash dividends in the foreseeable
future. The Company presently intends to retain any earnings that may be
generated to provide funds for the operation of business.
ITEM 6. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the financial statements of the Company and the notes thereto appearing
elsewhere herein.
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RESULTS OF OPERATIONS
The Company is in the development stage. Since its inception in February 2,
1998(Inception), the Company's efforts have been principally devoted to
research, development, initial marketing activities, licensing and raising
capital. The Company has generated no revenue and has incurred substantial
operating losses to date, which losses are continuing. Since inception, the
Company has sustained cumulative losses of ($803,536). These losses have
resulted primarily from expenditures for general and administrative activities,
including salaries and professional fees, which have aggregated $664,633 since
inception. Losses are expected to continue through fiscal year 2000.
Research and development expenses for the period February 2, 1998(Inception)
through December 31, 1998 were $0 compared to $119,500 for the year ended
December 31, 1999, an increase of $119,500. These increases were due to the
Company's payment of fees to FR&PC ALTAI for training.
General and administrative expenses increased from $279,022 for the period
February 2, 1998 (Inception) through December 31,1998 to $521,829 for the fiscal
year ended December 31, 1999. An increase of $242,807 the increases were due to
additional employees hired, and increased legal and accounting fees incurred in
connection with the Company's expanding activities and patent applications.
LIQUIDITY AND CAPITAL RESOURCES
The Company borrowed $120,000 in November 1999. The terms of the loan are for
monthly interest payments at an annualized rate of 12.5% per annum. As of
December 31, 1999 the first interest payment had not been made. The note is
payable in November 2000. The Company has pledged .42% of all common stock
outstanding at the date of issuance. Since the Company has missed its first
interest payment the lender has the right to acceleration.
The Company borrowed $119,500 in November 1999. The loan is due November 2001.
Interest on the note is 12.50% per annum, payable upon repayment of the
principal.
During 1999 the Company completed a private placement of 165,678 shares of
common stock at prices ranging from $2.38 to $3.50 per share. The Company issued
these shares for gross proceeds of $417,225. The Company also issued 7,840
shares of common stock for services valued at $32,538. The Company issued 20,000
shares of common stock for legal services to be rendered valued at $110,250. The
Company is currently seeking sources for additional interim and long-term
financing.
IMPACT OF YEAR 2000
We are aware of the issues associated with the programming code in existing
computer systems associated with the Year 2000. The year 2000 issue relates to
whether computer systems will properly recognize and process information
relating to dates in and after the Year 2000. These systems could fail or
produce erroneous results if they cannot adequately process dates beyond the
Year 1999 and are not corrected. Significant uncertainty exists in the software
industry concerning the potential consequences that may result from the failure
of software to adequately address the Year 2000 issue. While we have only
limited hardware and software in use, we have reviewed all software and hardware
used internally by us in all support systems to determine whether they are Year
2000 compliant. All of our existing software has already been upgraded by the
manufacturer or was recently purchased and is Year 2000 compliant. Therefore, we
believe our existing systems are Year 2000 compliant. We believe that systems
purchased in the future will also be Year 2000 compliant, and we will receive
appropriate confirmation and demonstrations in connection with any purchases.
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Since we have only limited systems, hardware, software, equipment and appliances
given our phase of development, we do not believe that the total cost for Year
2000 compliance will be material.
We cannot, however, predict the effect of the Year 2000 issue on companies with
which we transact business. Therefore, we cannot assure you that the effect of
the Year 2000 issue on these companies will not have a material negative effect
on our business, financial condition or results of operations.
We use third-party equipment, software and content, including non-information
technology systems, such as our security system, building equipment and
non-capital IT systems with embedded microcontrollers that may not be Year 2000
compliance. However, virtually all of these purchases are recent acquisitions or
we have had assurance from service providers that they are Year 2000 compliant.
As a result of these factors, our contingency plan is primarily focused on
locating back-up suppliers and service providers for critical systems. For
example, while we believe our current local web hosting provider is Year 2000
compliant since we have confirmations from them, we have arranged back-up
service from another web-hosting provider from whom we also received compliance
confirmation. In addition, in order to minimize potential adverse Year 2000
compliance problems, we have established certain procedures.
These procedures include designating our primary information technology officer
to identify, correct, test and implement solutions to Year 2000 problems as they
arise. In addition, we have also added additional inventory of products and
components to allow us to remain operational, if third-party vendors incur Year
2000 problems. We do not have any other contingency plans to address Year 2000
issues and we do not intend to do so.
If our software and computer systems and those of our third-party suppliers
should fail to be Year 2000 compliant, it would have a material adverse effect
on us. A significant disruption of the ability of consumers to reliably access
the Internet or portions of it or to use their credit cards would have a
material negative effect on demand for our products and services and would have
a material adverse effect on us. A reasonable worse case Year 2000 scenario
could involve a major failure of our material systems or our vendors' material
systems or failure of the Internet to be Year 2000 compliant.
These could have material adverse consequences for us. These consequences would
include difficulties or interruptions in operating our website effectively,
taking customer orders, processing orders, making deliveries or conducting other
fundamental parts of our business.
To date, we have not experienced any Year 2000 computer problems. Also, we are
not aware of any Year 2000 problems experienced by our vendors. We will,
however, continue to monitor the situation in the event any problems occur
during the year.
ITEM 7. FINANCIAL STATEMENTS
See "Index to Financial Statements" for the financial statements
included in this Form 10-KSB.
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INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report F-2
Balance Sheet F-3
Statements of Operations F-4
Statement of Stockholders' Deficit F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7 - F-12
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Geotec Thermal Generators, Inc.
We have audited the accompanying balance sheet of Geotec Thermal Generators,
Inc. (a development stage enterprise) as of December 31, 1999, and the related
statements of operations, changes in stockholders' deficit, and cash flows for
the year ended December 31, 1999 and for the period February 2, 1998 (date of
inception) through December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our 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 amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Geotec Thermal Generators, Inc.
(a development stage enterprise) as of December 31, 1999, and the results of its
operations and its cash flows for the year ended December 31, 1999 and the
period February 2, 1998 (date of inception) through December 31, 1999 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage and has no significant revenue from operations. It is utilizing technology
which may require substantial expenditures to successfully market. The Company
must successfully complete its marketing efforts. As a result the Company may
need additional funds. These factors raise substantial doubt about the ability
of the Company to continue as a going concern. Management's plans in regard to
these matters are described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of the foregoing
uncertainties.
/S/ Feldman Sherb Horowitz & Co., P.C.
Feldman Sherb Horowitz & Co., P.C.
Certified Public Accountants
New York, New York
March 22, 2000
F-2
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GEOTEC THERMAL GENERATORS, INC.
(A Development Stage Enterprise)
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
CURRENT ASSETS
Cash $ 24,393
Inventories 129,960
----------------
TOTAL CURRENT ASSETS 154,353
----------------
PROPERTY AND EQUIPMENT, net 7,612
ORGANIZATION COSTS, net 622
DEPOSIT 16,878
----------------
$ 179,465
================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 9,738
Note payable 120,000
----------------
TOTAL CURRENT LIABILITIES 129,738
----------------
NOTE PAYABLE 119,500
----------------
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value, 50,000,000
shares authorized; 20,737,775 shares
issued and outstanding 20,738
Additional paid-in capital 823,275
Deferred compensation (110,250)
Accumulated deficit (803,536)
----------------
TOTAL STOCKHOLDERS' DEFICIT (69,773)
----------------
$ 179,465
================
See notes to financial statements
F-3
<PAGE>
GEOTEC THERMAL GENERATORS, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative
February 2, 1998 February 2, 1998
Year Ended (Inception) through (Inception) through
December 31, 1999 December 31, 1998 December 31, 1999
----------------------- ------------------------ ------------------------
<S> <C> <C> <C>
REVENUES $ - $ - $ -
COSTS AND EXPENSES:
General and administrative 521,829 279,022 800,851
----------- ---------- -----------
OPERATING LOSS (521,829) (279,022) (800,851)
OTHER EXPENSES
Interest (expense) income (4,058) 1,373 (2,685)
----------- ---------- -----------
NET LOSS $ (525,887) $ (277,649) $ (803,536)
=========== ========== ===========
BASIC AND DILUTED NET LOSS PER SHARE $ (0.03) $ (0.01) $ (0.04)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 20,716,728 20,714,775 20,715,796
========== ============ ===========
</TABLE>
See notes to financial statements
F-4
<PAGE>
GEOTEC THERMAL GENERATORS, INC.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Common stock Additional
--------------------- Paid -in Deferred Accumulated
Shares Amount Capital Compensation Deficit Total
--------------------- ---------- ----------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Balance at February 2, 1998 (Inception) 2,000,000 $ 2,000 $ 282,000 $ - $ - $ 284,000
Net loss - - - - (277,649) (277,649)
---------- ------- --------- ---------------- ------------ ----------------
Balance at December 31, 1998 2,000,000 2,000 282,000 - (277,649) 6,351
Issuance of common stock pursuant
to exchange agreement 18,544,257 18,544 (18,544) - - -
Issuance of common stock 165,678 166 417,059 - - 417,225
Stock issued for services 27,840 28 142,760 (110,250) - 32,538
Net loss - - - - (525,887) (525,887)
----------- ------- --------- ---------------- ------------ ----------------
Balance at December 31, 1999 20,737,775 $ 20,738 $ 823,275 $ (110,250) $ (803,536) $ (69,773)
=========== ======= ========= ================ ============ ================
</TABLE>
See notes to financial statements
F-5
<PAGE>
GEOTEC THERMAL GENERATORS, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
February 2, 1998 February 2, 1998
Year Ended (Inception) through (Inception) through
December 31, 1999 December 31, 1998 December 31, 1999
------------------------ ------------------------ ------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss $ (525,887) $ (277,649) $ (803,536)
------------------------ ------------------------ ------------------------
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 3,568 1,753 5,321
Stock issued for compensation 32,538 - 32,538
Changes in assets and liabilities:
Increase in inventories (129,960) - (129,960)
Increase in organizational costs - (1,242) (1,242)
Increase in deposits (16,878) - (16,878)
Increase (decrease) in accounts
payable and accrued expenses 8,847 891 9,738
------------------------ ------------------------ ------------------------
NET CASH USED IN OPERATING ACTIVITIES (627,772) (276,247) (904,019)
------------------------ ------------------------ ------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (4,581) (7,732) (12,313)
------------------------ ------------------------ ------------------------
NET CASH USED IN INVESTING ACTIVITIES (4,581) (7,732) (12,313)
------------------------ ------------------------ ------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 239,500 - 239,500
Proceeds from issuance of common stock 417,225 284,000 701,225
------------------------ ------------------------ ------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 656,725 284,000 940,725
------------------------ ------------------------ ------------------------
NET INCREASE (DECREASE) IN CASH 24,372 21 24,393
CASH, beginning of period 21 - 21
------------------------ ------------------------ ------------------------
CASH, end of period $ 24,393 $ 21 $ 24,414
======================== ======================== ========================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Income taxes $ - $ - $ -
======================== ======================== ========================
Interest $ - $ 43 $ 43
======================== ======================== ========================
Non-cash investing and financing activity:
Common stock issued for services $ 110,250 $ - $ 110,250
======================== ======================== ========================
</TABLE>
See notes to financial statements
F-6
<PAGE>
GEOTEC THERMAL GENERATORS, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999 AND FROM
FEBRUARY 2, 1998 (Date of Inception) THROUGH DECEMBER 31, 1998
<PAGE>
1.ORGANIZATION:
Geotec Thermal Generators, Inc. ("Geotec" or the "Company") was
incorporated on February 2, 1998, in the state of Florida. The Company
is in the Development stage as of December 31, 1999.
The Company's intends to commercialize the Russian Federations's
technology for secondary oil and gas recovery in North, Central and
South America. The technology has been used on approximately 30,000
Russian wells to date. The Company was formed to complete the initial
development contract, which was executed in August 1996. Subsequent to
the development contract, three contracts were executed, covering
patent rights, transfer of technology and a long tem exclusive
contract for the geographic area as mentioned above
During October 1999, the Company was acquired by Kennsington, Inc.
("Kennsington") for 18,714,775 shares of Kennsington common stock for
all of the equity of the Company. As a result of this transaction the
principals of Geotec received approximately 90% of the total
outstanding common stock of Kennsington. Upon completion of the
transaction there were 20,714,775 shares of Kennsington issued and
outstanding. The acquisition 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 the Company, pursuant to which the Company is
treated as the continuing entity. In November of 1999, Kennsington
changed its name to Geotec Thermal Generators, Inc. as part of the
merger of its subsidiary into itself.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Presentation - The Company is in the development stage and
their operations are subject to all the risks inherent with an
emerging business enterprise. The Company has incurred an operating
loss of approximately $804,000 from February 2, 1998 (inception)
through December 31, 1999. No assurance exist that the Company will
not encounter substantial delays and expenses related to the financing
of its successful completion of its product development and marketing
effort and / or other unforseen difficulties. The Company will be
required to expand its management and administrative capabilities in
order to manage the aforementioned items as well as to respond to
competitive market conditions. These and other factors may require
additional funds and the Company may seek such funds through
additional equity financing, debt financing, collaborative
arrangements or from other resources. Such funds may not be available
on terms acceptable to the Company. Based on the Company's current
plans and assumptions, the Company believes its cash on-hand and
subsequent financing will be sufficient to fund its anticipated
operations through December 31, 2000.
F-7
<PAGE>
B. Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from those estimates.
C. Cash and cash equivalents - The Company considers all highly liquid
temporary cash investments with an original maturity of three months
or less when purchased, to be cash equivalents.
D. Inventories - Inventories are stated at lower of cost or market on the
first-in, first-out method of inventory valuation.
E. Property and equipment - Property and equipment is stated at cost.
Depreciation of property and equipment is computed using the
straight-line method over the estimated useful lives of the assets.
F. Stock based compensation - The Company accounts for stock transactions
in accordance with APB Opinion No. 25, "Accounting For Stock Issued To
Employees." In accordance with Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), "Accounting For Stock - Based
Compensation," the Company adopted the pro forma disclosure
requirements of SFAS 123.
G. Concentration of risk - Credit losses, if any, have been provided for
in the financial statements and are based on management's
expectations. Financial instruments which potentially subject the
Company to concentrations of credit risk are primarily cash and
accounts receivables. The Company invests its excess cash in high
quality short-term liquid money market instruments with major
financial institutions and the carrying values approximate their
market value. The Company does not believe that it is subject to any
unusual or significant risks, in the normal course of business.
H. 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.
I. Net loss per share - Basic loss per share has been calculated based
upon the weighted average number of common shares outstanding. Stock
options have been excluded as common stock equivalents in the diluted
earnings per share because they are either antidilutive, or their
effect is not material.
J. Fair value of financial instruments - The carrying amounts reported in
the balance sheet for cash, accounts payable and accrued expenses
approximate fair value based on the short-term maturity of these
instruments.
F-8
<PAGE>
K. 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, 1999, the Company believes that there has
been no impairment of its long-lived assets.
3.INVENTORIES
The Company as part of their Technology Transfer agreement (see Note
5) was required to purchase gas generator units. These gas generators
can be used only once for each attempt at oil and gas recovery for
each well.
4.PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of December 31,
1999:
Furniture and Fixtures 5 Years $ 684
Data processing equipment 3 Years 11,628
-------------
12,312
Less: accumulated depreciation (4,700)
-------------
$ 7,612
=============
5.LICENSING AGREEMENTS
In February 1999 the Company entered into an agreement with the
Federal State Unitary Enterprise, a company of the Russian Federation.
The agreement calls for the Company to purchase the technology rights
for secondary oil and gas recovery for $119,500. This purchase also
includes the use of Russian specialists in the development of a viable
technology for the Company. Due to the technology being in a
development stage the purchase has been expensed as research and
development for the year ended December 31, 1999.
6.NOTES PAYABLE
In November 1999, the Company borrowed $120,000 from a Bahamian
company. The terms of the loan are for the monthly interest payments
at an annualized rate of 12.50% per annum. As of December 31, 1999 the
first interest payment has not been made. The principal of the loan is
to be paid one year from the date of issuance. The Company has pledged
.42% of all common stock outstanding on the date of the note's
issuance. Since the Company has missed its first interest payment the
lender has the right of acceleration.
F-9
<PAGE>
In November 1999, the Company borrowed $119,500 from a Investment
Trust based in Bermuda, in order to facilitate the purchase of its
technology rights (Note 5). The loan is due in November 2001, two
years from the date of issuance. Interest on the note is 12.50% per
annum, payable upon repayment of the principal.
7.COMMON STOCK
The Company has completed a private placement of 165,678 shares of its
common stock at prices ranging from $2.38 to $3.50 per share. The
Company issued these shares for gross proceeds of $417,225. The
Company also issued 4,840 shares of common stock for services.
In December 1999 the Company issued 20,000 shares of common stock for
legal services to be rendered. The shares were valued at $5.51 per
share.
In December 1999 the Company issued 3,000 shares common stock for
consulting services rendered. The shares were valued at $5.51 per
share.
8.INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). SFAS 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 109 additionally requires the establishment
of a valuation allowance to reflect the likelihood of realization of
deferred tax assets.
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 is as follows:
Year ended
----------------------------------
December 31, 1999 December 31, 1998
----------------- -----------------
Taxes benefit computed
at statutory rate $ (202,000) $ (110,000)
Losses for which no tax
benefit utilized 202,000 110,000
----------------- -----------------
Net income tax benefit $ - $ -
================= =================
The Company has a net operating loss carryforward for tax purposes
totaling approximately $780,000 at December 31, 1999 expiring between
the years 2014 and 2019.
Listed below are the tax effects of the items related to the Company's
net tax liability:
December 31, 1999
---------------------
Tax benefit of net
operating loss carryforward $ 312,000
Valuation Allowance (312,000)
---------------------
Net deferred tax asset
recorded $ -
=====================
F-10
<PAGE>
9.COMMITMENTS
a. The Company leases a vehicle from a related party, under an operating
lease expiring in February 2003.
In December 1999, the Company entered into a five year lease for
office space commencing April 2000.
Future minimum rental payments under the non-cancelable operating
lease are as follows:
Year ended December 31,
2000 $ 67,352
2001 73,752
2002 76,315
2003 71,674
2004 71,516
Thereafter 5,974
-----------------
$ 366,583
=================
b. The Company entered into an agreement in December 1998 with the
Russian Federation ("Supplier"), whereby upon successful testing of 60
gas generators, the Company is required to order a minimum of 5,000
gas generators over a ten year period. A total of 1,000 generators is
required to be ordered in the first two years, with a minimum of 500
units per year in the subsequent eight years.
The Company is obligated to purchase approximately $4,500,000 of
generators over the next three years.
c. Employment Agreements - In January 1999, the Company entered into
five-year employment agreements with two officers. The total annual
commitment to the Company for these agreements will aggregate
$270,000.
In July and December 1999, the Company entered into a 5 year
employment agreement with two officers. The total annual commitment to
the Company for these agreements will aggregate $135,000.
F-11
<PAGE>
10.STOCK OPTIONS
In 1999, 126,000 options were granted. In 1999, had compensation cost
for the Plan been determined based on the fair value at the grant
dates for awards under the Plan, The Company's net loss and loss per
share would have increased to the pro forma amounts indicated below:
As Reported Pro Forma
---------------------- ----------------
Net loss $ (509,349) $ (558,349)
Basic and diluted net
loss per share $ (.02) $ (.03)
The fair value of each option grant is estimated on the date of grant
using the Black Scholes option-pricing method with the following
weighted average assumptions used for grants in 1999; dividend yield
0%, expected volatility 50%, risk free interest rate 7%, expected
lives in years 5.
The weighted average fair value of stock options granted during the
year ended December 31, 1999 was $2.38. No employee stock options were
granted in 1998.
F-12
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. MANAGEMENT
MANAGEMENT
The following table sets forth certain information concerning the
current directors of the Company and the executive officers of the Company:
MANAGEMENT
The officers and directors of the Company are as follows:
Name Age Position
- --------------------------------------------------------------------------------
Daniel Pepe 44 President and Chairman
W. Richard Lueck 50 Chief Executive Officer, Director
Secretary/Treasurer
Martin Scott 32 Chief Financial Officer
Albert O. Banahene 38 Chief Petroleum Engineer
The following is a brief description of the business background of the
directors/key employees of the Company.
Daniel Pepe has been Chairman and President of the Company since 1998. After
consulting from 1996-1998 with FR&PC ALTAI, a Russian military research and
production facility, he was offered the opportunity to develop their PGDBK
Generators in the North, Central, and South America markets. Mr. Pepe worked
directly with the firm and their Director General, and then successfully
negotiated with the Russian Government, identifying opportunities for successful
implementation of the technology into Asian markets.
From 1991 until 1996, Mr. Pepe served as President for Lexde Inc., a management
company, which helped, identify opportunities for US companies to develop and
market products in the former Soviet Union. While there, Mr. Pepe worked with US
and Russian government agencies, gaining experience and forming strategic
alliances with several organizations. In 1994, Mr. Pepe negotiated a contract
with FR&PC ALTAI to develop the North American market for the use of their
patented atomic-size nano diamond power within high technologies such as
Chemical Vapor Deposition and Physical Vapor Deposition film coatings.
In 1991, Mr. Pepe formed WTE, an independent consulting company that identified
opportunities for US companies to promote and market their products and services
in the former Soviet Union, where he strengthened interpersonal relationships
between the companies and high ranking personnel in the Soviet Union government.
Mr. Pepe's entrepreneurial experience includes the founding and operating of
successful businesses in a vast array of industries, including real estate, ship
building, and residential commercial construction.
11
<PAGE>
From 1985 until 1991, Mr. Pepe served as Vice President of Sales/Development for
Ridgemont Construction, a New England real estate developer, where he helped
develop and build residential and commercial projects throughout the region,
with the initial project generating $13,000,000. From 1984-85, Mr. Pepe worked
as a Sales Representative for PYA Monarch, a wholesale food distributor, where
he refined his sales skills, opening new accounts and establishing many customer
contacts.
From 1982-1984, Mr. Pepe was Manufacture Engineer for General Dynamics, where he
was responsible for several manufacturing units, increasing worker output and
improving the manufacturing process for various shipping vessels. From
1980-1982, Mr. Pepe was Plant Supervisor for Waganhiem Provisions, Inc., a food
wholesale/distribution company, where he managed fifty (50) employees. Mr. Pepe
is a member of the Society of Petroleum Engineers (SPE). Mr. Pepe received his
BS in Industrial Engineering/Technology from Roger Williams University in 1980.
W. Richard Lueck has been the Chief Executive Officer, Secretary and a Director
for the Company since its inception in 1998. Mr. Lueck has accumulated over 25
years of experience in financing, building, and managing of several biomedical
companies, with jobs and duties covering executive management, marketing,
technology acquisition, quality control and operations. Mr. Lueck also currently
holds the positions of Executive Vice President for Freedom Motors, Ltd., a
company providing rotary engine development, and President of Light Lift, Inc.,
a company specializing in patented portable scaffolding systems, where he has
been responsible for the capitalization structure and obtaining financing for
both high-growth companies.
From 1992 through 1996, Mr. Lueck served as Executive Vice president for
Cytoferon Corporation, where he was responsible for corporate restructuring,
finance, marketing, and scientific development of Viragen, Inc. Mr. Lueck
spearheaded Viragen's acquisition of Cytoferon Corporation. From 1988-89, Mr.
Lueck was Senior Group manager for Coulter Electronics, where he specialized in
marketing, product development, and technology transfers. From 1984 until 1988,
Mr. Lueck served as Executive Vice President and Director for American Labor, a
company specializing in coagulation and hematology products in the medical
industry. From 1979 until 1981, Mr. Lueck served as Senior Marketing Manager for
Warner-Lambert in Buffalo, NY, where he was involved in multi-plant marketing,
manufacturing, and operations.
From 1972 until 1974, Mr. Lueck worked at the University of Minnesota, Masonic
Hospital as a Research Scientist for Laboratory Operations, Cancer Research, and
Virology. Mr. Lueck received his BS in Biological Sciences/Biochemistry from the
University of Minnesota in 1974 and select MBA classes at Nova University and
New York Institute of Technology from 1976-77.
Martin Scott, a certified public accountant, has been the Company's Chief
Financial Officer since January 2000. Mr. Scott serves as Secretary and
Treasurer and Principal Accounting and Financial Officer of Registry Magic,
Incorporated (RMAG) since October 1997. From June 1996 until October 1997, he
was employed as an Audit Supervisor by Millward & Co., CPAs. From October 1995
until June 1996, Mr. Scott served as Controller of ERD Waste Corp.
(Nasdaq:ERDI), a waste disposal company. Prior thereto, from January 1995, he
was employed as a Senior Accountant with the firm of Richard A. Eisner & Co.,
LLP. From January 1991 to January 1995, he was employed as a Senior Accountant
with the firm of Feldman Radin & Co., P.C.
Albert O. Banahene has been the Company's Chief Petroleum Engineer since
September 1999. His petroleum industry experience span three continents; North
America, Europe and Africa. Practical experience include reservoir engineering
studies, reservoir simulation, well test analysis, production optimization,
production forecasting, and oil/gas property evaluation.
12
<PAGE>
Mr. Banahene was a Petroleum Engineer with JHR Corporation of Bridgeville, PA
responsible for Reservoir Management and Production Optimization (1999). He also
worked for Petroleum Reservoir Engineer for GeoKnowledge AS of Oslo developing
models for prospect analysis and fiscal regimes (1998). Mr.Banahene acquired
extensive Petroleum Production Operations and Reservoir Engineering experience
on some West African fields including Nemba Field in Angola; Tano and Saltpond
Fields in Ghana; and the Ibex, Kudu and Eland Fields in La Cote d'Ivoire. He
worked with the Ghana National Petroleum Corporation for 8 years (1990-1998).
During this tenure, he played a key role in developing strategies of integration
of West African Energy Projects. He was a member with a dynamic role in a
multi-disciplinary team (GNPC-Chevron) in developing some West African oil/gas
fields to supply gas to regional thermal plants and other markets - an
integrated project. He was part of a multi-disciplinary team (from the World
Bank, Ministry of Finance, Ministry of Mines and Energy, National Petroleum and
Electric Utility companies) tasked to rank and select proposed thermal power
plants to complement existing hydroelectric system. Mr. Banahene has also been
involved in petroleum production optimization in Bavli (Byelurus) and Rechitsa
(Russia) oil fields in the late 1980's.
Albert O. Banahene earned a Masters of Engineering Degree from the Colorado
School of Mines (1995). He also holds a Masters of Science in Petroleum
Engineering from the Moscow Institute of Oil and Gas, Russia (1989). Albert has
also earned credits towards the Master of Energy Management program offered at
the Norwegian School of Mines in Norway (1998/99).
During the year ended December 31, 1999, the Company's Board of
Directors held meetings and took action by unanimous written consent a total of
12 times.
Board Committees and Related Information
NONE.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's outstanding Common Stock to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock. Such persons are required by SEC
regulation to furnish the Company with copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners have been
complied with for the period for which this report relates.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid to
Daniel Pepe and W. Richard Lueck (the "Named Executive Officers") by the
Company. No other executive officer of the Company was paid a total annual
salary and bonus for the fiscal year ended December 31, 1999, which was $100,000
or more.
13
<PAGE>
Securities Other
Name and Principal Fiscal Underlying Annual
Position Year Salary Bonus Options Compensation
- -------- ---- ------ ----- -------- ------------
Daniel Pepe 1999 $107,752 -0- -0- -0-
President & Chairman 1998 $ 68,626 -0- -0- -0-
W. Richard Lueck, 1999 $ 37,002 -0- -0- -0-
Secretary & Treasurer & CEO 1998 $ 1,600 -0- -0- -0-
Effective January 1, 1999, the Company entered into five-year employment
agreements with each of Daniel Pepe and W. Richard Lueck providing for base
annual salaries of $135,000, with their salary increasing to $250,000 per year
when annual revenue reaches $5,000,000. The employees may receive annual bonuses
at the discretion of the Company, with bonuses to be determined by the
Compensation and Audit Committee. No formula or criteria have been specifically
determined.
OPTION GRANTS IN LAST FISCAL YEAR
The Company granted options to purchase 126,000 shares of common stock at an
exercise price of $2.38 to Albert O. Banahene the Company's Chief Petroleum
Engineer.
AGGREGATED FISCAL YEAR END OPTION VALUE TABLE
The following table sets forth certain information concerning unexercised stock
options held by the Named Executive Officers as of December 31, 1999. No stock
options were exercised by the Named Executive Officers during the period ended
December 31, 1999. No stock appreciation rights were granted or are outstanding.
Number of Unexercised Options Value of Unexercised in the Money
Held at December 31, 1999 Options at December 31, 1999
----------------------------- ----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -------- ----------- ------------- ----------- -------------
NONE - - - -
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 31, 1999, information
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person who is known by the Company to own beneficially more than 5% of its
Common Stock, (ii) each director and nominee for director, (iii) each Named
Executive Officer (as defined herein), and (iv) all directors and executive
officers as a group:
14
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
NAME AND ADDRESS OF SHARES OF COMMON STOCK SHARES BENEFI-
BENEFICIAL OWNERS(1)(2) BENEFICIALLY OWNED CIALLY OWNED(1)
- ----------------------- ---------------------------- ---------------
<S> <C> <C>
Daniel & Jodi Pepe........................ 787,500 3.8%
W. Richard Lueck.......................... 787,500 3.8%
ADRP NORM Trust (3)....................... 7,350,000 35.4%
Honest Tee Control Trust (4).............. 7,350,000 35.4%
Walter Smith.............................. 1,575,000 7.6%
All officers and directors
as a group (2 persons).................... 16,275,000 78.3%
</TABLE>
(1) Unless otherwise indicated below, the persons in the table above have
sole voting and investment power with respect to all shares shown as
beneficially owned by them, subject to community property laws where
applicable. A person is deemed to be the beneficial owner of securities
that can be acquired by such person within 60 days from the date
indicated above upon the exercise of options. Each person's percentage
of ownership is determined by assuming that any options held by such
person have been exercised. As December 31, 1999 there were 20,775,718
shares of Common Stock outstanding.
(2) Unless otherwise indicated below, the address of each person is c/o
the Company at 1615 S. Federal Highway, Suite 101, Boca Raton, Florida
33432.
(3) W. Richard Lueck is trustee.
(4) Daniel and Jodi Pepe are trustees.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
All transactions between the Company and its officers, shareholders and
each of their affiliated companies have been made on terms no less
favorable to the Company than those available from unaffiliated parties.
In the future, the Company intends to handle transactions of a similar
nature on terms no less favorable to the Company than those available from
unaffiliated parties. In addition, any forgiveness of loans must be
approved by a majority of the Company's independent directors who do not
have an interest in the transaction and who have access, at the Company's
expense, to the Company's counsel or independent counsel.
The Company leases a vehicle from a related party, under an operating
lease expiring in February 2003.
15
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ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
A. EXHIBITS:
Number Description
Exhibit 1 Underwriting Agreement(1)
Exhibit 2 Plan of Acquisition, Reorganization, Arrangement,
Liquidation, Etc. (1)
Exhibit 3 Articles of Incorporation
By-laws (as amended) (1)
Exhibit 4 Instruments Defining the Rights of Security Holders Above (1)
Exhibit 5 Voting Trust Agreement (1)
Exhibit 6 Material Contracts (1)
Exhibit 7 Letter on Accountant Change (1)
Exhibit 8 Information on Subsidiaries (1)
Exhibit 9 Power of Attorney (1)
Exhibit 10.1 Employment Agreement with Daniel Pepe (*)
Exhibit 10.2 Employment Agreement with W. Richard Lueck(*)
Exhibit 10.3 Employment Agreement with Albert O. Bahahene (*)
Exhibit 10.4 Employment Agreement with Martin Scott (*)
Exhibit 10.5 Lease Agreement with Residuary Trust U/W Leroy E. Dettman (*)
- ----------------
* Filed herewith
(1) Files as an exhibit to the Company's Registration Statement on Form
10SB12G/A (File No. 000-26315) as filed with and declared effective by the
Commission on September 2, 1999.
B. REPORTS ON FORM 8-K:
(1) On November 30, 1999 the Company filed a current report on Form 8-K
disclosing the reverse acquisition with Kennsingnton Capital Corp. and
the changing of the Companies name to Geotec Thermal Generators, Inc.
(2) On February 2, 2000 the Company filed a current report on Form 8-KA
disclosing the pro forma financial statements of the reverse
acquisition of the Company with Kennsington Capital Corp.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Geotec Thermal Generators, Inc.
DATE:April 13, 2000 By: /s/ Daniel Pepe
---------------
President and COB
In accordance with the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:
DATE:April 13, 2000 /s/ Daniel Pepe
----------------
President and COB
DATE:April 13, 2000 /s/ W. Richard Lueck
--------------------
CEO, Secretary and Treasurer
DATE:April 13, 2000 /s/ Martin P. Scott
-------------------
Chief Financial Officer, Director
Employment Agreement
AGREEMENT dated June 20, 1999 (the Effective Date") by and between
Geotec Thermal Generators Inc., a Florida corporation, (hereinafter called the
"Company"or "Employer") and Albert O. Banahene, a Colorado resident (hereinafter
call the "Employee").
WHEREAS, Employer desires to employ Employee upon the terms and
conditions hereinafter set forth and Employee desires to accept employment upon
such terms and conditions; and
WHEREAS, Employer and Employee desire to set forth in writing the terms
and conditions of their agreements and understandings with respect to the
Employee"s employment by Employer.
NOW, THEREFORE, Employer hereby employs Employee and Employee hereby
accepts employment under the following terms and conditions:
1. EMPLOYMENT
Employer hereby employees Employee and Employee hereby accepts
employment by Employer, upon all the terms and conditions hereinafter set forth.
2. TERM
Subject to the provisions for earlier termination set forth in Section
9 hereof, this Agreement shall commence on the Effective Date, July 20, 1999, or
upon obtainment of an H1 visa, whichever occurs first, and shall end three years
later unless extended by both parties. Notwithstanding any of the foregoing to
the contrary, if this Employment Agreement is terminated prior to the expiration
of the Employment Term, which shall be subject to a unanimous vote for removal
for cause by the Company"s Board of Directors. A year shall mean, with respect
to the year during which termination occurs, the period commencing on the first
day of such year and ending as of the close of business of the day of
termination of Employee"s employment, and Employment Term shall mean the period
commencing on the Effective Date and ending as of the close of business of the
day of termination of Employee"s employment.
3. EMPLOYEE"S REPRESENTATIONS AND WARRANTIES
Employee represents and warrants, to the best of his knowledge, to
Employer that he is free to accept employment with Employer as contemplated
herein and has no other written or oral obligations or commitments of any kind
or nature which would in any way interfere with his acceptance of his employment
pursuant to the terms hereof or the full performance of his obligations
hereunder or the exercise of his best efforts in his employment hereunder.
Employee represents and warrants that he is not in breach of any existing
confidentiality or covenant not to compete agreements, if any, the Employee may
have executed with other third parties prior to the Effective Date.
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4. DUTIES AND EXTENT OF SERVICES
Employee shall be employed as the Employer"s Chief Petroleum Engineer,
as such, shall, subject to the direction of the President, supervise the conduct
of all subordinates and daily operations and affairs within the Employer"s
position, consistent with the position of the Chief Petroleum Engineer and
perform such other duties and responsibilities as may be assigned to the
Employee from time to time consistent with such title by the Board of Directors
or the President of the Employer.
Employee agrees to devote sufficient time, skill, attention and energy
diligently and competently to perform the duties and responsibilities assigned
to him hereunder or pursuant hereto. Employee shall use his best efforts to be
loyal and faithful at all times and constantly endeavor to improve his ability
and his knowledge of the business of Employer in an effort to increase the value
of his services for the mutual benefit of Employee and Employer.
5. COMPENSATION
Employee shall receive an annualized salary of $60,000 during the term
of this Agreement. Increases shall be subject to the approval of the Board of
Directors.
6. FRINGE BENEFITS AND EXPENSES
A. Employee shall be eligible (subject to the terms and conditions of
the particular plans and programs) to participate in such medical,
hospitalization, group health, accident, disability and life insurance programs
and plans, such pension, profit sharing, stock option, incentive compensation
and stock purchase plans and such other employee benefit programs to the same
extent such plans and programs are made generally available from time to time by
Employer to all of its other similarly-situated employees; provide, however,
Employer shall be under no obligation to make any such plans or programs
available to its employees or continue any which currently or in the future
exist. Employee shall also be entitled to receive stock options equal to
$300,000 of common stock. Said option shall be for 600 shares at a strike price
of $500.00 per share. Said options shall be registered, as soon as the Company
is publicly traded with any and all other shares that are registered. Said
options shall be vested over three years, 200 shares per year, beginning in the
second year of full time employment. Said options will be subject only to
removal for cause, once vested. If the Employee's Visa is not renewed, this
removal shall be deemed as removal without cause. Disability will also be deemed
as removal without cause relative to the options mentioned above.
B. For the term of this Agreement, Employer shall not be provided an
automobile, however, Employer will reimburse employee for related gas,
maintenance and insurance expense, for performance of Employee"s duties to
Employer as specified herein.
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C. Other Expenses Employer shall reimburse Employee for his reasonable
out-of-pocket cost and expenses incurred in connection with the performance of
his duties and responsibilities hereunder. Reimbursement of such expenses shall
be subject to the submission by Employee of appropriate invoices, receipts and
other supporting documentation, consistent with Employer"s customary
reimbursement policies and procedures.
7. VACATIONS
Employee shall be entitled to normal two weeks vacation taken by other
similar members of management during each twelve-month period of the Employment
Term. Employee shall not be entitled to be compensated for any unused vacation
upon termination of the Agreement. The periods during which Employee will be
absent from work shall be determined by Employee taking into account the needs
of the Employer"s business and shall be subject to the approval of the Executive
Committee of the Company (which shall not be unreasonably withheld).
8. FACILITIES
Employer shall provide and maintain (or cause to be provided and
maintained) such facilities, equipment, supplies and personnel as it reasonably
determines is adequate for Employee"s performance of his duties and
responsibilities under this Agreement.
9. TERMINATION OF EMPLOYMENT
A. Termination Events. Notwithstanding any provisions of this Agreement
to the contrary, Employee"s employment may be terminated by Employer with Cause
(as hereinafter defined) effective upon the delivery of written notice to
Employee. In addition, Employee"s employment shall terminate (i) upon Employee"s
death or (ii) upon Employee becoming disabled (as hereinafter defined).
B. Definition of Disabled. For purposes of this Agreement, Employee
shall be deemed to be "Disabled" when, by reason of physical or mental illness
or of injury, he is unable to perform substantially all of the duties and
responsibilities required of him in connection with his employment hereunder. No
disability shall be deemed to exist until after Employee shall be unable to
perform his duties hereunder for ninety (90) consecutive days (the "Disability
Period"). If Employee shall have been under a disability but shall have returned
to work prior to the end of the Disability Period, any new disability commencing
within thirty (30) days of the termination of the prior disability shall be a
continuation of the prior disability, and the period of all such disabilities
shall be added together to determine whether, or how much of, the Disability
Period has elapsed.
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C. Definition of Cause. For purposes of this Agreement, "Cause" shall
include, but not be limited to: (a) conviction for fraud or criminal conduct
(other than conviction of, or a pleas of guilty to, a traffic violation); (b)
habitual drunkenness or drug addiction; (c)fraud against employer or
embezzlement; (d) sanctions against Employee in his capacity as an employee of
Employer by regulatory agencies governing Employer or against Employer because
of wrongful acts or conduct of Employee; (e) material breach or default by
Employee of any of the terms or conditions of this Agreement; or (f) the
resignation or quitting of Employee prior to the end of the Employment Term (in
this last event, Employee"s employment shall be deemed terminated with Cause on
the date that he resigns or quits).
10. NON-DISCLOSURE OF CONFIDENTIAL/PROPRIETARY INFORMATION
A. Confidential Information. Employee acknowledges that Employee has
been informed that it is the policy of Employer to maintain as secret and
confidential all information relating to (i) the financial condition, businesses
and interests of Employer and its affiliates, (ii) the systems, know-how,
products, services, costs, inventions, patents, patent applications, formulae,
research and development procedures, notes and results, computer software
programs, marketing and sales techniques and/or programs, methods,
methodologies, manuals, lists and other trade secrets heretofore and hereafter
acquired, sold developed and/or used by Employer and its affiliates and (iii)
the nature and terms of Employer"s and its affiliate"s relationships with their
respective customers, clients, suppliers, lenders, vendors, consultants,
independent contractors and employees (all such information being hereinafter
collectively referred to as "Confidential Information"), and Employee further
acknowledges that such Confidential Information is of great value to Employer
and its affiliates and, in and by reason and as a result of Employee"s
employment by Employer, Employee will be making use of, acquiring and/or adding
to such Confidential Information. Therefore, Employee understands that it is
reasonably necessary to protect Employer"s and its affiliates" trade secrets,
good will and business interests that Employee agree and, accordingly, Employee
will not directly or indirectly (except where authorized by the President of
Employer for the benefit of Employer and/or its affiliate(s) and/or as required
in the course of his employment) at any time hereafter divulge or disclose for
any purpose whatsoever to any persons, firms, corporations or other entities
other than Employer or its affiliates (hereinafter referred to collectively as
"Third Parties"), or use or cause or authorize any Third Parties to use, any
such Confidential Information, except as otherwise required by law.
2. Employer"s Materials. In accordance with the foregoing, Employee
furthermore agrees that (i) Employee will at no time retain or remove from the
premises of Employer or its affiliates any research and development materials,
drawings, notebooks, notes, reports, formulae, software programs or discs or
other containers of software, manuals, data books, records, materials or
documents of any kind or description for any purpose unconnected with the strict
performance of Employee"s duties with Employer and (ii) upon cessation or
termination of Employee"s employment with Employer for any reason, Employee
shall forthwith deliver or cause to be delivered up to Employer any and all
research and development materials,
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drawings, notebooks, notes, reports, formulae, software programs or discs or
other containers of software, manuals, data, books, records, materials and other
documents and materials in Employee"s possession or under Employee"s control
relating to any Confidential Information or any property or information which is
otherwise the property of Employer or its affiliates.
10. COVENANT-NOT-TO-COMPETE
In view of the Confidential Information to be obtained by or disclosed
to Employee, because of the know-how acquired and to be acquired by Employee,
and as a material inducement to Employer to enter into this Agreement and
continue to employ Employee, Employee covenants and agrees that, so long as
Employee is employed by Employer and for a period of five (5) years after
Employee ceases for any reason to be employed by Employer, Employee shall not,
directly or indirectly (i) divert business from, (ii) solicit or transact any
business competitive with Employer or its affiliates with, or (iii) sell any
products or services sold or offered by Employer or its affiliates to, any
customer or former customer of Employer or its affiliates. In addition, Employee
covenants and agrees that, so long as Employee is employed by Employer and for a
period of five (5) years after Employee ceases for any reason to be employed by
Employer, Employee hereby agrees to refrain from, anywhere in the world, (the
"Geographical Area"), directly or indirectly owning, managing, operating,
controlling or financing, or participating in the ownership, management, control
or financing of, or being connected with or having an interest, in, or otherwise
taking any part as a stockholder, director, officer, employee, agent,
consultant, partner or otherwise, in, any business competitive with that engaged
in or being developed by Employer or its affiliates during Employee"s term of
employment. Without limitation of the foregoing, Employer"s business is
acknowledged to include the development, manufacture, use and sale of gas
generators to produce thermo-chemical treatment of wells (oil, gas, water wells)
and related technology. Employee acknowledges that Employer"s business is
anticipated to be international in scope, that a similar business could
effectively compete with Employer"s and its affiliates businesses from any
location in the world, and that, therefore, the restricted Geographical Area is
reasonable in scope to protect Employer"s and its affiliates" trade secrets and
legitimate business interests.
11. MPLOYER"S REMEDIES FOR BREACH OF SECTIONS 10 & 11
Employee covenants and agrees that if Employee shall violate or breach
any of Employee"s covenants or agreements provided for in Section 10 and 11
hereof, Employer and/or its affiliates shall be entitled to an accounting and
repayment of all profits, compensation, commissions, remunerations, or benefits
which Employee directly or indirectly has realized or realizes as a result of,
growing out of or in connection with any such violation or breach. In addition,
in the event of a breach or violation or threatened or imminent breach or
violation of any provisions of Sections 10 or 11 hereof, Employer and/or its
affiliates shall be entitled to a temporary or permanent injunction or any other
appropriate decree of specific performance or equitable relief, without posting
of bond, from a court of competent jurisdiction in order to prevent, prohibit or
restrain any such breach or violation or threatened or imminent breach or
5
<PAGE>
violation by Employee, by Employee"s partners, agents, representatives,
servants, employers or employees and/or by any third parties. Employer shall be
entitled to such injunctive or other equitable relief in addition to any damages
which are suffered, and the prevailing party shall be entitled to reasonable
attorney"s and paralegals" fees and costs and other costs incurred in connection
with any such litigation, both before and at trial and at all tribunal levels.
Resort by Employer and/or its affiliates to such injunctive or other equitable
relief shall not be deemed to waive or to limit in any respect any other rights
or remedies which Employer or its affiliates may have with respect to such
breach or violation. Finally, if any breach of this clause occurs, the Employee
shall forfeit any and all options that have been earned but not exercised.
_______initials
12. REASONABLENESS OF RESTRICTIONS
A. Reasonableness. Employee acknowledges that any breach or violation
of Sections 10 or 11 hereof will cause irreparable injury and damage and
incalculable harm to Employer and its affiliates and that it would be very
difficult or impossible to measure the damages resulting from any such breach or
violation. Employee further acknowledges that Employee has carefully read and
considered the provisions of Sections 10, 11 and 12 hereof and, having done so,
agrees that the restrictions and remedies set forth in such Sections (including
but not limited to, the time period, geographical and types of restrictions
imposed) are fair and reasonable and are reasonably required for the protection
of the business, trade secrets, interests and good will of Employer and its
affiliates.
B. Severability. Employee understands and intends that each provision
and restriction agreed to by Employee in Sections 10, 11, and 12 hereof shall be
construed as separate and divisible from every other provision and restriction
and that, in the event that any one of the provisions of, or restrictions in,
Sections 10, 11 and/or 12 hereof shall be held to be invalid or unenforceable,
the remaining provisions thereof and restrictions therein shall nevertheless
continue to be valid and enforceable as though the invalid or unenforceable
provisions or restrictions had not been included therein, and any one or more of
such valid provisions and restrictions may be enforced in whole or in part as
the circumstances warrant. In the event that any such provision relating to time
period and/or geographical and/or type of restriction shall be declared by a
court of competent jurisdiction to exceed the maximum or permissible time
period, geographical area or type of restriction such court deems reasonable and
enforceable, said time period and/or geographical and/or type of restriction
shall be deemed to become and shall thereafter be the maximum time period and/or
geographical restriction and/or type of restriction which such court deems
reasonable and enforceable.
C. Survivability. The restrictions, acknowledgments, covenants and
agreements of Employee set forth in Sections 10, 11, 12, and 13 of this
Agreement shall survive any termination of this Agreement or of Employee"s
employment (for any reason, including expiration of the Employment Term).
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14. EMPLOYEE"S DISCLOSURES AND REPRESENTATIONS AND WARRANTIES
Employee hereby acknowledges, represents and warrants to the
best of his knowledge and belief, and agrees with, , Employer as follows:
(a) That Employee and his representatives and agents (i) have
received and read and are familiar with this Agreement, and (ii) are familiar
with the business and operations conducted and to be conducted by Employer and
the risks attendant thereto.
(b) That Employee and/or his representatives and agents have
had an opportunity to ask questions of and receive satisfactory answers from
Employer and/or a person or persons authorized to act on Employer"s behalf
concerning the terms and conditions of this Agreement, this transaction and
Employer and its currently contemplated business and operations.
(c) That Employee has been represented by such legal and
other professional advisors (if any), each of whom has been personally selected
by Employee, as Employee has found necessary to consult concerning the
transactions contemplated in or by this Agreement.
(d) That Employee has full right, power and authority to
perform all obligations under this Agreement.
Employee hereby agrees to indemnify and hold harmless Employer and its
shareholders, directors, officers, employees and agents from and against any and
all loss, damage, liability, cost or expense (including reasonable attorneys"
and paralegals" fees and costs before and at trial and at all appellate levels)
due to or arising out of any inaccuracy in, or breach of, any representation,
warranty or covenant of Employee contained in this Section 14.
15. INDEPENDENT COUNSEL
Employer and Employee agree that each of them have been, or were
advised fully understand that they are entitled to be, represented by
independent legal counsel with respect to all matters contemplated herein, from
the commencement of negotiations at all times through the execution hereof.
16. LAW APPLICABLE
This Agreement shall be governed by and construed pursuant to the laws
of the State of Florida, without giving effect to conflicts of laws principles.
Any action brought will be pursued in Broward County, Florida.
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17. NOTICES
Any notices required or permitted to be given pursuant to this
Agreement shall be sufficient, if in writing, and if personally delivered or
sent by certified or registered mail, return receipt requested, to his
residence, in the case of Employee, or to its then principle office, in the case
of Employer.
18. SUCCESSION
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective legal representatives, heirs, assignees
and/or successors in interest of any kind whatsoever; provided, however, that
Employee acknowledges and agrees that he cannot assign or delegate any of his
rights, duties, responsibilities or obligations hereunder to any other person or
entity.
19. ENTIRE AGREEMENT
This Agreement constitutes the entire final agreement between
the parties with respect to, and supercedes any and all prior agreements between
the parties hereto both oral and written concerning, the subject matter hereof
and may not be amended, modified or terminated except by a writing signed by the
parties hereto.
20. SEVERABILITY
If any provision of this Agreement shall be held to be invalid
or unenforceable, and is not reformed by a court of competent jurisdiction, such
invalidity or unenforceability shall attach only to such provision and shall not
in any way affect or render invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if such invalid or
unenforceable provision were not contained herein.
21. NO WAIVER
A waiver of any breach or violation of any term, provision or
covenant contained herein shall not be deemed a continuing waiver or a waiver of
any future or past breach or violation. No oral waiver shall be binding.
22. ATTORNEYS" FEES"
In the event that either of the parties to this Agreement institutes
suit against the other party to this Agreement to enforce any of his or its
rights hereunder, the prevailing party in such action shall be entitled to
recover from the other party all reasonable costs thereof, including reasonable
attorneys" and paralegals" fees and cost incurred before and at trial and at all
tribunal levels.
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the day and
year first above written.
Geotec Thermal Generators, Inc. By:________________________
W. Richard Lueck, CEO
Individually----------------------------------By:____________________________
Albert O. Banahene
9
Employment Agreement
AGREEMENT date January 1, 1999 (the Effective Date") by and between
Geotec Thermal Generators Inc., a Florida corporation, (hereinafter called the
"Company"or "Employer") and W. Richard Lueck, a Florida resident (hereinafter
call the "Employee").
WHEREAS, Employer desires to employ Employee upon the terms and
conditions hereinafter set forth and Employee desires to accept employment upon
such terms and conditions; and
WHEREAS, Employer and Employee desire to set forth in writing the terms
and conditions of their agreements and understandings with respect to the
Employee"s employment by Employer.
NOW, THEREFORE, Employer hereby employs Employee and Employee hereby
accepts employment under the following terms and conditions:
1. EMPLOYMENT
Employer hereby employees Employee and Employee hereby accepts
employment by Employer, upon all the terms and conditions hereinafter set forth.
2. TERM
Subject to the provisions for earlier termination set forth in Section
9 hereof, this Agreement shall commence on the Effective Date, January 1, 1999,
and shall end five years later unless extended by both parties. Notwithstanding
any of the foregoing to the contrary, if this Employment Agreement is terminated
prior to the expiration of the Employment Term, a year shall mean, with respect
to the year during which termination occurs, the period commencing on the first
day of such year and ending as of the close of business of the day of
termination of Employee"s employment, and Employment Term shall mean the period
commencing on the Effective Date and ending as of the close of business of the
day of termination of Employee"s employment.
3. EMPLOYEE"S REPRESENTATIONS AND WARRANTIES
Employee represents and warrants to Employer that he is free to accept
employment with Employer as contemplated herein and has no other written or
oral obligations or commitments of any kind or nature which would in any way
interfere with
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his acceptance of his employment pursuant to the terms hereof or the full
performance of his obligations hereunder or the exercise of his best efforts in
his employment hereunder. Employee represents and warrants that he is not in
breach of any existing confidentiality or covenant not to compete agreements, if
any, the Employee may have executed with other third parties prior to the
Effective Date.
4. DUTIES AND EXTENT OF SERVICES
Employee shall be employed as the Employer"s Chief Executive Officer,
as such, shall, subject to the direction of the President, supervise the conduct
of all subordinates and daily operations and affairs within the Employer"s
position, consistent with the position of the Chief Executive Officer and
perform such other duties and responsibilities as may be assigned to the
Employee from time to time consistent with such title by the Board of Directors
or the President of the Employer.
Employee agrees to devote sufficient time, skill, attention and energy
diligently and competently to perform the duties and responsibilities assigned
to him hereunder or pursuant hereto. Employee shall use his best efforts to be
loyal and faithful at all times and constantly endeavor to improve his ability
and his knowledge of the business of Employer in an effort to increase the value
of his services for the mutual benefit of Employee and Employer.
5. COMPENSATION
Employee shall receive an annualized salary of $135,000 during the term
of this Agreement, payable to Honest Tee Trust. This annual salary shall be
increase to $250,000 if and when the Company shall obtain monthly sales equal or
greater than $5,000,000 per year. Employee is an agent of Honest Tee Trust, an
Irish Trust Based in Antigiua.
6. FRINGE BENEFITS AND EXPENSES
A. Employee shall be eligible (subject to the terms and conditions of
the particular plans and programs) to participate in such medical,
hospitalization, group health, accident, disability and life insurance programs
and plans, such pension, profit sharing,
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stock option, incentive compensation and stock purchase plans and such other
employee benefit programs to the same extent such plans and programs are made
generally available from time to time by Employer to all of its other
similarly-situated employees; provide, however, Employer shall be under no
obligation to make any such plans or programs available to its employees or
continue any which currently or in the future exist.
B. For the term of this Agreement, Employer shall provide an
automobile, and Employer will reimburse employee for related gas, maintenance
and insurance expense, for performance of Employee"s duties to Employer as
specified herein.
C. Other Expenses Employer shall reimburse Employee for his reasonable
out-of-pocket cost and expenses incurred in connection with the performance of
his duties and responsibilities hereunder. Reimbursement of such expenses shall
be subject to the submission by Employee of appropriate invoices, receipts and
other supporting documentation, consistent with Employer"s customary
reimbursement policies and procedures.
7. VACATIONS
Employee shall be entitled to normal three weeks vacation
taken by other similar members of management during each twelve-month period of
the Employment Term. Employee shall not be
entitled to be compensated for any unused vacation upon termination of the
Agreement. The periods during which Employee will be absent from work shall be
determined by Employee taking into account the needs of the Employer"s business
and shall be subject to the approval of the Executive Committee of the Company
(which shall not be unreasonably withheld).
8. FACILITIES
Employer shall provide and maintain (or cause to be provided
and maintained) such facilities, equipment, supplies and personnel as it
reasonably determines is adequate for Employee"s performance of his duties and
responsibilities under this Agreement.
9. TERMINATION OF EMPLOYMENT
A. Termination Events. Notwithstanding any provisions of this
Agreement to the contrary, Employee"s employment may be terminated by Employer
with Cause (as hereinafter defined) effective upon the delivery of written
notice to Employee. In addition, Employee"s employment shall terminate (i) upon
Employee"s death or (ii) upon Employee becoming disabled (as hereinafter
defined).
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B. Definition of Disabled. For purposes of this Agreement,
Employee shall be deemed to be "Disabled" when, by reason of physical or mental
illness or of injury, he is unable to perform substantially all of the duties
and responsibilities required of him in connection with his employment
hereunder. No disability shall be deemed to exist until after Employee shall be
unable to perform his duties hereunder for ninety (90) consecutive days (the
"Disability Period"). If Employee shall have been under a disability but shall
have returned to work prior to the end of the Disability Period, any new
disability commencing within thirty (30) days of the termination of the prior
disability shall be a continuation of the prior disability, and the period of
all such disabilities shall be added together to determine whether, or how much
of, the Disability Period has elapsed.
C. Definition of Cause. For purposes of this Agreement,
"Cause" shall include, but not be limited to: (a) arrest or conviction for fraud
or criminal conduct (other than conviction of, or a pleas of guilty to, a
traffic violation); (b) habitual drunkenness or drug addiction; (c) fraud
against employer or embezzlement; (d) sanctions against Employee in his capacity
as an employee of Employer by regulatory agencies governing Employer or against
Employer because of wrongful acts or conduct of Employee; (e) material breach or
default by Employee of any of the terms or conditions of this Agreement; or (f)
the resignation or quitting of Employee prior to the end of the Employment Term
(in this last event, Employee"s employment shall be deemed terminated with Cause
on the date that he resigns or quits).
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
A. Confidential Information. Employee acknowledges that
Employee has been informed that it is the policy of Employer to maintain as
secret and confidential all information relating to (i) the financial condition,
businesses and interests of Employer and its affiliates, (ii) the systems,
know-how, products, services, costs, inventions, patents, patent applications,
formulae, research and development procedures, notes and results, computer
software programs, marketing and sales techniques and/or programs, methods,
methodologies, manuals, lists and other trade secrets heretofore and hereafter
acquired, sold developed and/or used by Employer and its affiliates and (iii)
the nature and terms of Employer"s and its affiliate"s relationships with their
respective customers, clients, suppliers, lenders, vendors, consultants,
independent contractors and employees (all such information being hereinafter
collectively referred to as "Confidential Information"), and Employee further
acknowledges that such Confidential Information is of great value to Employer
and its affiliates and, in and by reason and as a result of Employee"s
employment by Employer, Employee will be making use of, acquiring and/or adding
to such Confidential Information. Therefore, Employee understands that it is
reasonably
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necessary to protect Employer"s and its affiliates" trade secrets, good will and
business interests that Employee agree and, accordingly, Employee will not
directly or indirectly (except where authorized by the President of Employer for
the benefit of Employer and/or its affiliate(s) and/or as required in the course
of his employment) at any time hereafter divulge or disclose for any purpose
whatsoever to any persons, firms, corporations or other entities other than
Employer or its affiliates (hereinafter referred to collectively as "Third
Parties"), or use or cause or authorize any Third Parties to use, any such
Confidential Information, except as otherwise required by law.
2. Employer"s Materials. In accordance with the foregoing,
Employee furthermore agrees that (i) Employee will at no time retain or remove
from the premises of Employer or its affiliates any research and development
materials, drawings, notebooks, notes, reports, formulae, software programs or
discs or other containers of software, manuals, data books, records, materials
or documents of any kind or description for any purpose unconnected with the
strict performance of Employee"s duties with Employer and (ii) upon cessation or
termination of Employee"s employment with Employer for any reason, Employee
shall forthwith deliver or cause to be delivered up to Employer any and all
research and development materials, drawings, notebooks, notes, reports,
formulae, software programs or discs or other containers of software, manuals,
data, books, records, materials and other documents and materials in Employee"s
possession or under Employee"s control relating to any Confidential Information
or any property or information which is otherwise the property of Employer or
its affiliates.
11. COVENANT-NOT-TO-COMPETE
In view of the Confidential Information to be obtained by or
disclosed to Employee, because of the know-how acquired and to be acquired by
Employee, and as a material inducement to Employer to enter into this Agreement
and continue to employ Employee, Employee covenants and agrees that, so long as
Employee is employed by Employer and for a period of two (2) years after
Employee ceases for any reason to be employed by Employer, Employee shall not,
directly or indirectly (i) divert business from, (ii) solicit or transact any
business competitive with Employer or its affiliates with, or (iii) sell any
products or services sold or offered by Employer or its affiliates to, any
customer or former customer of Employer or its affiliates. In addition, Employee
covenants and agrees that, so long as Employee is employed by Employer and for a
period of two (2) years after Employee ceases for any reason to be employed by
Employer, Employee hereby agrees to refrain from, anywhere in the world, (the
"Geographical Area"), directly or indirectly owning, managing, operating,
controlling or financing, or participating in the ownership, management, control
or financing of, or being connected with or having an interest, in, or otherwise
taking any part as a stockholder, director, officer, employee,
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agent, consultant, partner or otherwise, in, any business competitive with that
engaged in or being developed by Employer or its affiliates during Employee"s
term of employment. Without limitation of the foregoing, Employer"s business is
acknowledged to include the development, manufacture and sale of rotary engines
and related technology. Employee acknowledges that Employer"s business is
anticipated to be international in scope, that a similar business could
effectively compete with Employer"s and its affiliates businesses from any
location in the world, and that, therefore, the restricted Geographical Area is
reasonable in scope to protect Employer"s and its affiliates" trade secrets and
legitimate business interests.
12. EMPLOYER"S REMEDIES FOR BREACH OF SECTIONS 10 & 11
Employee covenants and agrees that if Employee shall violate
or breach any of Employee"s covenants or agreements provided for in Section 10
and 11 hereof, Employer and/or its affiliates shall be entitled to an accounting
and repayment of all profits, compensation, commissions, remunerations, or
benefits which Employee directly or indirectly has realized or realizes as a
result of, growing out of or in connection with any such violation or breach. In
addition, in the event of a breach or violation or threatened or imminent breach
or violation of any provisions of Sections 10 or 11 hereof, Employer and/or its
affiliates shall be entitled to a temporary or permanent injunction or any other
appropriate decree of specific performance or equitable relief, without posting
of bond, from a court of competent jurisdiction in order to prevent, prohibit or
restrain any such breach or violation or threatened or imminent breach or
violation by Employee, by Employee"s partners, agents, representatives,
servants, employers or employees and/or by any third parties. Employer shall be
entitled to such injunctive or other equitable relief in addition to any damages
which are suffered, and the prevailing party shall be entitled to reasonable
attorney"s and paralegals" fees and costs and other costs incurred in connection
with any such litigation, both before and at trial and at all tribunal levels.
Resort by Employer and/or its affiliates to such injunctive or other equitable
relief shall not be deemed to waive or to limit in any respect any other rights
or remedies which Employer or its affiliates may have with respect to such
breach or violation.
_______initials
13. REASONABLENESS OF RESTRICTIONS
A. Reasonableness. Employee acknowledges that any breach or
violation of Sections 10 or 11 hereof will cause irreparable injury and damage
and incalculable harm to Employer and its affiliates and that it would be very
difficult or impossible to measure the damages resulting from any such breach or
violation. Employee further acknowledges that Employee has carefully read and
considered the provisions of Sections 10, 11 and 12
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hereof and, having done so, agrees that the restrictions and remedies set forth
in such Sections (including but not limited to, the time period, geographical
and types of restrictions imposed) are fair and reasonable and are reasonably
required for the protection of the business, trade secrets, interests and good
will of Employer and its affiliates.
B. Severability. Employee understands and intends that each
provision and restriction agreed to by Employee in Sections 10, 11, and 12
hereof shall be construed as separate and divisible from every other provision
and restriction and that , in the event that any one of the provisions of, or
restrictions in, Sections 10, 11 and/or 12 hereof shall be held to be invalid or
unenforceable, the remaining provisions thereof and restrictions therein shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable provisions or restrictions had not been included therein, and any
one or more of such valid provisions and restrictions may be enforced in whole
or in part as the circumstances warrant. In the event that any such provision
relating to time period and/or geographical and/or type of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum or
permissible time period, geographical area or type of restriction such court
deems reasonable and enforceable, said time period and/or geographical and/or
type of restriction shall be deemed to become and shall thereafter be the
maximum time period and/or geographical restriction and/or type of restriction
which such court deems reasonable and enforceable.
C. Survivability. The restrictions, acknowledgments,
covenants and agreements of Employee set forth in Sections 10, 11, 12, and 13 of
this Agreement shall survive any termination of this Agreement or of Employee"s
employment (for any reason, including expiration of the Employment Term).
14. EMPLOYEE"S DISCLOSURES AND REPRESENTATIONS AND WARRANTIES
Employee hereby acknowledges, represents and warrants to,
agrees with, Employer as follows:
(a) That Employee and his representatives and agents (i)
have received and read and are familiar with this Agreement, and (ii) are
familiar with the business and operations conducted and to be conducted by
Employer and the risks attendant thereto.
(b) That Employee and/or his representatives and agents
have had an opportunity to ask questions of and receive satisfactory answers
from Employer and/or a person or persons authorized to act on Employer"s behalf
concerning the terms and
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conditions of this Agreement, this transaction and Employer and its currently
contemplated business and operations.
(c) That Employee has been represented by such legal and
other professional advisors (if any), each of whom has been personally selected
by Employee, as Employee has found necessary to consult concerning the
transactions contemplated in or by this Agreement.
(d) That Employee has full right, power and authority to
perform all obligations under this Agreement.
Employee hereby agrees to indemnify and hold harmless Employer and its
shareholders, directors, officers, employees and agents from and against any and
all loss, damage, liability, cost or expense (including reasonable attorneys"
and paralegals" fees and costs before and at trial and at all appellate levels)
due to or arising out of any inaccuracy in, or breach of, any representation,
warranty or covenant of Employee contained in this Section 14.
15. INDEPENDENT COUNSEL
Employer and Employee agree that each of them have been, or were
advised fully understand that they are entitled to be, represented by
independent legal counsel with respect to all matters contemplated herein, from
the commencement of negotiations at all times through the execution hereof.
16. LAW APPLICABLE
This Agreement shall be governed by and construed pursuant to
the laws of the State of Florida, without giving effect to conflicts of laws
principles. Any action brought will be pursued in Broward County, Florida.
17. NOTICES
Any notices required or permitted to be given pursuant to this
Agreement shall be sufficient, if in writing, and if personally delivered or
sent by certified or registered mail, return receipt requested, to his
residence, in the case of Employee, or to its then principle office, in the case
of Employer.
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18. SUCCESSION
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective legal representatives, heirs,
assignees and/or successors in interest of any kind whatsoever; provided,
however, that Employee acknowledges and agrees that he cannot assign or delegate
any of his rights, duties, responsibilities or obligations hereunder to any
other person or entity.
19. ENTIRE AGREEMENT
This Agreement constitutes the entire final agreement between
the parties with respect to, and supercedes any and all prior agreements between
the parties hereto both oral and written concerning, the subject matter hereof
and may not be amended, modified or terminated except by a writing signed by the
parties hereto.
20. SEVERABILITY
If any provision of this Agreement shall be held to be invalid
or unenforceable, and is not reformed by a court of competent jurisdiction, such
invalidity or unenforceability shall attach only to such provision and shall not
in any way affect or render invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if such invalid or
unenforceable provision were not contained herein.
21. NO WAIVER
A waiver of any breach or violation of any term, provision or
covenant contained herein shall not be deemed a continuing waiver or a waiver of
any future or past breach or violation. No oral waiver shall be binding.
22. ATTORNEYS" FEES"
In the event that either of the parties to this Agreement institutes
suit against the other party to this Agreement to enforce any of his or its
rights hereunder, the prevailing party in such action shall be entitled to
recover from the other party all reasonable costs thereof, including reasonable
attorneys" and paralegals" fees and cost incurred before and at trial and at all
tribunal levels.
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the day and
year first above written.
Geotec Thermal Generators, Inc. By:________________________
Dan Pepe, President
Individually----------------------------------By:____________________________
W. Richard Lueck
10
Employment Agreement
AGREEMENT date January 1, 1999 (the Effective Date") by and between
Geotec Thermal Generators Inc., a Florida corporation, (hereinafter called the
"Company"or "Employer") and Dan Pepe, a Florida resident (hereinafter call the
"Employee").
WHEREAS, Employer desires to employ Employee upon the terms and
conditions hereinafter set forth and Employee desires to accept employment upon
such terms and conditions; and
WHEREAS, Employer and Employee desire to set forth in writing the terms
and conditions of their agreements and understandings with respect to the
Employee"s employment by Employer.
NOW, THEREFORE, Employer hereby employs Employee and Employee hereby
accepts employment under the following terms and conditions:
1. EMPLOYMENT
Employer hereby employees Employee and Employee hereby accepts
employment by Employer, upon all the terms and conditions hereinafter set forth.
2. TERM
Subject to the provisions for earlier termination set forth in Section
9 hereof, this Agreement shall commence on the Effective Date, January 1, 1999,
and shall end five years later unless extended by both parties. Notwithstanding
any of the foregoing to the contrary, if this Employment Agreement is terminated
prior to the expiration of the Employment Term, a year shall mean, with respect
to the year during which termination occurs, the period commencing on the first
day of such year and ending as of the close of business of the day of
termination of Employee"s employment, and Employment Term shall mean the period
commencing on the Effective Date and ending as of the close of business of the
day of termination of Employee"s employment.
3. EMPLOYEE"S REPRESENTATIONS AND WARRANTIES
Employee represents and warrants to Employer that he is free to accept
employment with Employer as contemplated herein and has no other written or
oral obligations or commitments of any kind or nature which would in any way
interfere with
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his acceptance of his employment pursuant to the terms hereof or the full
performance of his obligations hereunder or the exercise of his best efforts in
his employment hereunder. Employee represents and warrants that he is not in
breach of any existing confidentiality or covenant not to compete agreements, if
any, the Employee may have executed with other third parties prior to the
Effective Date.
4. DUTIES AND EXTENT OF SERVICES
Employee shall be employed as the Employer"s President, as such, shall,
subject to the direction of the Company"s Board of Directors, supervise the
conduct of all subordinates and daily operations and affairs within the
Employer"s position, consistent with the position of the President and perform
such other duties and responsibilities as may be assigned to the Employee from
time to time consistent with such title by the Board of Directors.
Employee agrees to devote sufficient time, skill, attention and energy
diligently and competently to perform the duties and responsibilities assigned
to him hereunder or pursuant hereto. Employee shall use his best efforts to be
loyal and faithful at all times and constantly endeavor to improve his ability
and his knowledge of the business of Employer in an effort to increase the value
of his services for the mutual benefit of Employee and Employer.
5. COMPENSATION
Employee shall receive an annualized salary of $135,000 during the term
of this Agreement. This annual salary shall be increase to $250,000 if and when
the Company shall obtain monthly sales equal or greater than $5,000,000 per
year.
6. FRINGE BENEFITS AND EXPENSES
A. Employee shall be eligible (subject to the terms and conditions of
the particular plans and programs) to participate in such medical,
hospitalization, group health, accident, disability and life insurance programs
and plans, such pension, profit sharing,
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stock option, incentive compensation and stock purchase plans and such other
employee benefit programs to the same extent such plans and programs are made
generally available from time to time by Employer to all of its other
similarly-situated employees; provide, however, Employer shall be under no
obligation to make any such plans or programs available to its employees or
continue any which currently or in the future exist.
B. For the term of this Agreement, Employer shall provide an
automobile, and Employer will reimburse employee for related gas, maintenance
and insurance expense, for performance of Employee"s duties to Employer as
specified herein.
C. Other Expenses Employer shall reimburse Employee for his reasonable
out-of-pocket cost and expenses incurred in connection with the performance of
his duties and responsibilities hereunder. Reimbursement of such expenses shall
be subject to the submission by Employee of appropriate invoices, receipts and
other supporting documentation, consistent with Employer"s customary
reimbursement policies and procedures.
7. VACATIONS
Employee shall be entitled to normal three weeks vacation
taken by other similar members of management during each twelve-month period of
the Employment Term. Employee shall not be entitled to be compensated for any
unused vacation upon termination of the Agreement. The periods during which
Employee will be absent from work shall be determined by Employee taking into
account the needs of the Employer"s business and shall be subject to the
approval of the Executive Committee of the Company (which shall not be
unreasonably withheld).
8. FACILITIES
Employer shall provide and maintain (or cause to be provided
and maintained) such facilities, equipment, supplies and personnel as it
reasonably determines is adequate for Employee"s performance of his duties and
responsibilities under this Agreement.
9. TERMINATION OF EMPLOYMENT
A. Termination Events. Notwithstanding any provisions of this
Agreement to the contrary, Employee"s employment may be terminated by Employer
with Cause (as hereinafter defined) effective upon the delivery of written
notice to Employee. In addition, Employee"s employment shall terminate (i) upon
Employee"s death or (ii) upon Employee becoming disabled (as hereinafter
defined).
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B. Definition of Disabled. For purposes of this Agreement,
Employee shall be deemed to be "Disabled" when, by reason of physical or mental
illness or of injury, he is unable to perform substantially all of the duties
and responsibilities required of him in connection with his employment
hereunder. No disability shall be deemed to exist until after Employee shall be
unable to perform his duties hereunder for ninety (90) consecutive days (the
"Disability Period"). If Employee shall have been under a disability but shall
have returned to work prior to the end of the Disability Period, any new
disability commencing within thirty (30) days of the termination of the prior
disability shall be a continuation of the prior disability, and the period of
all such disabilities shall be added together to determine whether, or how much
of, the Disability Period has elapsed.
C. Definition of Cause. For purposes of this Agreement,
"Cause" shall include, but not be limited to: (a) arrest or conviction for fraud
or criminal conduct (other than conviction of, or a pleas of guilty to, a
traffic violation); (b) habitual drunkenness or drug addiction; (c) fraud
against employer or embezzlement; (d) sanctions against Employee in his capacity
as an employee of Employer by regulatory agencies governing Employer or against
Employer because of wrongful acts or conduct of Employee; (e) material breach or
default by Employee of any of the terms or conditions of this Agreement; or (f)
the resignation or quitting of Employee prior to the end of the Employment Term
(in this last event, Employee"s employment shall be deemed terminated with Cause
on the date that he resigns or quits).
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
A. Confidential Information. Employee acknowledges that
Employee has been informed that it is the policy of Employer to maintain as
secret and confidential all information relating to (i) the financial condition,
businesses and interests of Employer and its affiliates, (ii) the systems,
know-how, products, services, costs, inventions, patents, patent applications,
formulae, research and development procedures, notes and results, computer
software programs, marketing and sales techniques and/or programs, methods,
methodologies, manuals, lists and other trade secrets heretofore and hereafter
acquired, sold developed and/or used by Employer and its affiliates and (iii)
the nature and terms of Employer"s and its affiliate"s relationships with their
respective customers, clients, suppliers, lenders, vendors, consultants,
independent contractors and employees (all such information being hereinafter
collectively referred to as "Confidential Information"), and Employee further
acknowledges that such Confidential Information is of great value to Employer
and its affiliates and, in and by reason and as a result of Employee"s
employment by Employer, Employee will be making use of, acquiring and/or adding
to such Confidential Information. Therefore, Employee understands that it is
reasonably
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<PAGE>
necessary to protect Employer"s and its affiliates" trade secrets, good will and
business interests that Employee agree and, accordingly, Employee will not
directly or indirectly (except where authorized by the President of Employer for
the benefit of Employer and/or its affiliate(s) and/or as required in the course
of his employment) at any time hereafter divulge or disclose for any purpose
whatsoever to any persons, firms, corporations or other entities other than
Employer or its affiliates (hereinafter referred to collectively as "Third
Parties"), or use or cause or authorize any Third Parties to use, any such
Confidential Information, except as otherwise required by law.
2. Employer"s Materials. In accordance with the foregoing,
Employee furthermore agrees that (i) Employee will at no time retain or remove
from the premises of Employer or its affiliates any research and development
materials, drawings, notebooks, notes, reports, formulae, software programs or
discs or other containers of software, manuals, data books, records, materials
or documents of any kind or description for any purpose unconnected with the
strict performance of Employee"s duties with Employer and (ii) upon cessation or
termination of Employee"s employment with Employer for any reason, Employee
shall forthwith deliver or cause to be delivered up to Employer any and all
research and development materials, drawings, notebooks, notes, reports,
formulae, software programs or discs or other containers of software, manuals,
data, books, records, materials and other documents and materials in Employee"s
possession or under Employee"s control relating to any Confidential Information
or any property or information which is otherwise the property of Employer or
its affiliates.
11. COVENANT-NOT-TO-COMPETE
In view of the Confidential Information to be obtained by or
disclosed to Employee, because of the know-how acquired and to be acquired by
Employee, and as a material inducement to Employer to enter into this Agreement
and continue to employ Employee, Employee covenants and agrees that, so long as
Employee is employed by Employer and for a period of two (2) years after
Employee ceases for any reason to be employed by Employer, Employee shall not,
directly or indirectly (i) divert business from, (ii) solicit or transact any
business competitive with Employer or its affiliates with, or (iii) sell any
products or services sold or offered by Employer or its affiliates to, any
customer or former customer of Employer or its affiliates. In addition, Employee
covenants and agrees that, so long as Employee is employed by Employer and for a
period of two (2) years after Employee ceases for any reason to be employed by
Employer, Employee hereby agrees to refrain from, anywhere in the world, (the
"Geographical Area"), directly or indirectly owning, managing, operating,
controlling or financing, or participating in the ownership, management, control
or financing of, or being connected with or having an interest, in, or otherwise
taking any part as a stockholder, director, officer, employee,
5
<PAGE>
consultant, partner or otherwise, in, any business competitive with that engaged
in or being developed by Employer or its affiliates during Employee"s term of
employment. Without limitation of the foregoing, Employer"s business is
acknowledged to include the development, manufacture and sale of gas generators
for oil and gas secondary recovery and related technology. Employee acknowledges
that Employer"s business is anticipated to be international in scope, that a
similar business could effectively compete with Employer"s and its affiliates
businesses from any location in the world, and that, therefore, the restricted
Geographical Area is reasonable in scope to protect Employer"s and its
affiliates" trade secrets and legitimate business interests.
12. EMPLOYER"S REMEDIES FOR BREACH OF SECTIONS 10 & 11
Employee covenants and agrees that if Employee shall violate
or breach any of Employee"s covenants or agreements provided for in Section 10
and 11 hereof, Employer and/or its affiliates shall be entitled to an accounting
and repayment of all profits, compensation, commissions, remunerations, or
benefits which Employee directly or indirectly has realized or realizes as a
result of, growing out of or in connection with any such violation or breach. In
addition, in the event of a breach or violation or threatened or imminent breach
or violation of any provisions of Sections 10 or 11 hereof, Employer and/or its
affiliates shall be entitled to a temporary or permanent injunction or any other
appropriate decree of specific performance or equitable relief, without posting
of bond, from a court of competent jurisdiction in order to prevent, prohibit or
restrain any such breach or violation or threatened or imminent breach or
violation by Employee, by Employee"s partners, agents, representatives,
servants, employers or employees and/or by any third parties. Employer shall be
entitled to such injunctive or other equitable relief in addition to any damages
which are suffered, and the prevailing party shall be entitled to reasonable
attorney"s and paralegals" fees and costs and other costs incurred in connection
with any such litigation, both before and at trial and at all tribunal levels.
Resort by Employer and/or its affiliates to such injunctive or other equitable
relief shall not be deemed to waive or to limit in any respect any other rights
or remedies which Employer or its affiliates may have with respect to such
breach or violation.
_______initials
13. REASONABLENESS OF RESTRICTIONS
A. Reasonableness. Employee acknowledges that any breach or
violation of Sections 10 or 11 hereof will cause irreparable injury and damage
and incalculable harm to Employer and its affiliates and that it would be very
difficult or impossible to measure the damages resulting from any such breach or
violation. Employee further acknowledges that Employee has carefully read and
considered the provisions of Sections 10, 11 and 12
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hereof and, having done so, agrees that the restrictions and remedies set forth
in such Sections (including but not limited to, the time period, geographical
and types of restrictions imposed) are fair and reasonable and are reasonably
required for the protection of the business, trade secrets, interests and good
will of Employer and its affiliates.
B. Severability. Employee understands and intends that each
provision and restriction agreed to by Employee in Sections 10, 11, and 12
hereof shall be construed as separate and divisible from every other provision
and restriction and that , in the event that any one of the provisions of, or
restrictions in, Sections 10, 11 and/or 12 hereof shall be held to be invalid or
unenforceable, the remaining provisions thereof and restrictions therein shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable provisions or restrictions had not been included therein, and any
one or more of such valid provisions and restrictions may be enforced in whole
or in part as the circumstances warrant. In the event that any such provision
relating to time period and/or geographical and/or type of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum or
permissible time period, geographical area or type of restriction such court
deems reasonable and enforceable, said time period and/or geographical and/or
type of restriction shall be deemed to become and shall thereafter be the
maximum time period and/or geographical restriction and/or type of restriction
which such court deems reasonable and enforceable.
C. Survivability. The restrictions, acknowledgments, covenants
and agreements of Employee set forth in Sections 10, 11, 12, and 13 of this
Agreement shall survive any termination of this Agreement or of Employee"s
employment (for any reason, including expiration of the Employment Term).
14. EMPLOYEE"S DISCLOSURES AND REPRESENTATIONS AND WARRANTIES
Employee hereby acknowledges, represents and warrants to,
agrees with, Employer as follows:
(a) That Employee and his representatives and agents (i)
have received and read and are familiar with this Agreement, and (ii) are
familiar with the business and operations conducted and to be conducted by
Employer and the risks attendant thereto.
(b) That Employee and/or his representatives and agents
have had an opportunity to ask questions of and receive satisfactory answers
from Employer and/or a person or persons authorized to act on Employer"s behalf
concerning the terms and
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conditions of this Agreement, this transaction and Employer and its currently
contemplated business and operations.
(c) That Employee has been represented by such legal and
other professional advisors (if any), each of whom has been personally selected
by Employee, as Employee has found necessary to consult concerning the
transactions contemplated in or by this Agreement.
(d) That Employee has full right, power and authority to
perform all obligations under this Agreement.
Employee hereby agrees to indemnify and hold harmless Employer and its
shareholders, directors, officers, employees and agents from and against any and
all loss, damage, liability, cost or expense (including reasonable attorneys"
and paralegals" fees and costs before and at trial and at all appellate levels)
due to or arising out of any inaccuracy in, or breach of, any representation,
warranty or covenant of Employee contained in this Section 14.
15. INDEPENDENT COUNSEL
Employer and Employee agree that each of them have been, or were
advised fully understand that they are entitled to be, represented by
independent legal counsel with respect to all matters contemplated herein, from
the commencement of negotiations at all times through the execution hereof.
16. LAW APPLICABLE
This Agreement shall be governed by and construed pursuant to
the laws of the State of Florida, without giving effect to conflicts of laws
principles. Any action brought will be pursued in Broward County, Florida.
17. NOTICES
Any notices required or permitted to be given pursuant to this
Agreement shall be sufficient, if in writing, and if personally delivered or
sent by certified or registered mail, return receipt requested, to his
residence, in the case of Employee, or to its then principle office, in the case
of Employer.
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18. SUCCESSION
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective legal representatives, heirs,
assignees and/or successors in interest of any kind whatsoever; provided,
however, that Employee acknowledges and agrees that he cannot assign or delegate
any of his rights, duties, responsibilities or obligations hereunder to any
other person or entity.
19. ENTIRE AGREEMENT
This Agreement constitutes the entire final agreement between
the parties with respect to, and supercedes any and all prior agreements between
the parties hereto both oral and written concerning, the subject matter hereof
and may not be amended, modified or terminated except by a writing signed by the
parties hereto.
20. SEVERABILITY
If any provision of this Agreement shall be held to be invalid
or unenforceable, and is not reformed by a court of competent jurisdiction, such
invalidity or unenforceability shall attach only to such provision and shall not
in any way affect or render invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if such invalid or
unenforceable provision were not contained herein.
21. NO WAIVER
A waiver of any breach or violation of any term, provision or
covenant contained herein shall not be deemed a continuing waiver or a waiver of
any future or past breach or violation. No oral waiver shall be binding.
22. ATTORNEYS" FEES"
In the event that either of the parties to this Agreement institutes
suit against the other party to this Agreement to enforce any of his or its
rights hereunder, the prevailing party in such action shall be entitled to
recover from the other party all reasonable costs thereof, including reasonable
attorneys" and paralegals" fees and cost incurred before and at trial and at all
tribunal levels.
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the day and
year first above written.
Geotec Thermal Generators, Inc. By:________________________
W. Richard Lueck, CEO
Individually----------------------------------By:____________________________
Dan Pepe
10
Employment Agreement
AGREEMENT dated December 9, 1999 (the Effective Date, is Feb. 1, 2000")
by and between Geotec Thermal Generators Inc., a Florida corporation,
(hereinafter called the "Company"or "Employer") and Martin Scott, a Florida
resident (hereinafter call the "Employee").
WHEREAS, Employer desires to employ Employee upon the terms and
conditions hereinafter set forth and Employee desires to accept employment upon
such terms and conditions; and
WHEREAS, Employer and Employee desire to set forth in writing the terms
and conditions of their agreements and understandings with respect to the
Employee"s employment by Employer.
NOW, THEREFORE, Employer hereby employs Employee and Employee hereby
accepts employment under the following terms and conditions:
1. EMPLOYMENT
Employer hereby employees Employee and Employee hereby accepts
employment by Employer, upon all the terms and conditions hereinafter set forth.
2. TERM
Subject to the provisions for earlier termination set forth in Section
9 hereof, this Agreement shall commence on the Effective Date, Feburary 1, 2000,
and shall end three years later unless extended by both parties. Notwithstanding
any of the foregoing to the contrary, if this Employment Agreement is terminated
prior to the expiration of the Employment Term, which shall be subject to a
unanimous vote for removal for cause by the Company"s Board of Directors. A year
shall mean, with respect to the year during which termination occurs, the period
commencing on the first day of such year and ending as of the close of business
of the day of termination of Employee"s employment, and Employment Term shall
mean the period commencing on the Effective Date and ending as of the close of
business of the day of termination of Employee"s employment.
3. EMPLOYEE"S REPRESENTATIONS AND WARRANTIES
Employee represents and warrants, to the best of his knowledge, to
Employer that he is free to accept employment with Employer as contemplated
herein and has no other written or oral obligations or commitments of any kind
or nature which would in any way interfere with his acceptance of his employment
pursuant to the terms hereof or the full performance of his obligations
hereunder or the exercise of his best efforts in his employment hereunder.
Employee represents and warrants that he is not in breach of any existing
confidentiality or covenant not to compete agreements, if any, the Employee may
have executed with other third parties prior to the Effective Date.
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4. DUTIES AND EXTENT OF SERVICES
Employee shall be employed as the Employer"s Chief Financial Officer,
as such, shall, subject to the direction of the Chief Executive Officer,
supervise the conduct of all subordinates and daily operations and affairs
within the Employer"s position, consistent with the position of the Chief
Financial Officer and perform such other duties and responsibilities as may be
assigned to the Employee from time to time consistent with such title by the
Board of Directors or the Chief Executive Officer of the Employer.
Employee agrees to devote sufficient time, skill, attention and energy
diligently and competently to perform the duties and responsibilities assigned
to him hereunder or pursuant hereto. Employee shall use his best efforts to be
loyal and faithful at all times and constantly endeavor to improve his ability
and his knowledge of the business of Employer in an effort to increase the value
of his services for the mutual benefit of Employee and Employer.
5. COMPENSATION
Employee shall receive an annualized salary of $75,000 during the term
of this Agreement. Increases shall be subject to the approval of the Board of
Directors.
6. FRINGE BENEFITS AND EXPENSES
A. Employee shall be eligible (subject to the terms and conditions of
the particular plans and programs) to participate in such medical,
hospitalization, group health, accident, disability and life insurance programs
and plans, such pension, profit sharing, stock option, incentive compensation
and stock purchase plans and such other employee benefit programs to the same
extent such plans and programs are made generally available from time to time by
Employer to all of its other similarly-situated employees; provide, however,
Employer shall be under no obligation to make any such plans or programs
available to its employees or continue any which currently or in the future
exist. Employee shall also be entitled to receive stock options of 110,000
option of common stock. Said option shall be for 110,000 shares at a strike
price of $3.25 per share. Said options shall be registered, as soon as the
Company is publicly traded with any and all other shares that are registered.
Said options shall be vested over three years, on third of the option shares per
year, beginning in the first day of the second year of full time employment.
Said options will be subject only to removal for cause, once vested. If the
Employee's Visa is not renewed, this removal shall be deemed as removal without
cause. Disability will also be deemed as removal without cause relative to the
options mentioned above.
B. For the term of this Agreement, Employer shall not be provided an
automobile, however, Employer will reimburse employee for related gas,
maintenance and insurance expense, for performance of Employee"s duties to
Employer as specified herein.
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C. Other Expenses Employer shall reimburse Employee for his reasonable
out-of-pocket cost and expenses incurred in connection with the performance of
his duties and responsibilities hereunder. Reimbursement of such expenses shall
be subject to the submission by Employee of appropriate invoices, receipts and
other supporting documentation, consistent with Employer"s customary
reimbursement policies and procedures.
7. VACATIONS
Employee shall be entitled to normal two weeks vacation taken by
other similar members of management during each twelve-month period of the
Employment Term. Employee shall not be entitled to be compensated for any unused
vacation upon termination of the Agreement. The periods during which Employee
will be absent from work shall be determined by Employee taking into account the
needs of the Employer"s business and shall be subject to the approval of the
Executive Committee of the Company (which shall not be unreasonably withheld).
8. FACILITIES
Employer shall provide and maintain (or cause to be provided
and maintained) such facilities, equipment, supplies and personnel as it
reasonably determines is adequate for Employee"s performance of his duties and
responsibilities under this Agreement.
9. TERMINATION OF EMPLOYMENT
A. Termination Events. Notwithstanding any provisions of this
Agreement to the contrary, Employee"s employment may be terminated by Employer
with Cause (as hereinafter defined) effective upon the delivery of written
notice to Employee. In addition, Employee"s employment shall terminate (i) upon
Employee"s death or (ii) upon Employee becoming disabled (as hereinafter
defined).
B. Definition of Disabled. For purposes of this Agreement,
Employee shall be deemed to be "Disabled" when, by reason of physical or mental
illness or of injury, he is unable to perform substantially all of the duties
and responsibilities required of him in connection with his employment
hereunder. No disability shall be deemed to exist until after Employee shall be
unable to perform his duties hereunder for ninety (90) consecutive days (the
"Disability Period"). If Employee shall have been under a disability but shall
have returned to work prior to the end of the Disability Period, any new
disability commencing within thirty (30) days of the termination of the prior
disability shall be a continuation of the prior disability, and the period of
all such disabilities shall be added together to determine whether, or how much
of, the Disability Period has elapsed.
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C. Definition of Cause. For purposes of this Agreement,
"Cause" shall include, but not be limited to: (a) conviction for fraud or
criminal conduct (other than conviction of, or a pleas of guilty to, a traffic
violation); (b) habitual drunkenness or drug addiction; (c)fraud against
employer or embezzlement; (d) sanctions against Employee in his capacity as an
employee of Employer by regulatory agencies governing Employer or against
Employer because of wrongful acts or conduct of Employee; (e) material breach or
default by Employee of any of the terms or conditions of this Agreement; or (f)
the resignation or quitting of Employee prior to the end of the Employment Term
(in this last event, Employee"s employment shall be deemed terminated with Cause
on the date that he resigns or quits).
10. NON-DISCLOSURE OF CONFIDENTIAL/PROPRIETARY INFORMATION
A. Confidential Information. Employee acknowledges that Employee
has been informed that it is the policy of Employer to maintain as secret and
confidential all information relating to (i) the financial condition, businesses
and interests of Employer and its affiliates, (ii) the systems, know-how,
products, services, costs, inventions, patents, patent applications, formulae,
research and development procedures, notes and results, computer software
programs, marketing and sales techniques and/or programs, methods,
methodologies, manuals, lists and other trade secrets heretofore and hereafter
acquired, sold developed and/or used by Employer and its affiliates and (iii)
the nature and terms of Employer"s and its affiliate"s relationships with their
respective customers, clients, suppliers, lenders, vendors, consultants,
independent contractors and employees (all such information being hereinafter
collectively referred to as "Confidential Information"), and Employee further
acknowledges that such Confidential Information is of great value to Employer
and its affiliates and, in and by reason and as a result of Employee"s
employment by Employer, Employee will be making use of, acquiring and/or adding
to such Confidential Information. Therefore, Employee understands that it is
reasonably necessary to protect Employer"s and its affiliates" trade secrets,
good will and business interests that Employee agree and, accordingly, Employee
will not directly or indirectly (except where authorized by the Chief Executive
Officer of Employer for the benefit of Employer and/or its affiliate(s) and/or
as required in the course of his employment) at any time hereafter divulge or
disclose for any purpose whatsoever to any persons, firms, corporations or other
entities other than Employer or its affiliates (hereinafter referred to
collectively as "Third Parties"), or use or cause or authorize any Third Parties
to use, any such Confidential Information, except as otherwise required by law.
2. Employer"s Materials. In accordance with the foregoing,
Employee furthermore agrees that (i) Employee will at no time retain or remove
from the premises of Employer or its affiliates any research and development
materials, drawings, notebooks, notes, reports, formulae, software programs or
discs or other containers of software, manuals, data books, records, materials
or documents of any kind or description for any purpose unconnected with the
strict performance of Employee"s duties with Employer and (ii) upon cessation or
termination of Employee"s employment with Employer for any reason, Employee
shall forthwith deliver or cause to be delivered up to Employer any and all
research and development materials,
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drawings, notebooks, notes, reports, formulae, software programs or discs or
other containers of software, manuals, data, books, records, materials and other
documents and materials in Employee"s possession or under Employee"s control
relating to any Confidential Information or any property or information which is
otherwise the property of Employer or its affiliates.
10. COVENANT-NOT-TO-COMPETE
In view of the Confidential Information to be obtained by or
disclosed to Employee, because of the know-how acquired and to be acquired by
Employee, and as a material inducement to Employer to enter into this Agreement
and continue to employ Employee, Employee covenants and agrees that, so long as
Employee is employed by Employer and for a period of five (5) years after
Employee ceases for any reason to be employed by Employer, Employee shall not,
directly or indirectly (i) divert business from, (ii) solicit or transact any
business competitive with Employer or its affiliates with, or (iii) sell any
products or services sold or offered by Employer or its affiliates to, any
customer or former customer of Employer or its affiliates. In addition, Employee
covenants and agrees that, so long as Employee is employed by Employer and for a
period of five (5) years after Employee ceases for any reason to be employed by
Employer, Employee hereby agrees to refrain from, anywhere in the world, (the
"Geographical Area"), directly or indirectly owning, managing, operating,
controlling or financing, or participating in the ownership, management, control
or financing of, or being connected with or having an interest, in, or otherwise
taking any part as a stockholder, director, officer, employee, agent,
consultant, partner or otherwise, in, any business competitive with that engaged
in or being developed by Employer or its affiliates during Employee"s term of
employment. Without limitation of the foregoing, Employer"s business is
acknowledged to include the development, manufacture, use and sale of gas
generators to produce thermo-chemical treatment of wells (oil, gas, water wells)
and related technology. Employee acknowledges that Employer"s business is
anticipated to be international in scope, that a similar business could
effectively compete with Employer"s and its affiliates businesses from any
location in the world, and that, therefore, the restricted Geographical Area is
reasonable in scope to protect Employer"s and its affiliates" trade secrets and
legitimate business interests.
11. EMPLOYER"S REMEDIES FOR BREACH OF SECTIONS 10 & 11
Employee covenants and agrees that if Employee shall violate
or breach any of Employee"s covenants or agreements provided for in Section 10
and 11 hereof, Employer and/or its affiliates shall be entitled to an accounting
and repayment of all profits, compensation, commissions, remunerations, or
benefits which Employee directly or indirectly has realized or realizes as a
result of, growing out of or in connection with any such violation or breach. In
addition, in the event of a breach or violation or threatened or imminent breach
or violation of any provisions of Sections 10 or 11 hereof, Employer and/or its
affiliates shall be entitled to a temporary or permanent injunction or any other
appropriate decree of specific performance or equitable relief, without posting
of bond, from a court of competent jurisdiction in order to prevent, prohibit or
restrain any such breach or violation or threatened or imminent breach or
5
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violation by Employee, by Employee"s partners, agents, representatives,
servants, employers or employees and/or by any third parties. Employer shall be
entitled to such injunctive or other equitable relief in addition to any damages
which are suffered, and the prevailing party shall be entitled to reasonable
attorney"s and paralegals" fees and costs and other costs incurred in connection
with any such litigation, both before and at trial and at all tribunal levels.
Resort by Employer and/or its affiliates to such injunctive or other equitable
relief shall not be deemed to waive or to limit in any respect any other rights
or remedies which Employer or its affiliates may have with respect to such
breach or violation. Finally, if any breach of this clause occurs, the Employee
shall forfeit any and all options that have been earned but not exercised.
_______initials
12. REASONABLENESS OF RESTRICTIONS
A. Reasonableness. Employee acknowledges that any breach or
violation of Sections 10 or 11 hereof will cause irreparable injury and damage
and incalculable harm to Employer and its affiliates and that it would be very
difficult or impossible to measure the damages resulting from any such breach or
violation. Employee further acknowledges that Employee has carefully read and
considered the provisions of Sections 10, 11 and 12 hereof and, having done so,
agrees that the restrictions and remedies set forth in such Sections (including
but not limited to, the time period, geographical and types of restrictions
imposed) are fair and reasonable and are reasonably required for the protection
of the business, trade secrets, interests and good will of Employer and its
affiliates.
B. Severability. Employee understands and intends that each
provision and restriction agreed to by Employee in Sections 10, 11, and 12
hereof shall be construed as separate and divisible from every other provision
and restriction and that, in the event that any one of the provisions of, or
restrictions in, Sections 10, 11 and/or 12 hereof shall be held to be invalid or
unenforceable, the remaining provisions thereof and restrictions therein shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable provisions or restrictions had not been included therein, and any
one or more of such valid provisions and restrictions may be enforced in whole
or in part as the circumstances warrant. In the event that any such provision
relating to time period and/or geographical and/or type of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum or
permissible time period, geographical area or type of restriction such court
deems reasonable and enforceable, said time period and/or geographical and/or
type of restriction shall be deemed to become and shall thereafter be the
maximum time period and/or geographical restriction and/or type of restriction
which such court deems reasonable and enforceable.
C. Survivability. The restrictions, acknowledgments, covenants
and agreements of Employee set forth in Sections 10, 11, 12, and 13 of this
Agreement shall survive any termination of this Agreement or of Employee"s
employment (for any reason, including expiration of the Employment Term).
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14. EMPLOYEE"S DISCLOSURES AND REPRESENTATIONS AND WARRANTIES
Employee hereby acknowledges, represents and warrants to
the best of his knowledge and belief, and agrees with, , Employer as follows:
(a) That Employee and his representatives and agents
(i) have received and read and are familiar with this Agreement, and (ii) are
familiar with the business and operations conducted and to be conducted by
Employer and the risks attendant thereto.
(b) That Employee and/or his representatives and
agents have had an opportunity to ask questions of and receive satisfactory
answers from Employer and/or a person or persons authorized to act on Employer"s
behalf concerning the terms and conditions of this Agreement, this transaction
and Employer and its currently contemplated business and operations.
(c) That Employee has been represented by such legal
and other professional advisors (if any), each of whom has been personally
selected by Employee, as Employee has found necessary to consult concerning the
transactions contemplated in or by this Agreement.
(d) That Employee has full right, power and authority
to perform all obligations under this Agreement.
Employee hereby agrees to indemnify and hold harmless Employer and its
shareholders, directors, officers, employees and agents from and against any and
all loss, damage, liability, cost or expense (including reasonable attorneys"
and paralegals" fees and costs before and at trial and at all appellate levels)
due to or arising out of any inaccuracy in, or breach of, any representation,
warranty or covenant of Employee contained in this Section 14.
15. INDEPENDENT COUNSEL
Employer and Employee agree that each of them have been, or were
advised fully understand that they are entitled to be, represented by
independent legal counsel with respect to all matters contemplated herein, from
the commencement of negotiations at all times through the execution hereof.
16. LAW APPLICABLE
This Agreement shall be governed by and construed pursuant to
the laws of the State of Florida, without giving effect to conflicts of laws
principles. Any action brought will be pursued in Broward County, Florida.
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17. NOTICES
Any notices required or permitted to be given pursuant to this
Agreement shall be sufficient, if in writing, and if personally delivered or
sent by certified or registered mail, return receipt requested, to his
residence, in the case of Employee, or to its then principle office, in the case
of Employer.
18. SUCCESSION
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective legal representatives, heirs,
assignees and/or successors in interest of any kind whatsoever; provided,
however, that Employee acknowledges and agrees that he cannot assign or delegate
any of his rights, duties, responsibilities or obligations hereunder to any
other person or entity.
19. ENTIRE AGREEMENT
This Agreement constitutes the entire final agreement between
the parties with respect to, and supercedes any and all prior agreements between
the parties hereto both oral and written concerning, the subject matter hereof
and may not be amended, modified or terminated except by a writing signed by the
parties hereto.
20. SEVERABILITY
If any provision of this Agreement shall be held to be invalid
or unenforceable, and is not reformed by a court of competent jurisdiction, such
invalidity or unenforceability shall attach only to such provision and shall not
in any way affect or render invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if such invalid or
unenforceable provision were not contained herein.
21. NO WAIVER
A waiver of any breach or violation of any term, provision or
covenant contained herein shall not be deemed a continuing waiver or a waiver of
any future or past breach or violation. No oral waiver shall be binding.
22. ATTORNEYS" FEES"
In the event that either of the parties to this Agreement institutes
suit against the other party to this Agreement to enforce any of his or its
rights hereunder, the prevailing party in such action shall be entitled to
recover from the other party all reasonable costs thereof, including reasonable
attorneys" and paralegals" fees and cost incurred before and at trial and at all
tribunal levels.
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the day and
year first above written.
Geotec Thermal Generators, Inc. By:________________________
W. Richard Lueck, CEO
Individually----------------------------------By:____________________________
Martin Scott
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L E A S E A G R E E M E N T
- --------------------------------------------------------------------------------
THIS LEASE AGREEMENT made and entered into this 15th day of December
1999, by and between the Residuary Trust U/W Leroy E. Dettman hereinafter
referred to as "LESSOR", and Geo-Tec Thermal Generators, Inc. hereinafter
referred to as "LESSEE".
WITNESSETH
WHEREAS, LESSEE desires to lease from LESSOR part of a building
located at 1615 S. Federal Highway, Palm Beach County, Boca Raton, Florida on
lands owned by LESSOR. Specifically 2654 square feet on the 1st floor.
NOW, THEREFORE, for and in consideration of the premises and of the
covenants and agreements herein contained, the parties hereto hereby
obligate themselves as follows:
ARTICLE I - BUILDING;
Located at 1615 S. Federal Highway, Boca Raton, FL 33432.
ARTICLE II - COVENANT OF LESSOR:
LESSOR covenants for it or anyone claiming by, through or under
LESSOR, that it will put LESSEE in actual possession of the demised
premises as improved and that LESSEE, on paying the said rental and
performing the covenants herein agreed by it to be performed, shall
and may peaceably and quietly have, hold and occupy the demised
premises for the term of this Lease. No substantial renovations shall
be made without the written approval and consent of LESS0R.
ARTICLE III -TERM:
LESSEE is to have the premises herein described, together with the
building related improvements to be constructed thereon, for a term of
five (5) years beginning on February 1st, 2000.
ARTICLE IV - RENT:
In consideration of the leasing of the aforesaid premises, LESSEE does
hereby covenant and agree with LESSOR to pay rental in the sum of
($318,480.00 ) THREE HUNDRED EIGHTEEN THOUSAND FOUR HUNDRED AND EIGHTY
DOLLARS. Said rental shall be payable monthly in advance at the rate
of $5308.00 per month plus Sales Tax. Monthly installments of rent
being paid simultaneously with the execution of this Lease Agreement,
and thereafter commencing on the first day of February,2000. Said
total rent of ($318,480.00) THREE HUNDRED EIGHTEEN THOUSAND FOUR
HUNDRED AND EIGHTY DOLLARS reserved and agreed to be paid under this
Lease shall be paid in lawful currency of the United States of
America.
The annual rental herein provided to be paid by LESSEE unto LESSOR
shall be subject to increase in accordance with the provisions of this
paragraph. In computing said increase, it is agreed that, beginning February
1st, 2001 and each one year thereafter, the rent shall increase a fixed amount
of 3%. The increases in rent are as follows:
February 1st, 2001 monthly rent shall increase to $5407.24 plus tax
per month.
February 1st, 2002 monthly rent shall increase to $5631.26 plus tax
per month.
February 1st, 2003 monthly rent shall increase to $5800.19 plus tax
per month.
February 1st, 2004 monthly rent shall increase to $5974.20 plus tax
per month.
Increases of 3% per year will also apply to the option years of this
lease if said option is executed.
Time is of the essence in respect to rent and any payment due under
this Lease. All rents and other payments required to be paid by the LESSEE are
due on the first day of the month, and shall be subject to a 5% late charge if
not received by the LESSOR on or before the 7th day of the month. The LESSEE
agrees to pay all costs and expenses, together with reasonable attorney's fees,
which may be incurred by the LESSOR in enforcing the terms, covenants and
conditions of this Lease, whether by suit or otherwise.
<PAGE>
ARTICLE V - ADDITIONAL RENT, DEFINITIONS
Terms and conditions of this article have been deleted from this
lease.
ARTICLE VI-PAYMENT OF REAL ESTATE TAXES AND ASSESSMENTS:
- --------------------------------------------------------
It is the understanding and agreement of the parties hereto that all
real estate taxes and assessments will be paid by LESSOR during the initial term
of this Lease and any extension or renewal thereof. LESSOR shall pay such taxes
each year prior to the time they become delinquent.
ARTICLE VII - OTHER TAXES:
- -------------------------
The LESSEE agrees that during the term of this Lease or any extension
thereof, it will pay to the public officers charged with the collection thereof,
any "use" or "sales" tax that might be imposed by any governmental body against
the LESSEE by reason of the occupancy of the demised premises and payment of
rental therefor by the LESSEE; and LESSEE further covenants and agrees to pay
such tax or taxes prior to the same becoming delinquent and to furnish unto
LESSOR evidence of such payment. In the event LESSEE should fail to pay such use
or sales taxes, then the LESSOR, at its sole option, may pay said tax or taxes
and the amount so paid by LESSOR shall be added to and become additional rental
to be paid by LESSEE unto LESSOR. LESSEE shall have the option of paying any
such use or sales tax directly to the governmental body assessing the same or to
the LESSOR. In the event the same are paid to the LESSOR, it shall be LESSOR'S
obligation to pay the same to such governmental body.
ARTICLE VIII - INSURANCE:
- ------------------------
At all times during the term of this Lease, the following insurance will
be maintained in the name of the LESSOR:
1. "All Risk" insurance in an amount equal to the full replacement value of the
LESSOR'S improvements on the demised premises. The value of the improvements
will exclude the cost of foundations, underground piping and/ or wiring, outside
paving and landscaping. Such insurance shall include the "Inflation Guard
Endorsement" or shall be adjusted annually to reflect the then current
construction costs.
2. Rent insurance on an "All Risk" basis in an amount equal to 75% of the annual
rent plus the sum of the annual taxes and insurance.
3. "Lessors Risk Only" liability insurance covering both bodily injury liability
and property damage liability with a combined single limit of $1,000,000.00 for
each occurrence.
The insurance will be subject to the requirements of any institutional
first mortgagee, including, but not limited to, Federal Flood Insurance.
This insurance will be maintained with insurance companies licensed and
qualified to do business in the State of Florida and have a general
policyholders' rating of A or A+ and a financial rating of class XV as
established by A.M. Best Company of Oldwick, New Jersey.
It is understood and agreed that this insurance does not cover LESSEE'S
property - real or personal - in any way.
LESSOR and LESSEE each waive any against each other for any damage to
property subject to insurance. Each party agrees to obtain a waiver of
subrogation from its insurance carrier permitting this waiver.
ARTICLE IX - HOLD HARMLESS:
- --------------------------
The LESSEE covenants and agrees with LESSOR that during the entire term
of this Lease, the LESSEE will indemnify and save harmless the LESSOR against
any and all claims, debt, demands or obligations which may be made against the
LESSOR or against the LESSOR'S title in the premises arising by reason of any
negligent acts or Omissions of the LESSEE, its officers, agents or employees in
occupying the premises; and not any acts or omissions of the LESSOR, its
officers, agents or employees; and if it becomes necessary for the LESSOR to
defend any action seeking to impose any such liability, the LESSEE will pay the
LESSOR all costs of court and reasonable attorneys' fees incurred by LESSOR in
such defense, in addition to any other sums which said LESSOR may be called upon
to pay by reason of the entry of a judgment decree against the LESSOR in the
litigation in which such claim is asserted.
The LESSOR covenants and agrees with LESSEE that during the entire term
of this Lease, the LESSOR will indemnify and save harmless the LESSEE against
any and all claims, debt, demands or obligations which may be made against the
LESSEE arising by reason of any negligent acts or omissions of the LESSOR, its
officers, agents or employees; and if it becomes necessary for the LESSEE to
defend any action seeking to impose any such liability, the LESSOR will pay the
LESSEE all costs of court and reasonable attorneys' fees incurred by LESSEE in
such defense, in addition to any other sums which LESSEE may be called upon to
pay by reason of the entry of a judgment or decree against the LESSEE in the
litigation in which such claim is asserted.
<PAGE>
ARTICLE X - UTILITIES, UTILITY CHARGES, CASH DEPOSITS:
- -----------------------------------------------------
The LESSOR hereby represents and warrants that at the time of the
execution of this Lease, that sufficient water (either by water mains or
approved wells)., electricity, telephone, sewage facilities (either by sanitary
sewer systems or approved septic tanks) and garbage removal capability will be
available to the LESSEE, for the LESSEE'S intended use of the premises. It is
expressly understood that it is the LESSORS responsibility of make necessary
applications with the proper authority for required utility service to serve the
premises, and such applications are to be filed in sufficient time to allow the
utility company to provide service to the premises. All cash deposits as may be
required by the utility companies are the responsibility of the LESSOR.
Telephone hook-up is not the responsibility of the LESSOR.
The LESSOR agrees and covenants to pay all utility charges, including,
but not limited to, water, gas, electricity, sewage and removal of waste
materials used on or arising from use of the premises and pay the same monthly
or as they shall become due.
ARTICLE XI - AIR CONDITIONING AND HEATING AND MAINTENANCE;
- ---------------------------------------------------------
Upon occupancy of the premises and acceptance of the air conditioning, heating
and cooling systems and installations, the LESSOR shall assume full and complete
responsibility for the operation, maintenance, repair and replacement of such
air conditioning, heating and cooling systems. LESSOR shall not be liable to
LESSEE for the failure or discontinuance of the air conditioning, heating and
cooling systems, or for the provisions of any other utility service to the
demised premises.
ARTICLE XII - MAINTENANCE:
- -------------------------
Upon acceptance and occupancy of the premises, the LESSOR shall
thenceforth during the term of this Lease and any renewals thereof be
responsible for interior maintenance of the premises. LESSOR will also pay for
water service and sewer charges, lawn and garden service, building management
fees, exterior painting and caulking, paving and parking lot, exterior lighting,
roof repairs, and all other required exterior maintenance, including the
maintenance cost of private roadway access to the facility, if any. The LESSOR
will be required to clean windows (exterior) and will be required to make
repairs to doors and windows, including locks and weather stripping, as may be
necessary. LESSEE to be responsible for any signs, mail boxes, exterior
identification, etc., which has been installed on the premises on LESSEE'S
behalf.
ARTICLE XIII - FIXTURES AND PERSONAL PROPERTY:
- ---------------------------------------------
It is agreed between the parties hereto that LESSEE may install any
trade fixtures, equipment, and other personal property on the demised premises
of a temporary or permanent nature, and LESSOR agrees that LESSEE shall have the
right at any time, provided LESSEE is not in default of any of the terms of this
Lease, to remove any and all such trade fixtures, equipment and other personal
property which it may have stored or installed in the demised premises. Provided
further, however, that in such event LESSEE shall restore the premises
substantially to the same condition, except for ordinary wear and tear, in which
they were at the time LESSEE took possession. LESSEE shall not be obligated to
restore the premises substantially to the same condition in which they were at
the time LESSEE took possession in the event of changes and alterations made
upon written approval of the LESSOR or in the event the demised premises are
surrendered because of default on the part of the LESSOR.
The provisions hereof shall not be construed to prevent the LESSEE from
financing or refinancing the purchase of equipment or machinery, and the LESSOR
shall execute such reasonable documents in favor of any financial institution
holding security thereon, subordinating rights of the LESSOR thereof. Nor shall
there be a lien on any work in process of LESSEE.
ARTICLE XIV - LESSEE FORBIDDEN TO ENCUMBER LESSOR'S INTEREST:
- ------------------------------------------------------------
It is expressly agreed and understood between the parties hereto that
nothing in this Lease contained shall ever be construed as empowering the LESSEE
to encumber or cause to be encumbered the title or interest of LESSOR in the
demised premises in any manner whatsoever. In the event that regardless of this
prohibition any person, furnishing or claiming to have furnished labor or
materials at the request of the LESSEE or of any person claiming by, through or
under the LESSEE shall file a lien against LESSOR'S interest therein, LESSEE,
within thirty (30) days after being notified thereof, shall cause said lien to
be satisfied or record or other premises released therefrom by the posting of a
bond or other security as prescribed by law, or shall cause same to be
discharged as a lien against LESSOR'S interest in the demised premises by an
order of a court having jurisdiction to discharge such lien.
ARTICLE XV - LAWFUL USE OF PREMISES:
- -----------------------------------
LESSEE further covenants and agrees that said demised land and all
building and improvements thereon during the term of this Lease shall be used
only and exclusively for lawful purposes. LESSEE will not knowingly use or
suffer anyone to use said premises or building for any purpose in violation of
the laws of the United States, the State of Florida, the County of Palm Beach or
any other governmental unit wherein the premises may be located.
ARTICLE XVI - COMPLIANCE WITH REGULATIONS OF PUBLIC BODIES:
- ----------------------------------------------------------
The LESSEE covenants and agrees that it will, at its own cost, make
such improvements on the premises and perform such acts and do such things as
may be lawfully required by any public body having jurisdiction over said
property in order to comply with such sanitary, zoning, setback, and other
similar requirements designed to protect the public, applicable only to the
manner of LESSEE'S use and occupancy of the demised premises. LESSEE also agrees
to comply with all deed restrictions.
The undertakings in this ARTICLE XVI by the LESSEE are conditioned upon
the LESSOR delivering the demised premises to LESSEE with the improvements
constructed thereon complying with all zoning ordinances, setback requirements,
sanitary requirements and other similar requirements in effect at the time of
the commencement of the term of this Lease, and LESSEE shall not be required to
make any structural changes to meet such requirements as they from time-to-time
may exist.
<PAGE>
ARTICLE XVII - SIGNS:
- --------------------
During the term of this Lease, LESSEE may install such signs on the
demised premises as may be permitted by appropriate authorities and recorded
restrictions, provided, however, that such signs shall be first approved by
LESSOR in writing, which approval shall not be unreasonably withheld. Such signs
may be attached in such manner as approved by the LESSOR provided that upon the
termination of this Lease they are removed at the expense of the LESSEE.
ARTICLE XVIII - DEFAULT BY LESSOR OR LESSEE:
- -------------------------------------------
In the event that either the LESSOR or the LESSEE shall violate or
default under any of the terms or provisions of this Lease, each shall, as the
case may be, indemnify and pay to the prevailing party all costs and expenses,
including, but not limited to, reasonable attorneys, fees incurred in enforcing
the terms and provisions of this Lease or incurred in any court action including
attorneys' fees which may be incurred on appeal, which the prevailing party may
incur or pay by reason of the other party's default or Lease violation.
ARTICLE XIX-LESSORIS RIGHT TO INSPECT PREMISES:
- ----------------------------------------------
The LESSEE agrees and covenants that the LESSOR or its agents, for the
purposes of examining or inspecting the condition of the demised premises, shall
have access to the said demised premises not more frequently than once every
ninety (90) days and then, upon the giving of ten (10) days notice by the LESSOR
to the LESSEE of the LESSOR'S intent to examine or inspect the demised premises.
Notwithstanding the foregoing, the LESSOR in the event of any emergency such as,
but not limited to, a fire, flood or severe windstorm, shall have free access to
said demised premises for the purposes of examining or inspecting damage done to
the demised premises.
LESSOR shall have the right to show the demised premises during the
ninety- (90) days prior to termination to prospective lessees, at reasonable
times during normal business hours. The LESSOR further reserves the right to
show the demised premises to prospective purchasers. Except in the event of an
emergency, LESSOR shall not have entrance to the demised premises without the
accompaniment of an employee of LESSEE.
ARTICLE XX - ASSIGNMENT OR SUBLETTING:
- -------------------------------------
LESSEE may, with the consent of LESSOR which consent shall not be
unreasonably withheld, assign this Lease or sublet in whole or in part the
demised premises provided that LESSEE herein shall continue to remain liable and
responsible for the payment of rental due hereunder. For the purpose of this
clause a merger or consolidation of LESSEE with another corporation or an
assignment to a wholly owned subsidiary shall not constitute an assignment
requiring the consent of the LESSOR. LESSOR shall have the right to assign the
lease premises without consent of the LESSEE and LESSEE agrees to attorn to the
LESSOR'S assignee. No assignment by the LESSOR shall relieve LESSEE of its
obligations hereunder.
ARTICLE XXI - DESTRUCTION OR DAMAGE BY FIRE OR OTHER HAZARDS:
- -------------------------------------------------------------
The parties hereto agree, that, if the improvements erected or to be
erected upon the demised premises are partially or totally destroyed or damaged
by fire or other hazard, then the LESSOR shall promptly repair and restore such
improvements as soon as it is reasonably practical to restore them so that they
are restored substantially to the prior existing condition, subject to such
changes as LESSEE may reasonably require, and provided, however, that such
changes will not increase the cost of restoration unless LESSEE agrees to pay
for such increased cost; due allowance, however, shall be made for reasonable
time necessary for LESSOR to adjust the loss with the insurance companies
insuring the demised premises at the time of the happening of the fire or the
casualty, but in no event shall such adjustment result in the LESSOR not being
obligated to make such restoration and in any event the restoration must
commence within Fifteen (15) days after the happening of such fire or other
casualty and the completion thereof must be completed within two (2) months
after such fire, casualty or the disaster with reasonable allowance made for
delay occasioned by strike, lockouts Or conditions beyond the control of the
LESSOR, but in any event, said restoration must be completed on or before two
(2) months after the happening of such fire or other casualty. If such
restoration is not completed within said two (2) months period, then LESSEE, at
its option, may cancel this Lease with abatement of rent as of the date of the
loss, provided, however, that LESSOR shall be entitled to retain the proceeds of
any rent insurance as provided for in ARTICLE VIII thereof. However, failure of
the insurance company to authorize such restoration work will be considered a
reasonable delay.
In the event of total destruction of the demised premises, and the
LESSOR fails to completely restore and rebuild the same within nine (9) months
after such fire, casualty or other disaster, then, in that event, the LESSEE
may, at its option, elect to terminate and cancel this Lease, in which event the
Lease shall be terminated upon written notice by the LESSEE to the LESSOR and
neither party shall thereafter have any further obligation with respect to the
other.
Should the demised premises or any portion thereof be rendered
untenantable by reason of the damage or destruction thereof caused by fire,
casualty or disaster during the term of this Lease as provided for this section,
rent shall be abated in proportion to the areas of the demised premises rendered
untenantable from the date of the happening of the fire or other, casualty or
disaster up to the date of restoration of the premises, except any rent that may
be retrieved from rent insurance procured pursuant to this Lease. However, no
rent shall accrue for any portion of the premises unless LESSEE is able to
conduct its usual business on that portion of the premises that remain
tenantable. If after the date of the happening of the fire or other casualty or
disaster, the LESSEE shall have paid any rents for a period beyond such date,
the tenant shall be entitled to a proportionate refund.
In the event of complete or total destruction of the improvements or
destruction to such an extent that the premises are rendered untenantable by the
LESSEE, the LESSOR shall not be required to restore or rebuild the improvements
in the event there are less than five (5) years remaining of the term of this
Lease, unless the parties hereto agree to extend the term of this Lease for not
less than five (5) years from the date of completion by the LESSOR of such
restoration.
In the event that the Lease is cancelled as provided for in this
ARTICLE XXI, LESSEE shall be entitled to all insurance proceeds representing the
value of leasehold improvements paid for or agreed to be paid for by the LESSEE
together with all replacements thereof and additions thereto, and all proceeds
provided that LESSOR first receives the proceeds covering the replacement value
of LESSOR'S building from all undesignated proceeds.
<PAGE>
ARTICLE XXII - OUIET ENJOYMENT:
- ------------------------------
LESSOR covenants that so long as tenant pays the rent reserved in this
lease and performs its agreements hereunder, tenant shall have the right to
quietly enjoy and use the leased premises for the term hereof, subject only to
the provisions of this Lease.
ARTICLE XXIII - DEFAULT BY LESSEE:
- ---------------------------------
Each of the following shall be deemed a default by the LESSEE and a
breach of this Lease:
A..The filing of a petition by or against the LESSEE for adjudication
as a bankrupt under the Bankruptcy Act, as now or hereafter amended or
supplemented, or for reorganization within the meaning of Chapter X of said
Bankruptcy Act, or for arrangement within the meaning of Chapter XI of said
Bankruptcy Act, or the filing of any petition by or against the LESSEE under any
further bankruptcy act for the same or similar relief. The dissolution or the
commencement of any action or proceeding for the dissolution or liquidation of
the LESSEE whether instituted by or against the LESSEE or for the appointment of
a receiver or trustee of the property of the LESSEE.
B. The taking possession of the premise or property of the LESSEE upon
the premises by any governmental office or agency pursuant to statutory
authority for the dissolution, rehabilitation, reorganization or liquidation of
the LESSEE.
C. The making by the LESSEE of any "assignment for the benefit of
creditors".
"If 'A shall be involuntary on the part of the LESSEE, the event in
question shall not be deemed a default within the meaning of the Lease in the
absence of any adjudication thereof or final order thereon, and if either A, B
or C above shall be involuntary on the part of the LESSEE, there shall be no
default within the meaning of this Lease, if such event is dismissed or vacated
by the LESSEE within sixty (60) days from the occurrence of such event,
otherwise such event shall constitute a default hereunder.,,
D. A failure to pay the rent herein reserved, or additional rent, or
any part hereof, for a period of ten (10) days after receipt of
written notice.
E. Failure in the performance of any other covenant or condition of
this Lease on the part of the LESSEE to be performed, for a period
of thirty (30) days after receipt of written notice.For the purposes
of subdivision "E", of this ARTICLE XXIII, no failure on the part of
the LESSEE in the performance of work required to be performed or
acts to be done or conditions to be modified shall be deemed to
exist if steps shall have, in good faith, been commenced promptly
by the LESSEE to rectify the same and shall be prosecuted to
completion with diligence and continuity. If the matter in question
shall involve building construction, and if the LESSEE shall be
subject to unavoidable delay, either by reason of governmental
regulations restricting the availability of labor or materials,or by
strikes or other labor troubles, or by reason of conditions beyond
the control of the LESSEE, the LESSEE'S time to perform under said
subdivision "E" of this ARTICLE XXIII shall be extended for a period
commensurate with such delay.
(ii) In the event of any such default of the LESSEE, the LESSOR may serve a
written notice upon the LESSEE that the LESSOR elects to terminate this Lease
upon a specified date not less than thirty (30) days after the date of the
serving of such notice, except in the case of a default under subdivision "D"
hereof for nonpayment of rent, in which event such date shall not be less than
then (10) days after the expiration of any ten (10) day notice given under said
subdivision "D", and if the default remains uncured or the time period is not
extended as herein provided, this Lease shall then expire on the date so
specified as if that date had been originally fixed as the expiration date of
the term herein given.
(iii) In the event this Lease shall be terminated as herein before provided, or
by summary proceedings or otherwise, or in the event the demised premises or any
part thereof shall be abandoned by the LESSEE, the LESSOR, or its agents,
servants or representatives, may immediately or at any time thereafter, re-enter
and resume possession of said premises or such part thereof, and remove all
persons and property therefrom, either by summary dispossess proceedings or by a
suitable action or proceeding at law, without being liable for any damages
therefore. Moving out of the premises or leaving the premises vacant shall not
be deemed an abandonment of the premises, provided that LESSEE continues to pay
the rent as and when due. No re-entry by the LESSOR shall be deemed an
acceptance of a surrender of the Lease.
In the event this Lease be terminated by summary proceedings, or
otherwise as provided herein, or if the premises shall have been abandoned and
whether or not the premises be released, the entire amount of rent which would
be paid to the expiration date of this Lease shall become due and payable. In
the event of such termination or abandonment, LESSOR shall be obligated to use
its best efforts to mitigate any damages it may have against LESSEE. In the
event the premises are released by the LESSOR, the LESSOR shall be entitled to
recover from the LESSEE, and the LESSEE shall pay to the LESSOR, in addition to
any other damages becoming due hereunder, an amount equal to the amount of all
rents and additional rent reserved under this Lease, less the net rent, if any,
collected by the LESSOR on releasing the demised premises, which shall be due
and payable by the LESSEE to the LESSOR on the several days on which the rent
and additional rent reserved in this Lease would have become due and payable;
that is to say, upon each of such days the LESSEE shall pay to the LESSOR the
amount of deficiency then existing. Such net rent collected on reletting by the
LESSOR shall be computed by deducting from the gross rents collected and
reasonable expenses incurred by the LESSOR in connection with the reletting of
the premises or any part thereof, including brokers, commission and the cost of
repairing, renovating or remodeling said premises; however, the expenses to be
deducted in computing the net rent collected on reletting shall not include the
cost of performing any covenant contained herein required to be performed by
LESSEE.
The obligation of the LESSOR to use its best efforts to mitigate any
damages it may have against LESSEE shall not preclude the right of the LESSOR to
obtain by judicial process a judgment for the entire amount of rent which would
be paid to the expiration date of the Lease. If said Lease is terminated by
summary proceedings or otherwise as provided herein. In the event LESSOR obtains
a judgment in such manner, LESSOR shall be obligated to use its best efforts to
mitigate any damages it may have recovered in accordance with the provisions of
the paragraph.
<PAGE>
ARTICLE XXIV-SUBORDINATION:
- --------------------------
This Lease, its terms, conditions and all leasehold interests and rights
hereunder are expressly made, given and granted subject and subordinate to the
lien of any bona fide first mortgage which the LESSOR may secure from any bank,
life insurance company, savings and loan association or other recognized lending
institution; and TENANT agrees to execute any instrument or instruments required
by the mortgagee to subordinate the terms of this Lease to any such first
mortgage that may be placed upon the premises by the LESSOR. In the event of
foreclosure when this Lease is not terminated, the TENANT agrees to attorn rent
due hereunder to the mortgagee, if successor in interest, or to the successful
purchaser at foreclosure sale (new substitute lessor).
ARTICLE XXV -RENEWAL OF LEASE;
- -----------------------------
At the conclusion of the term of this Lease, the LESSEE shall have an
option of renewing for an additional 2 year term at a rent based on $24 per
square foot annual rental rate as adjusted by the 3% fixed increases as referred
to in Article IV.
The LESSEE shall exercise option to renew the Lease for an additional 2
year period, in writing, delivered to LESSOR'S place of business as hereinafter
set forth, at least three (3) months in advance of the expiration of the initial
term of this Lease.
ARTICLE XXVI -CONDEMNATION:
- --------------------------
It is further understood and agreed that if at any time during the
continuance of this Lease, the legal title to the demised land or the
improvements located thereon on any portion thereof be taken, appropriated or
condemned by reason of eminent domain, there shall be such division of the
proceeds of award in such condemnation proceedings and such abatement of rent
and other adjustments made as shall be just and equitable under the
circumstances. If the LESSOR and LESSEE are unable to agree upon what division,
annual abatement of rent, or other adjustments are just and equitable within
sixty (60) days after such award shall have been made, then the matters in
dispute shall be submitted to arbitration in accordance with the provisions then
obtaining of the American Arbitration Association and this Lease shall be
specifically enforceable under the prevailing arbitration law, and judgment upon
the award rendered may be entered in the Court of the State of Florida having
jurisdiction.
Notwithstanding anything to the contrary herein contained, any
proceeds of award in such condemnation proceedings shall be paid in favor of the
party for who said award is specifically granted. That is to say that in the
event the LESSEE is not specifically awarded proceeds from said proceedings,
LESSEE shall not receive any such proceeds.
If this Lease is terminated in any manner herein provided in this
ARTICLE XXVI, rent for the last month of LESSEE'S occupancy shall be prorated
and LESSOR agrees to refund the LESSEE any rents paid in advance.
If the legal title to the entire premises were wholly taken by
condemnation proceedings, this Lease shall be automatically cancelled. If legal
title to a portion of the demised premises is taken and the parties hereto agree
that such taking renders the remainder of the demised premises unfit for its
intended use, LESSEE, at its sole option, may elect to terminate this Lease. In
the event the parties cannot agree upon what partial taking renders the
remainder of the demised premises unfit for its intended use, then the matter
shall be submitted to arbitration in the manner provided above. In general, it
is the intent of this ARTICLE XXVI that upon condemnation, the parties hereto
shall share in the award to the extent that their respective interest are
destroyed, damaged or depreciated by the exercise of the right of eminent
domain.
ARTICLE XXVII - NOTICES:
- -----------------------
All notices required by the law and this Lease to be given by one party
to the other shall be in writing, and the same shall be served by Certified
Mail, Return Receipt Requested, in postage prepaid envelopes addressed to the
following Addresses or such other addresses as may be by one party to the other
designated in writing:
AS TO LESSOR: RESIDUARY TRUST U/W LEROY E. DETTMAN
1615 S. Federal Highway, Suite 300
Boca Raton, FL 33432
-------------------------------------------
AS TO LESSEE: Geo-Tec Thermal Generators, Inc.
1615 S. FEDERAL HIGHWAY, Suite #
Boca Raton, FL 33432
-------------------------------------------
ARTICLE XXVIII - MISCELLANEOUS:
- ------------------------------
The covenants and agreements contained herein shall bind and the
benefits and advantages shall inure to the respective heirs, executors,
administrators, successors, and assigns of the parties hereto. Whenever used,
the singular number shall include the plural; the plural, the singular; and the
use of any gender shall be applicable to all genders. All covenants, agreements
and undertakings shall be joint and several.
No modifications or changes shall be made to this Lease unless the same
are made in writing and signed by the party against whom enforcement is sought.
ARTICLE XXIX - SECURITY DEPOSIT: Return of Property upon Termination of Lease:
- --------------------------------
To insure the good and faithful performance of the terms of this Lease
LESSEE agrees to deposit with LESSOR a sum equal to Two (2) Months rent of the
Lease. Upon satisfactory completion of the term of this Lease or any renewals
thereof and surrender of the premises by the LESSEE in a condition equally as
good as originally accepted by LESSEE, normal wear and tear accepted, said
security deposit shall be returned to LESSEE. If LESSEE does not surrender the
premises in such condition then LESSOR may deduct such amounts from the security
deposit as may be necessary to make proper repairs and return the remaining
amount, if any, of the security deposit to LESSEE.
ARTICLE XXX - RETURN OF PROPERTY UPON TERMINATION OF LEASE:
- -----------------------------------------------------------
Upon the termination of this Lease, LESSEE agrees to return to the
LESSOR all of said property, free and clear and discharged of all rights of any
persons whomsoever against said property, in good condition excepting usual wear
and tear, free, clear and discharged of all claims, debts, and obligations of
any kind or nature against the same.
<PAGE>
ARTICLE XXXI - INSOLVENCY OF LESSEE:
- -----------------------------------
Should the LESSEE at any time during the term of this Lease become
insolvent or be placed in liquidation or suffer or permit any petition under any
of the rehabilitative provisions of the bankruptcy act or any involuntary or
voluntary petition of bankruptcy to be filed by it or against it, or otherwise
make any assignment for the benefit of its creditors, or should a receiver or
trustee by appointed for the LESSEE'S property, then and in any such event and
upon the happening of any such event, the LESSOR shall have the right at its
election to consider the same a material default on the part of the LESSEE of
the terms and provisions hereof and to terminate this Lease, in which event no
interest of any kind hereunder shall vest in the trustee in bankruptcy,
receiver, or other like officer or agent. This ARTICLE is in furtherance of and
not a limitation of the po era herein conferred upon the LESSOR. However, in the
event of a filing of any petition in bankruptcy or under any of the
rehabilitative provisions of the bankruptcy act which might seek the assistance
of the bankruptcy court either in the form of reorganization or an arrangement
with creditors, or otherwise, the LESSEE shall have one hundred and twenty (120)
days from such filing in which to obtain an order of the Federal District Court
discharging said petition before same constitutes a material default on LESSEE'S
part of the terms and conditions hereof so as to entitle the LESSOR to terminate
this Lease.
ARTICLE XXXII -DAMAGE DUE TO LESSEE'S NEOLIGENCE:
- ------------------------------------------------
LESSEE shall be liable for and shall hold LESSOR harmless in respect of
damage or injury to the leased premises, including any and all damages to the
exterior walls of the building or the paved and/or hard topped areas surrounding
the premises including parking lots, driveways and sidewalks, or the person or
property of the LESSEE, or the person or property of LESSOR'S other tenants, or
anyone also, if due to an act of neglect of LESSEE or anyone in its control or
employ. LESSEE shall at once report in writing to LESSOR any defective condition
known to him which LESSOR is required to repair and failure to so report shall
make LESSEE responsible for damages resulting from defective conditions. All
personal property upon the premises shall be at the risk of the LESSEE only, and
LESSOR shall not be liable for any damages thereto or theft thereof.
ADDITIONAL PARAGRAPH #1- TENANTS RIGHT TO VACATE LEASED PREMISES
-----------------------
It is agreed between the LESSOR AND LESSEE that after the 3rd year
of this lease the LESSEE shall have the right to " buy out " of the remaining 2
years of this lease by paying to the LESSOR a sum equal to the un-amortized
costs associated with the total cost of tenant improvements necessary to prepare
LESSEE"S space for occupancy.
IN -WITNESS WHEREOF, the parties hereto have executed this Lease in
several counterparts, each of which shall be deemed an original and in manner
and form sufficient in law the day and year first above written.
SIGNED, SEALED and DELIVERED
IN THE PRESENCE OF:
WITNESS LESSOR
- -------------------- -----------------------
- -------------------- -----------------------
WITNESS LESSEE
- --------------------- ------------------------
- --------------------- ------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001087717
<NAME> GEOTEC THERMAL GENERATORS, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 24,393
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 129,960
<CURRENT-ASSETS> 154,353
<PP&E> 12,312
<DEPRECIATION> 4,700
<TOTAL-ASSETS> 179,465
<CURRENT-LIABILITIES> 129,738
<BONDS> 119,500
0
0
<COMMON> 20,738
<OTHER-SE> (90,511)
<TOTAL-LIABILITY-AND-EQUITY> 179,465
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 521,829
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,058
<INCOME-PRETAX> (528,887)
<INCOME-TAX> 0
<INCOME-CONTINUING> (528,887)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (528,887)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
