U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION
12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
INDUSTRIAL RUBBER INNOVATIONS, INC.
(Name of small business issuer in its charter)
FLORIDA 91-1922981
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
6801 MCDIVITT DRIVE
BAKERSFIELD, CALIFORNIA 93313
(Address of Principal Executive Offices) (Zip Code)
(661) 833-8188
(Registrant's Telephone Number, Including Area Code)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
(None)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, par value $0.001
Title of Class
<PAGE>
TABLE OF CONTENTS
PART I
Item 1 Description of Business.
Item 2 Plan of Operation.
Item 3 Description of Property.
Item 4 Security Ownership of Certain Beneficial Owners
and Management.
Item 5 Directors, Executive Officers, Promoters and
Control Persons.
Item 6 Executive Compensation.
Item 7 Certain Relationships and Related Transactions.
Item 8 Description of Securities.
PART II
Item 1 Market Price of and Dividends on the
Registrant's Common Equity and Other Shareholder
Matters.
Item 2 Legal Proceedings.
Item 3 Changes In and Disagreements With Accountants.
Item 4 Recent Sales of Unregistered Securities.
Item 5 Indemnification of Directors and Officers.
PART F/S
Financial Statements.
PART III
Item 1 Index to Exhibits.
Item 2 Description of Exhibits.
<PAGE>
PART I
ITEM 1 - DESCRIPTION OF BUSINESS
Industrial Rubber Innovations, Inc. (the "Company" or "IRI")
develops, manufactures, and markets specialty synthetic rubber
molded products from its synthetic rubber compounds. The Company
was organized as a Florida corporation on August 7, 1986 and is
currently based in Bakersfield, California.
On April 26, 1999, IRI (which at the time was designated EPL
Ventures Corp., a Florida corporation ("EPL")) acquired all of the
outstanding common stock of Industrial Rubber Innovations, Inc., a
Nevada corporation ("IRI-Nevada") in a business combination
described as a "reverse acquisition." For accounting purposes, the
acquisition has been treated as the acquisition of EPL (the
Registrant) by IRI-Nevada. As part of the acquisition, EPL changed
its name to Industrial Rubber Innovations, Inc. ("IRI").
Immediately prior to the acquisition, and following the
effectiveness of a 1-for-5 reverse stock split which was part of the
acquisition, EPL had 3,444,000 shares of common stock outstanding.
As part of EPL's reorganization with IRI-Nevada, EPL issued
3,800,000 shares of its common stock to the shareholders of
IRI-Nevada in exchange for 3,800 shares of IRI-Nevada common stock.
In addition, the Company issued warrants, exercisable until May 1,
2001 and containing registration rights, to purchase an aggregate of
2,000,000 shares of its common stock, one-half at an exercise price
of $0.50 and one-half at an exercise price of $0.75, to the
IRI-Nevada shareholders. EPL had no significant operations prior to
the merger. The Company's common stock currently trades on the NASD
OTC Bulletin Board under the symbol "IRIB."
BUSINESS OF ISSUER
There are two types of rubber: natural rubber and synthetic rubber.
According to 1998 statistics, synthetic rubber accounted for
approximately sixty percent (60%) of the world rubber production,
while natural rubber accounted for forty percent (40%) of the
market. Fifty percent (50%) of the world's synthetic rubber
production is from the United States and Europe.
Natural rubber deteriorates when exposed to the heat, pressure, and
corrosive chemicals encountered in many applications. The synthetic
rubber industry produces rubber compounds and products that have
substantially expanded rubber capabilities. These synthetic rubber
attributes, developed in numerous classes of synthetic rubber
compounds, are used extensively in aerospace and defense,
construction, chemical processing, refineries, oil and gas recovery,
and the semiconductor industry. Major research efforts are directed
at, among other things, continuing to improve the ability of
synthetic rubber to withstand applications in increasingly hostile
environments.
Under the terms of a royalty-free license agreement with Century
Rubber, LLC which gives the Company the exclusive right to
manufacture, market, sell and distribute products using a
proprietary rubber compound formula, the Company develops,
manufactures, and markets specialty synthetic rubber molded
products. The attributes of the Company's initial synthetic rubber
product IRI-500, used in oil and gas production wells such as
packing, rings, and cones, include unusual resistance to heat, wear,
and oils. In its production process, the Company blends readily
available raw materials to produce the required product
characteristics. The raw rubber material is then molded into a
specific product. The Company's products have been used primarily in
the top of wells in the oil and gas recovery industry, and products
manufactured from the IRI-500 product line continue to outperform
products made from competitive synthetic rubbers. The Company has a
limited supply of IRI-500 in its inventory, estimated to be
sufficient for approximately four (4) months of the Company's
present client demands, and will begin marketing a new product line
as soon as the existing inventory is exhausted.
The Company's new product line, Veraton(TM), will substantially
extend the capabilities of the Company's product line beyond that of
products manufactured with IRI-500. Based on preliminary test
results, Veraton appears to exceed many of the high performance
characteristics of DuPont's top perfluoroelastomer, Kalrez(TM).
Applications using Kalrez(TM) are among the most demanding and
highest priced synthetic rubber products.
<PAGE>
DISTRIBUTION METHODS
Currently, the Company is leveraging the contacts of its management
team to generate sales of its products. The Company recently
entered into non-exclusive agreements with Petro-Rep Co., an oil
field supply company located in Kern County, California, and Gencon
Capital Resources of Ottawa, Canada to market the Company's
products. The Company is currently in discussions with several
other independent representative firms to market the Company's
products on a non-exclusive basis.
COMPETITION
The Synthetic Rubber Industry as a Whole
The synthetic rubber industry is primarily made up of large,
industrial chemical companies located throughout the world. The
industry is capital intensive for both production and research and
development. Most of the competitive companies have substantially
greater financial resources than the Company, and typically a
significant portion of their revenues are reinvested into research
and development. In addition, many competitive companies have
historic business relationships with their customers or have some
form of mutual ownership or financial relationships.
The Company intends to establish itself as a manufacturer of high
end, high performance synthetic rubber products that can be used in
many of today's demanding process and environmental applications.
It is a highly competitive market. The Company does not intend to
compete in the high volume segment of the industry, where price,
capacity, and production efficiencies control the marketplace.
Instead, the Company intends to differentiate itself by the fact
that its rubber compounds provide customers with products that have
necessary application characteristics that cannot be obtained
elsewhere. The competition is based on the tested capabilities of
their rubber products, manufacturing qualifications, and process
verification. Many of these advanced product applications require
long lead times for extensive testing and development work with
customers. In order to build an initial sales and earnings base to
expand, the Company will introduce Veraton(TM) products for the oil
and gas recovery markets. The oil and gas recovery industry has a
much shorter product introduction cycle, and does not require the
extensive product development phase required in other high tech
applications.
Major competitors include DuPont, which manufactures synthetic
rubber compounds known as Viton(TM) and Kalrez(TM).
Oil and Gas Well Producers
In contrast to the synthetic rubber industry as a whole, the oil and
industry uses large volumes of high performance rubber products and
is extremely fragmented. In most cases, petroleum companies have
ceased to stock parts inventories for their field operating leases,
and the parts inventory function has fallen to stocking
distributors. Although there is powerful competition for sales to
this industry, the decentralization of the buying decision to the
lease engineer and the ability to sell to stocking distributors who
will market the product based on its capabilities creates an
opportunity for the Company to generate sales. For these reasons,
this market is currently the Company's primary target.
The five largest competitors currently selling molded rubber
products for oil and gas production wells in California are Skinner
Brothers, Ratigan, Huber, Utex, and E.M. Berry.
RAW MATERIALS AND PRINCIPAL SUPPLIERS
The Company uses readily available chemicals and carbon black in the
production of its rubber compounds. The chemicals are manufactured
by several of the world's large chemical companies in plants located
in the United States and in other countries. These manufacturers
include Dow, Chevron and Mobil, and are available in most countries
through various distributors.
DEPENDENCE ON KEY CUSTOMERS
The Company is not dependent presently on any one or several
customers for the sale of its rubber compound. Sales of its IRI-500
rubber compound is to many individual oil and gas well operators and
is not dependent on their parent companies for the purchase decision.
<PAGE>
PATENTS, TRADEMARKS, LICENSES
The Company's products are currently made from a formula made
available to the Company through a royalty-free license agreement
with Century Rubber, LLC, whose principal members include members of
the Company's management, namely John Proulx, David H. Foran, Steven
Tieu, Benny Hun and Nancy Sheo. See "Certain Relationships and
Related Transactions". Under the terms of the license, the Company
has the unrestricted right to manufacture, market, sell, and
distribute worldwide all products made from or derived from the
licensed formula for an indefinite period of time. The Company also
has an option to acquire a license for all new and future formulas
and/or products developed by Century Rubber, LLC on terms to be
individually negotiated, as well as a right of first refusal to
match the terms of any license agreements negotiated by Century
Rubber, LLC.
The Company currently provides research and development and office
space to Century Rubber, LLC without charge, but does not otherwise
contribute financially to the research and/or development of
formulas by Century Rubber, LLC. In the future, the Company may
enter into agreements with Century Rubber, LLC which provide for the
payment or reimbursement of certain expenses and other research and
development costs in exchange for license rights.
Neither Century Rubber, LLC nor the Company generally relies upon
patent protection for their formulas and/or products, believing
instead that treating them as trade secrets affords better
protection. To date, competitors have been unable to reverse
engineer the chemical composition of the Company's IRI-500 or
Veraton(TM) products. Based on the chemical reactions that take
place during the proprietary mixing phase of production, Management
believes that there is a very small likelihood that the trade
secrets will ever be reverse engineered. There can be no assurance
that competitors of the Company do not have competing patents which
may preclude certain aspects of the Company's formulas or designs,
that competitors may reverse engineer and create competitive
products to those of the Company or that other technological
protection can be obtained for the Company's products. No assurance
can be given that patents will be granted on future patent
applications. The Company has one trademark application pending,
that for the trade name "Veraton".
GOVERNMENTAL APPROVALS AND REGULATION
The Company believes it is in compliance with federal, state and
local regulations with respect to environmental protection. The
Company does not anticipate that costs of compliance with such
regulations will have a material effect on its capital expenditures,
earnings or competitive position.
RESEARCH AND DEVELOPMENT
During the past twelve months, the Company has made substantial
improvements to its rubber compounds. Research efforts have
resulted in a rubber compound capable of withstanding continuous
temperatures of up to 1,000 degrees Fahrenheit. The product
development efforts have led to the addition of capabilities to
withstand corrosive materials, such as Silicone Oil. Other product
development efforts have resulted in Veraton(TM) compound
characteristics that include resistance to radiation.
As a result of its license with Century Rubber, LLC, the Company has
not engaged in a significant amount of research and development to
date. All of the research efforts have been undertaken by
Management at no direct cost to the Company. As such, no research
and development costs have been directly borne by customers.
Although not currently contemplated by the Company, it may undertake
significant research and development projects in the future.
COST OF COMPLIANCE WITH ENVIRONMENTAL REGULATIONS
The Company's manufacturing facility in Bakersfield, California is
located in an area zoned appropriately for the mixing of chemicals
and carbon black. Other than requirements for the handling and
storage of chemicals, the only manufacturing requirements that must
be addressed by the Company is installation of an air filtration
system its manufacturing facility, expected to cost approximately
$50,000.
<PAGE>
NUMBER OF EMPLOYEES
As of July 20, 1999, the Company employed approximately 7 people on
a full time basis.
ITEM 2 - PLAN OF OPERATION
The following discussion contains certain forward-looking statements
that are subject to business and economic risks and uncertainties,
and the Company's actual results could differ materially from those
forward-looking statements. The following discussion regarding the
financial statements of the Company should be read in conjunction
with the financial statements and notes thereto.
The Company's prior full fiscal year ending October 31, 1998 is not
indicative of the Company's current business plan and operations.
During the periods ending October 31, 1997, October 31, 1998 and
March 31, 1999, the Company had no revenues and was in its
development stages. After the Company's merger with IRI-Nevada, as
previously discussed, the current business plan was implemented.
Therefore, this plan of operation will focus on the Company's
current business plan and operations. For information concerning
the Company's prior full fiscal years, the Company refers the reader
to the financial statements provided herewith.
In order to fulfill orders for products, the Company is currently
using its existing supply of products in inventory. During the next
twelve months, the Company intends to equip its newly leased
facility with the necessary equipment to begin manufacturing its
products in Bakersfield. Once fully operational, it is anticipated
that the manufacturing facility will employ approximately 12 - 15
people on a full time basis.
Liquidity
The Company is currently in negotiations with a limited number of
funding sources to provide the working capital necessary for
operations during the next twelve months. The Company currently has
a minimal amount of capital available to it and anticipates the need
for at least $1,000,000 during the next twelve months. It is
anticipated that the Company will undertake a private placement of
its common stock in order to raise the necessary capital. In
addition, the Company is in negotiations for equipment leasing
financing in order to complete the build-out of its newly leased
facility.
It is not currently contemplated that the Company will perform any
substantial product research or development during the next twelve
months.
Capital Expenditures
The Company expects to finance the purchase of the equipment
necessary to build-out its newly leased facility through equipment
leasing financing presently being negotiated.
YEAR 2000 DISCLOSURE
The Company has completed a review of its computer systems and
non-information technology ("non-IT") systems to identify all
systems that could be affected by the inability of many existing
computer and microcomputer systems to process time-sensitive data
accurately beyond the year 1999, referred to as the Year 2000 or Y2K
issue. The Company is dependent to a limited extent on third-party
computer systems and applications. The Company also relies on its
own computer and non-IT systems (which consist of personal
computers, internal telephone systems, internal network server,
Internet server and associated software and operating systems). In
conducting the Company's review of its internal systems, the Company
performed operational tests of its systems which revealed no Y2K
problems. As a result of its review, the Company has discovered no
problems with its systems relating to the Y2K issue and believes
that such systems are Y2K compliant. The Company has not obtained
written assurances from any suppliers regarding the status of those
suppliers with respect to the Y2K issue, and the Company does not
currently have any plans to obtain such assurances. Because the
Company has not completed its manufacturing facility, a review for
Y2K compliance has not been conducted with respect to manufacturing.
Costs associated with the Company's review were not material to its
results of operations and are not anticipated to be material in the
future.
<PAGE>
While the Company believes that its procedures have been designed to
be successful, because of the complexity of the Year 2000 issue and
the interdependence of organizations using computer systems, there
can be no assurances that the Company's efforts, or those of third
parties with whom the Company interacts, have fully resolved all
possible Year 2000 issues. Failure to satisfactorily address the
Year 2000 issue could have a material adverse effect on the Company.
The most likely worst case Y2K scenario which management has
identified to date is that, due to unanticipated Y2K compliance
problems, the Company may be unable to obtain raw materials from its
suppliers, in whole or in part. Should this occur, it would result
in a material loss of some or all gross revenue for an
indeterminable amount of time, which could cause the Company to
cease operations. In the event of failure of one or more of its
suppliers due to Y2K issues, the Company's only recourse for any
damages suffered would be through litigation. The Company has not
yet developed a contingency plan to address this worst case Y2K
scenario, and does not intend to develop such a plan in the future.
ITEM 3 - DESCRIPTION OF PROPERTY
On June 3, 1999, the Company entered into a lease for an
approximately 29,300 square foot facility located at 6801 McDivitt
Drive, Bakersfield, California 93313. The lease term begins on
September 1, 1999 and is effective through August 31, 2004. The
monthly base rent shall be equal to $8,500 in year one, $8,775 in
year two, $9,038 in year three, $9,309 in year four, and $9,589 in
year five of the lease. Under the terms of the lease, the Company
has a right of first refusal to purchase the premises and an option
to renew the lease for an additional five (5) year term beginning at
$9,877 per month and increasing at the end of each twelve (12) month
period at a rate of 3% per annum.
The Company is currently in negotiations with equipment suppliers to
provide the necessary equipment to manufacture in its Bakersfield
facility.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 20, 1999, certain
information with respect to the Company's equity securities owned of
record or beneficially by (i) each Officer and Director of the
Company; (ii) each person who owns beneficially more than 5% of each
class of the Company's outstanding equity securities; and (iii) all
Directors and Executive Officers as a group.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
<S> <C> <C> <C>
Common Stock John Proulx 310,000 (1) 4.1 %
4525 New Horizon Blvd., Suite 7,
Bakersfield, CA 93313
Common Stock David H. Foran 210,000 (2) 2.9 %
4525 New Horizon Blvd., Suite 7,
Bakersfield, CA 93313
Common Stock Steven Tieu 270,000 (3) 3.6 %
4525 New Horizon Blvd., Suite 7,
Bakersfield, CA 93313
Common Stock Benny Hun 350,000 4.8 %
4525 New Horizon Blvd., Suite 7,
Bakersfield, CA 93313
Common Stock Nancy Sheo 250,000 (4) 3.4 %
4525 New Horizon Blvd., Suite 7,
Bakersfield, CA 93313
<PAGE>
Common Stock Dale Paruk 400,000 5.5 %
701-555 Jervis Street
Vancouver, BC V6E 4NI
All Officers and
Directors as a Group 1,390,000 (1)(2)(3)(4) 17.5 %
(5 Persons)
</TABLE>
(1) Includes warrants to acquire 200,000 shares of common
stock, exercisable until May 1, 2001 at an exercise
price of $0.75 per share.
(2) Includes warrants to acquire 100,000 shares of common
stock, exercisable until May 1, 2001 at an exercise
price of $0.50 per share.
(3) Includes warrants to acquire 200,000 shares of common
stock, exercisable until May 1, 2001 at an exercise
price of $0.75 per share.
(4) Includes warrants to acquire 200,000 shares of common
stock, exercisable until May 1, 2001 at an exercise
price of $0.75 per share.
The Company believes that the beneficial owners of securities listed
above, based on information furnished by such owners, have sole
investment and voting power with respect to such shares, subject to
community property laws where applicable. Beneficial ownership is
determined in accordance with the rules of the Commission and
generally includes voting or investment power with respect to
securities. Shares of stock subject to options or warrants
currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage of the person
holding such options or warrants, but are not deemed outstanding for
purposes of computing the percentage of any other person.
<PAGE>
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the names and ages of the current
directors and executive officers of the Company, the principal
offices and positions with the Company held by each person and the
date such person became a director or executive officer of the
Company. The executive officers of the Company are elected annually
by the Board of Directors. The directors serve one year terms until
their successors are elected. The executive officers serve terms of
one year or until their death, resignation or removal by the Board
of Directors. Other than the relationship between Mr. Tieu, who is
the son of Ms. Sheo, there are no family relationships between any
of the directors and executive officers. In addition, there was no
arrangement or understanding between any executive officer and any
other person pursuant to which any person was selected as an
executive officer.
The directors and executive officers of the Company are as follows:
Name Age Positions
John Proulx 52 President, Chief Executive Officer,
Director (1999)
David H. Foran 51 Chief Financial Officer, Secretary,
Director (1999)
Steven Tieu 32 Vice President of Technical Support,
Director (1999)
Benny Hun 35 Vice President of Production,
Director (1999)
Nancy Sheo 42 Vice President of Development (1999)
JOHN PROULX started his career in Canadian provincial and municipal
law enforcement. Prior to retirement therefrom in 1978, he was in
charge of major crime investigation. After retirement, Mr. Proulx
entered the optical field. He joined Vanier Optical in 1979, where
he ultimately became manager. In 1989, he formed and operated his
own design and manufacturing firm, Na-Do Optical, Inc., which
together with Vanier was awarded contracts by the Canadian Armed
Forces to supply one hundred percent (100%) of their eyeglass
requirements. He sold Na-Do Optical, Inc. in 1993. From 1993 to
the present, Mr. Proulx formed and operated a new international
optical firm, Opti-Plus Eyewear, Inc., which works closely with the
Canadian government's Export Development Corporation. Among other
achievements, Opti-Plus Eyewear, Inc. has recently instructed and
trained employees and management of an optical company in North
Africa (Tunisia) to grind and produce quality plastic eyeglasses.
Opti-Plus Eyewear, Inc. has also received contracts to supply
eyeglasses for the Canadian Armed Forces in British Columbia.
DAVID H. FORAN has served in numerous financial positions in the
mortgage banking industry, including terms with Associates Financial
Services from 1970 to 1974, Citibank from 1974 to 1976, and Nova
Financial Services from 1990 to 1996. His responsibilities have
included structuring and funding transactions, and accounting and
reporting. Most recently, Mr. Foran worked in the formation and
funding of venture capital projects in the United States and Canada.
STEVEN TIEU learned rubber development and production at his
family's rubber plant in Vietnam, which also manufactured
motorcycles for Honda. Since moving to the United States in the
1980's, Mr. Tieu has used his experience, additional education, and
training to continue as a sole proprietor in the rubber industry and
in the import-export business.
BENNY HUN started his career in rubber production with the Tieu
family business in Vietnam. Before moving to Canada in the 1980's,
he was responsible for production at a rubber plant in Vietnam.
After moving to Canada, Mr. Hun held positions in plant management
and production for several companies in Vancouver, including Haida
Optical Lab from 1992 to 1997, and Smart Tech Optical Lab, Inc. from
1997 to 1999.
NANCY SHEO, Steven Tieu's mother, has been involved in all phases of
the Tieu family rubber business since the 1960's. Although she
holds no formal higher education degrees, she has years of practical
experience in the research and development and use of rubber
compounds and the manufacture of rubber products.
<PAGE>
ITEM 6 - EXECUTIVE COMPENSATION
On May 15, 1999, the Company entered into a two (2) year Employment
Agreement with John Proulx, the Company's President and CEO, whereby
the Company will pay Mr. Proulx an annual salary of $60,000. The
Agreement can be terminated at any time for cause, as defined
therein, without penalty or severance. The Agreement can be
terminated by Mr. Proulx at any time for good reason, as defined
therein, in which case Mr. Proulx would be entitled to one-year's
compensation as severance. The Agreement may be terminated by the
Company after the first year for good reason, as defined therein, in
which case Mr. Proulx would be entitled to one-year's compensation
as severance.
On May 15, 1999, the Company entered into a two (2) year Employment
Agreement with David H. Foran, the Company's Chief Financial Officer
and Secretary, whereby the Company will pay Mr. Foran an annual
salary of $60,000. The Agreement can be terminated at any time for
cause, as defined therein, without penalty or severance. The
Agreement can be terminated by Mr. Foran at any time for good
reason, as defined therein, in which case Mr. Foran would be
entitled to one-year's compensation as severance. The Agreement may
be terminated by the Company after the first year for good reason,
as defined therein, in which case Mr. Foran would be entitled to
one-year's compensation as severance.
On May 15, 1999, the Company entered into a two (2) year Employment
Agreement with Steven Tieu, the Company's Vice President of
Technical Support, whereby the Company will pay Mr. Tieu an annual
salary of $60,000. The Agreement can be terminated at any time for
cause, as defined therein, without penalty or severance. The
Agreement can be terminated by Mr. Tieu at any time for good reason,
as defined therein, in which case Mr. Tieu would be entitled to
one-year's compensation as severance. The Agreement may be
terminated by the Company after the first year for good reason, as
defined therein, in which case Mr. Tieu would be entitled to
one-year's compensation as severance.
On May 15, 1999, the Company entered into a two (2) year Employment
Agreement with Benny Hun, the Company's Vice President of
Production, whereby the Company will pay Mr. Hunn an annual salary
of $60,000. The Agreement can be terminated at any time for cause,
as defined therein, without penalty or severance. The Agreement can
be terminated by Mr. Hunn at any time for good reason, as defined
therein, in which case Mr. Hunn would be entitled to one-year's
compensation as severance. The Agreement may be terminated by the
Company after the first year for good reason, as defined therein, in
which case Mr. Hunn would be entitled to one-year's compensation as
severance.
On May 15, 1999, the Company entered into a two (2) year Employment
Agreement with Nancy Sheo, the Company's Vice President of
Development, whereby the Company will pay Ms. Sheo an annual salary
of $60,000. The Agreement can be terminated at any time for cause,
as defined therein, without penalty or severance. The Agreement can
be terminated by Ms. Sheo at any time for good reason, as defined
therein, in which case Ms. Sheo would be entitled to one-year's
compensation as severance. The Agreement may be terminated by the
Company after the first year for good reason, as defined therein, in
which case Ms. Sheo would be entitled to one-year's compensation as
severance.
On June 3, 1999, the Company's Board of Directors and a majority of
its shareholders approved the Industrial Rubber Innovations, Inc.
Omnibus Stock Option Plan (the "Option Plan"), effective July 1,
1999. Under the terms of the Option Plan, the Board of Directors
has the sole authority to determine which of the eligible persons
shall receive options, the number of shares which may be issued upon
exercise of an option, and other terms and conditions of the options
granted under the Plan to the extent they don't conflict with the
terms of the Plan. An aggregate of 750,000 shares of common stock
are reserved for issuance under the Plan during the year July 1,
1999 to June 30, 2000. For each subsequent year beginning July 1,
2000, there shall be reserved for issuance under the Plan that
number of shares equal to 10% of the outstanding shares of common
stock on July 1 of that year. The exercise price for all options
granted under the Plan shall be 100% of the fair market value of the
Company's common stock on the date of grant, unless the recipient is
the holder of more than 10% of the already outstanding securities of
the Company, in which case the exercise price shall be 110% of the
fair market value of the Company's common stock on the date of
grant. All options shall vest equally over a period of five years
from the date of issuance. Currently, the Board of Directors has
not issued any options under the terms of the Plan.
<PAGE>
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows certain compensation
information for services rendered in all capacities for the fiscal
year ended October 31, 1998 and the five months ended March 31,
1999. Other than as set forth herein, no executive officer's salary
and bonus exceeded $100,000 in any of the applicable years. The
following information includes the dollar value of base salaries,
bonus awards, the number of stock options granted and certain other
compensation, if any, whether paid or deferred.
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Awards Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Salary Bonus Compensation Awards Options Payouts Compensation
Principal Position Year $ $ $ $ SARs (#) $ $
John Proulx 1998 - - - - - - -
(President,CEO) (10/31)
1999 - - - - - - -
(3/31)
</TABLE>
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
NUMBER OF SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS/SAR'S OPTIONS/SAR'S GRANTED TO
GRANTED (#) EMPLOYEES IN FISCAL YEAR EXERCISE OF BASE PRICE
NAME ($/SH) EXPIRATION DATE
<S> <C> <C> <C> <C>
John Proulx -- -- -- --
</TABLE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of Unexercised
Securities Underlying Value of Unexercised In-
Options/SARs At FY-End The-Money Option/SARs
Shares Acquired On (#) At FY-End ($)
Name Exercise (#) Value Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
John Proulx - - - -
</TABLE>
<PAGE>
COMPENSATION OF DIRECTORS
The Directors have not received any compensation for serving in such
capacity, and the Company does not currently contemplate
compensating its Directors in the future for serving in such capacity.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 26, 1999, IRI (which at the time was designated EPL
Ventures Corp., a Florida corporation ("EPL")) acquired all of the
outstanding common stock of Industrial Rubber Innovations, Inc., a
Nevada corporation ("IRI-Nevada") in a business combination
described as a "reverse acquisition." For accounting purposes, the
acquisition has been treated as the acquisition of EPL (the
Registrant) by IRI-Nevada. As part of the acquisition, EPL changed
its name to Industrial Rubber Innovations, Inc. ("IRI").
Immediately prior to the acquisition, and following the
effectiveness of a 1-for-5 reverse stock split which was part of the
acquisition, EPL had 3,444,000 shares of common stock outstanding.
As part of EPL's reorganization with IRI-Nevada, EPL issued
3,800,000 shares of its common stock to the shareholders of
IRI-Nevada in exchange for 3,800 shares of IRI-Nevada common stock.
In addition, the Company issued warrants, exercisable until May 1,
2001 and containing registration rights, to purchase an aggregate of
2,000,000 shares of its common stock, one-half at an exercise price
of $0.50 and one-half at an exercise price of $0.75, to the
IRI-Nevada shareholders. EPL had no significant operations prior to
the merger. The Company's common stock currently trades on the NASD
OTC Bulletin Board under the symbol "IRIB."
Effective June 25, 1999, the Company entered into a royalty-free
license agreement with Century Rubber, LLC, a California Limited
Liability Company. Under the terms of the license, the Company has
the exclusive, unlimited right to manufacture, market, sell and
distribute products made from or derived from a single licensed
formula. The license is for an indefinite period, unless terminated
by Century Rubber, LLC due to a breach of the Agreement by the
Company. The members of Century Rubber, LLC are Messrs. Proulx,
Foran, Hun and Tieu, and Ms. Sheo, each a member of the Company's
management. As a result of the transaction, there exists a
potential conflict of interest between Century Rubber, LLC, the
Company, and members of the Company's management.
ITEM 8 - DESCRIPTION OF SECURITIES
COMMON STOCK
The Company's Articles of Incorporation authorize the issuance of
50,000,000 shares of common stock, $0.001 par value per share, of
which 7,244,000 were outstanding as of July 20, 1999. Pursuant to
the Agreement and Plan of Reorganization dated April 12, 1999, the
Company approved a 1-for-5 reverse stock split of its common stock.
All references to the numbers of shares of the Company's common
stock are adjusted to reflect the 1-for-5 reverse split of the
Company's common stock. Holders of shares of common stock are
entitled to one vote for each share on all matters to be voted on by
the stockholders. Holders of common stock have no cumulative voting
rights. Holders of shares of common stock are entitled to share
ratably in dividends, if any, as may be declared, from time to time
by the Board of Directors in its discretion, from funds legally
available therefor. In the event of a liquidation, dissolution or
winding up of the Company, the holders of shares of common stock are
entitled to share pro rata all assets remaining after payment in
full of all liabilities. Holders of common stock have no preemptive
rights to purchase the Company's common stock. There are no
conversion rights or redemption or sinking fund provisions with
respect to the common stock. All of the outstanding shares of
common stock are fully paid and non-assessable.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of
5,000,000 shares of preferred stock, $0.001 par value, none of which
are issued and outstanding. The Company's Board of Directors has
authority, without action by the shareholders, to issue all or any
portion of the authorized but unissued preferred stock in one or
more series and to determine the voting rights, preferences as to
dividends and liquidation, conversion rights, and other rights of
such series. The issuance of preferred stock may also include
restricting dividends on the common stock, dilute the voting power
of the common stock, and/or impair the liquidation rights of the
holders of common stock.
<PAGE>
TRANSFER AGENT
The transfer agent for the common stock is Interwest Transfer Co.,
1981 4800 South, Suite 100, Salt Lake City, Utah 84117.
<PAGE>
PART II
ITEM 1 - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
MARKET INFORMATION
The following table sets forth the high and low bid prices for
shares of the Company's common stock for the periods noted, as
reported by the National Daily Quotation Service and the NASDAQ
Bulletin Board. Quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions. On November 21, 1997, the Company's common stock
began listing on the NASDAQ exchange under the trading symbol EPLV.
Effective on April 27, 1999, the trading symbol for the Company's
common stock changed to IRIB.
<TABLE>
<S> <C> <C> <C>
Bid Prices
Year Period High Low
1999 First Quarter .07 .06
Second Quarter 1.94 1.00
Third Quarter 1.47 1.19
(thru July 20,1999)
1998 First Quarter 5.19 3.90
Second Quarter 3.62 2.12
Third Quarter .44 .06
Fourth Quarter .10 .06
</TABLE>
NUMBER OF SHAREHOLDERS
The number of beneficial holders of record of the common stock of
the company as of the close of business on July 20, 1999 was
approximately 82. Many of the shares of the Company's common stock
are held in "street name" and consequently reflect numerous
additional beneficial owners.
DIVIDEND POLICY
To date, the Company has declared no cash dividends on its common
stock, and does not expect to pay cash dividends in the next term.
The Company intends to retain future earnings, if any, to provide
funds for operation of its business.
ITEM 2 - LEGAL PROCEEDINGS
The Company may from time to time be involved in various claims,
lawsuits, disputes with third parties, actions involving allegations
of discrimination, or breach of contract actions incidental to the
operation of its business. The Company is not currently involved in
any such litigation which it believes could have a materially
adverse effect on its financial condition or results of operations.
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Effective March 11, 1999, Davidson & Company, Chartered Accountants,
were engaged by the Company as their principal accountant to audit
the Company's financial statements. There have been no changes in
accountants or disagreements of the type required to be reported
under this Item 3 between the Company and its independent auditors
since their date of engagement, nor during the Company's two most
recent fiscal years or any later interim period.
<PAGE>
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
In connection with a private offering of securities which was made
by the Company in January 1998, the Company sold an aggregate of
2,200,000 units (the "Units") to sixteen (16) purchasers under Rule
504 of Regulation D of the Securities Act of 1933. Each Unit
contained one (1) share of common stock and one (1) common stock
purchase warrant (the "Warrants"). The Warrants were exercisable
for a period of one year from the date of issuance at a price of
$1.00 per share. Each Unit was sold at a price of $0.25 per unit,
resulting in net proceeds to the Company of $550,000.
In connection with the exercise of the Warrants, an aggregate of
500,000 shares of common stock was issued to three (3) existing
shareholders in February 1998, resulting in net proceeds to the
Company of $500,000. The issuance was exempt from registration
under Rule 504 of Regulation D in accordance with the sale of the
Units in January 1998.
In connection with the exercise of the Warrants, an aggregate of
20,000 shares of common stock was issued to one (1) existing
shareholder in May 1998, resulting in net proceeds to the Company of
$20,000. The issuance was exempt from registration under Rule 506
of Regulation D.
In connection with a private offering of securities which was made
by the Company in April 1999, the Company sold an aggregate of
13,500,000 shares of common stock to ten (10) accredited investors
under Rule 504 of Regulation D of the Securities Act of 1933. Each
share was sold at a price of $0.04 per share, resulting in net
proceeds to the Company of $540,000.
On April 26, 1999, IRI (which at the time was designated EPL
Ventures Corp., a Florida corporation ("EPL") acquired all of the
outstanding common stock of Industrial Rubber Innovations, Inc., a
Nevada corporation ("IRI-Nevada") in a business combination
described as a "reverse acquisition." For accounting purposes, the
acquisition has been treated as the acquisition of EPL (the
Registrant) by IRI-Nevada. As part of the acquisition, EPL changed
its name to Industrial Rubber Innovations, Inc. ("IRI").
Immediately prior to the acquisition, and following the
effectiveness of a 1-for-5 reverse stock split which was part of the
acquisition, EPL had 3,444,000 shares of common stock outstanding.
As part of EPL's reorganization with IRI-Nevada, EPL issued
3,800,000 shares of its common stock to the shareholders of
IRI-Nevada in exchange for 3,800 shares of IRI-Nevada common stock.
In addition, the Company issued options to purchase an aggregate of
2,000,000 shares of its common stock to the IRI-Nevada shareholders.
All of the issuances were exempt under Section 4(2) of the
Securities Act of 1933.
On June 1, 1999, in exchange for consulting services the Company
issued to Pegasus Consulting, an accredited entity, warrants to
acquire 9,333 shares of common stock at a price of $0.75 per share,
exercisable until June 1, 2000. The issuance was exempt under
Section 4(2) of the Securities Act of 1933.
On January 18, 1999, IRI-Nevada entered into a loan agreement with
Gencon Investments, Ltd. ("Gencon"), an accredited entity, whereby
Gencon loaned to IRI-Nevada the sum of $37,500. In accordance with
the terms of the agreement, on May 25, 1999, the Company issued to
Gencon warrants to acquire 50,000 shares of common stock at a price
of $0.75 per share, exercisable until May 21, 2000. In addition,
and in accordance with the terms of the agreement, on May 25, 1999
the Company issued to two Gencon affiliates, Gordon Reid and Robert
Dent, warrants to acquire 100,000 shares and 150,000 shares,
respectively, of common stock at a price of $0.75 per share,
exercisable until May 21, 2000. All of the issuances were exempt
under Section 4(2) of the Securities Act of 1933.
<PAGE>
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation Laws of the State of Florida and the Company's
Bylaws provide for indemnification of the Company's Directors for
liabilities and expenses that they may incur in such capacities. In
general, Directors and Officers are indemnified with respect to
actions taken in good faith in a manner reasonably believed to be
in, or not opposed to, the best interests of the Company, and with
respect to any criminal action or proceeding, actions that the
indemnitee had no reasonable cause to believe were unlawful.
Furthermore, the personal liability of the Directors is limited as
provided in the Company's Articles of Incorporation.
The Company does not currently maintain a policy of directors and
officers insurance.
<PAGE>
PART F/S
FINANCIAL STATEMENTS
The Financial Statements required by this Item are included at the
end of this report beginning on Page F-1.
PART III
ITEM 1 - INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2 Agreement and Plan of Reorganization dated April 12, 1999
3.1 Articles of Incorporation of Henry Winkler, Inc. Filed
August 7, 1986
3.2 Amendment to Articles of Incorporation Filed June 23, 1997
3.3 Amendment to Articles of Incorporation Filed November 3,
1997
3.4 Articles of Merger filed with the Florida Secretary of
State on April 26, 1999
3.5 Bylaws
10.1 Loan Agreement with Gencon Investments, Ltd. dated
January 18, 1999
10.2 License Agreement with Century Rubber, LLC dated June
25, 1999
10.3 Employment Agreement for John Proulx dated May 15, 1999
10.4 Employment Agreement for David H. Foran dated May 15, 1999
10.5 Employment Agreement for Benny Hun dated May 15, 1999
10.6 Employment Agreement for Steven Tieu dated May 15, 1999
10.7 Employment Agreement for Nancy Sheo dated May 15, 1999
10.8 Lease of Premises Located at 6801 McDivitt Drive,
Bakersfield, CA
10.9 Omnibus Stock Option Plan adopted June 3, 1999
23 Consent of Davidson & Company, Chartered Accountants
ITEM 2 - DESCRIPTION OF EXHIBITS
Not applicable
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
INDUSTRIAL RUBBER INNOVATIONS, INC.
Date: July 26, 1999 By: /s/ John Proulx
John Proulx
President & Chief Executive Officer
<PAGE>
EPL VENTURES CORP.
FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
MARCH 31, 1999
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
EPL Ventures Corp.
(A Development Stage Company)
We have audited the balance sheets of EPL Ventures Corp. as at March 31,
1999 and October 31, 1998 and the statements of operations, changes in
shareholders' equity and cash flows for the five month period ended March
31, 1999, the year ended October 31, 1998 and the period from incorporation
on August 7, 1986 to March 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 audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of EPL Ventures Corp. as at
March 31, 1999 and October 31, 1998 and the results of its operations and
its cash flows for the five month period ended March 31, 1999, the year
ended October 31, 1998 and the period from incorporation on August 7, 1986
to March 31, 1999 in conformity with generally accepted accounting
principles in the United States of America.
The accompanying financial statements have been prepared assuming that EPL
Ventures Corp. will continue as a going concern. As discussed in Note 2 to
the financial statements, unless the Company attains future profitable
operations and/or obtains additional financing, there is substantial doubt
about the Company's ability to continue as a going concern. Management's
plans in regards to these matters are discussed in Note 2. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
The audited financial statements as at October 31, 1997 and for the ten
month period ended October 31, 1997 were examined by another auditor who
expressed an opinion without reservation on those statements in his report
dated November 6, 1997.
/s/ Davidson & Company
Vancouver, Canada Chartered Accountants
May 27, 1999
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<S> <C> <C>
March 31, October 31,
1999 1998
ASSETS
CASH $ - $ 158
INVESTMENT (Note 4) 800,000 800,000
DUE FROM INDUSTRIAL RUBBER INNOVATIONS INC. 58,500 -
$858,500 $800,158
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Bank indebtedness $ 23 $ -
Accounts payable and accrued liabilities 108,931 80,424
108,954 80,424
SHAREHOLDERS' EQUITY
Capital stock
Authorized
50,000,000 common shares
with a par value of $0.001
Issued and outstanding
October 31, 1997 -
1,000,000 common shares with
a par value of $0.001
March 31, 1999 -
3,720,000 common shares with
a par value of $0.001 3,720 3,720
Share subscriptions received 58,500 -
Additional paid-in capital 1,071,280 1,071,280
Deficit accumulated during
the development stage (383,954) (355,266)
749,546 719,734
$ 858,500 $ 800,158
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C> <C>
Incorporation
on August 7, Five Month Ten Month
1986 to Period Ended Year Ended Period Ended
March 31, March 31, October 31, October 31,
1999 1999 1998 1997
EXPENSES
Accounting and Legal fees 38,645 1,431 37,214 -
Administrative fees 19,000 - 19,000 -
Bank and interest charges 3,080 1,279 1,801 -
Consulting fees 59,842 20,700 39,142 -
Filing fees 697 - 697 -
Foreign exchange 2,291 (78) 2,369 -
Office expenses 16,139 3,158 6,161 1,820
Travel and entertainment 7,010 1,341 5,669 -
Telephone 7,250 857 6,393 -
(153,954) (28,688) (118,446) (1,820)
OTHER ITEM
Write-down of investments
(Note 4) (230,000) - (230,000) -
LOSS FOR THE PERIOD $ (383,954) $ (28,688) $ (348,446) $ (1,820)
LOSS PER SHARE $ (0.01) $ (0.14) $ (0.0018)
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING 3,720,000 2,501,849 1,000,000
</TABLE>
The accompanying notes are an integral part of these financial statments.
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Share Subscriptions Received Development
Shares Amount Capital Shares Amount Stage Total
Balance, December 31,
1995 10,000 $ 1,000 $ 4,000 - $ - $(5,000) -
Loss for the year - - - - - - -
Balance, December 31,
1996 10,000 1,000 4,000 - - (5,000) -
On June 23, 1997,
changed from $0.10
par value to $0.001
par value - (990) 990 - - - -
On June 23, 1997,
forward stock split
100:1 990,000 990 (990) - - - -
Loss for the period - - - - - (1,820) (1,820)
Balance, October 31,
1997 1,000,000 1,000 4,000 (6,820) (1,820)
Shares issued for cash 1,720,000 2,720 1,067,280 - - - 1,070,000
Loss for the year - - - - - (348,446) (348,446)
Balance, October 31,
1998 3,720,000 3,720 1,071,280 - - (355,266) 719,734
Loss for the period - - - - - (28,688) (28,688)
Shares subscription
received (net of
issuance cost) - - - - 58,500 - 58,500
Balance, March 31,
1999 3,720,000 $ 3,720 $ 1,071,280 - $ 58,500 (383,954) 749,546
</TABLE>
The accompanying notes are an integral part of these financil statements.
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<S> <C> <C> <C> <C>
Cumulative
Amounts From
Incorporation
on August 7, Five Month Ten Month
1986 to Period Ended Year Ended Period Ended
March 31, March 31, October 31, October 31,
1999 1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (383,954) $ (28,688) $ (348,446) $ (1,820)
Item not involving an outlay of
cash: Write-down of investments 230,000 - 230,000 -
Increase in accounts payable 108,931 28,507 78,604 1,820
Net cash used in operating activities (45,023) (181) (39,842) -
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 1,075,000 - 1,070,000 -
CASH FLOWS FROM INVESTING ACTIVITIES
Investment (1,030,000) - (1,030,000) -
Change in cash (bank indebtedness)
for the period (23) (181) 158 -
Cash (bank indebtedness),
beginning of period - 158 - -
Cash (bank indebtedness)
end of period $ (23) (23) 158 -
Supplemental disclosure with respect
to cash flows
Cash paid during the period
for interest - - - -
Cash paid during the period
for income taxes - - - -
</TABLE>
THERE WERE NO NON-CASH TRANSACTIONS FOR THE PERIODS ENDED MARCH 31, 1999,
OCTOBER 31, 1998 AND OCTOBER 31, 1997.
The accompanying notes are an integral part of these financial statements.
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized August 7, 1986, under the laws of the State
of Florida as Henry Winkler, Inc. The Company currently has no
operations and, in accordance with SFAS #7, is considered a
development stage company.
On August 14, 1986, the Company issued 10,000 shares of its $0.10 par
value common stock for $5,000.
On June 23, 1997, the State of Florida approved the Company's restated
Articles of Incorporation, which increased its capitalization from
10,000 common shares, $0.10 par value, to 50,000,000 common
shares, $0.001 par value.
Effective June 23, 1997, the Board of Directors approved a forward
stock split of 100:1. Thus increasing the number of common shares
outstanding from 10,000 common shares to 1,000,000 common
shares.
On October 21, 1997, the name of the Company was changed to EPL
Ventures Corp.
2. GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the company has no current
source of revenue. Without realization of additional capital, it
would be unlikely for the Company to continue as a going concern.
It is management's plan to seek additional capital through a merger
with an existing operating company.
<TABLE>
<S> <C> <C>
March 31, October 31,
1999 1998
Deficit accumulated during the development stage $ (383,954) $ (355,266)
Working capital deficiency (108,954) (80,266)
</TABLE>
3. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
In May 1993, the Financial Accounting Standards Board issued Statement
No. 115 ("SFAS 115"), Accounting for Certain Investments in Debt and
Equity Securities, which is effective for years beginning after
December 15, 1993. Under SFAS 115, the Company's investments are
classified into available-for-sale or trading securities categories
stated at their fair values. The fair market value of securities is
determined through published market value quotations, obtained for the
day of the valuation. Any unrealized holding gains or losses are to
be reported as a separate component of shareholder's equity until
realized for available-for-sale securities,and included in earnings for
trading securities.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting standards Board issued
Statements of Financial Accounting Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities"("SFAS 133") which
establishes accounting an reporting standards for derivative
instruments and for hedging activities. SFAS 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. The Company does not anticipate that the adoption of
the statement will have a significant impact on its financial statements.
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd ..)
REPORTING ON COSTS OF START-UP ACTIVITIES
In April 1998, the American Institute of Certified Public Accountant's
issued Statement of Position 98-5 "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") which provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs
of start-up activities and organization costs to be expensed as
incurred. SOP 98-5 is effective for fiscal years beginning after
December 15, 1998 with initial adoption reported as the cumulative
effect of a change in accounting principle. The Company has not yet
determined the effect that the adoption of this
statement will have on its financial statements.
LOSS PER SHARE
Loss per share is based on the weighted average number of common
shares outstanding during the period.
COMPARATIVE FIGURES
Certain comparative figures have been adjusted to conform to the
current year's presentation.
4. INVESTMENTS
During the year, the Company invested $850,000 in common shares of
Savant Biomedical Inc. ("Savant"). In addition, the Company holds a
note from Savant in the amount of $180,000. During the year, the
Company wrote-down its investment by the amount of $230,000 due to a
permanent decline in its market value, the amount of which has been
included in the statement of operations.
5. SUBSEQUENT EVENTS
a) The Company issued 13,500,000 common shares in connection with a
private placement offering at a price of $0.04 per common share,
for proceeds totaling $540,000.
b) Effective April 26, 1999 the Company acquired all of the issued
and outstanding share capital of Industrial Rubber Innovations,
Inc. ("IRI"). As consideration, the Company issued 3,800,000
common shares of the Company. Immediately prior to the
acquisition, the Company implemented a five for one
reverse stock split, resulting in a total of 3,444,000 common
shares outstanding. Post-acquisition number of shares
outstanding totaled 7,244,000 common shares. As part of the
acquisition agreement, the Company also issued warrants to
acquire 2,000,000 common shares of the Company to the IRI
shareholders.
Legally, the Company is the parent of IRI. However,as a result
of the share exchange described above, control of the combined
companies passed to the former shareholders of IRI. This type of
share exchange, referred to as a "reverse acquisition", deems
IRI to be the acquiror for accounting purposes. Accordingly,
the net assets of the IRI will be included in the balance sheet
at book values and the deemed acquisition of the Company will be
accounted for by the purchase method with the net assets of the
Company recorded at fair market value at the date of
acquisition.
At April 26, 1999, the Company was inactive with a thin market
for its shares,making it impossible to estimate the actual market
value of the 3,800,000 common shares. Therefore, the cost of
the acquisition will be determined by the fair value of the
Company's net assets.
<PAGE>
EPL VENTURES CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
5. SUBSEQUENT EVENTS (cont'd ..)
c) The Company changed its name to Industrial Rubber
Innovations, Inc.
d) The Company entered into five two-year Employment
Agreements with directors and an officer of
the Company. Each director and officer will be paid an
annual salary of $60,000.
These agreements may be terminated by either party after
the first year and would be subject to one
year's compensation as severance.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
MARCH 31, 1999
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Industrial Rubber Innovations, Inc.
(A Development Stage Company)
We have audited the balance sheet of Industrial Rubber Innovations, Inc. as
at March 31, 1999 and the statements of operations, changes in shareholders'
equity and cash flows for the period from incorporation on November 19, 1998
to March 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we
plan and perform an 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.
In our opinion, these statements present fairly, in all material respects,
the financial position of the Company as at March 31, 1999 and the results
of its operations and its cash flows for the period from incorporation on
November 19, 1998 to March 31, 1999 in conformity with generally accepted
accounting principles in the United States of America. We believe that our
audit provides a reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming that
Industrial Rubber Innovations, Inc. will continue as a going concern. As
discussed in Note 2 to the financial statements, unless the Company attains
future profitable operations and/or obtains additional financing, there is
substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regards to these matters are discussed in
Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Davidson & Company
Vancouver, Canada
Chartered Accountants
May 27, 1999
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A Development Stage Company)
BALANCE SHEET
AS AT MARCH 31, 1999
<TABLE>
<S> <C>
ASSETS
Current
Cash $ 1,981
Accounts Receivable 4,381
Inventory 37,434
43,796
Capital assets (Note 4) 15,477
$ 59,273
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 24,328
Loan to shareholder 10,000
Loan payable (Note 5) 37,500
Due to EPL Ventures Corp. 58,500
130,328
Shareholders' equity
Capital stock
Authorized
200,000,000 common share with a
par value of $0.001
Issued and outstanding 4
Deficit accumulated during the development stage (71,055)
59,273
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
CUMULATIVE AMOUNTS FROM INCORPORATION ON NOVEMBER 19, 1998 TO MARCH 31, 1999
<TABLE>
<S> <C>
REVENUE
Sales $ 4,381
Cost of goods sold (2,066)
OPERATING EXPENSES
Accounting and legal fees 11,250
Amortization 1,720
Automobile expenses 3,378
Bank and interest charges 465
Consulting fees 20,065
Office expenses 4,742
Travel and entertainment 24,856
Telephone and utilities 2,798
Testing mold 4,100
73,374
Loss for the period $ (71,059)
Loss per share $ (18.70)
Weighted average number of shares of
common stock outstanding 3,800
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
CUMULATIVE AMOUNTS FROM INCORPORATION ON NOVEMBER 19, 1998 TO MARCH 31, 1999
<TABLE>
<S> <C> <C> <C> <C>
Balance November 19, 1998 - $ - $ - $ -
Shares issued for cash 3,800 4 - 4
Loss for the period - - (71,059) (71,059)
Balance March 31, 1999 3,800 4 (71,059) (71,055)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
CUMULATIVE AMOUNTS FROM INCORPORATION ON NOVEMBER 19, 1998 TO MARCH 31, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (71,059)
Items not involving an outlay of cash:
Amortization 1,720
Changes in non-cash working capital items:
Increase in accounts receivable (4,381)
Increase in inventory (37,434)
Increase in accounts payable 24,328
Increase in loan to shareholder 10,000
Increase in loan payable 37,500
Increase in due to EPL Ventures Corp. 58,500
Net cash provided by operating activities 19,174
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of capital assets (17,197)
Change in cash for the period 1,981
Cash, beginning of period -
Cash, end of period $ 1,981
Supplemental disclosure with respect to cash flows
Cash paid during the period for interest $ 465
Cash paid during hte period for income taxes -
</TABLE>
THERE WERE NO NON-CASH TRANSACTIONS FOR THE PERIOD ENDED MARCH 31, 1999.
The accompanying notes are an integral part of these financial statements.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized November 19, 1998, under the laws of the State
of Nevada. The Company is in the business of selling specialty
synthetic rubber molded products.
2. GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the company has minimal
source of revenue. Without realization of additional capital, it would
be unlikely for the Company to continue as a going concern. It is
management's plan to seek additional capital through
a merger with an existing operating company.
<TABLE>
<S> <C>
1999
Deficit accumulated during the development stage $ (71,059)
Working capital deficiency (86,532)
</TABLE>
3. SIGNIFICANT ACCOUNTING POLICIES
INVENTORY
Inventory is valued at the lower of cost and net realizable value.
CAPITAL ASSETS
Capital assets are recorded at cost. Amortization is provided over the
estimated useful life of the asset using the following methods:
Molds and dyes 5 year straight-line
Computer equipment 5 year straight-line
REVENUE RECOGNITION
Revenue is derived from the sales of speciality synthetic rubber molded
products and compounds. Revenue from sales is recognized when the goods
are shipped.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting standards Board issued Statements
of Financial Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities"("SFAS 133") which establishes
accounting an reporting standards for derivative instruments and for
hedging activities. SFAS 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. The Company does
not anticipate that the adoption of the statement will have a significant
impact on its financial statements.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd ..)
REPORTING ON COSTS OF START-UP ACTIVITIES
In April 1998, the American Institute of Certified Public Accountant's
issued Statement of Position 98-5 "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") which provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs of
start-up activities and organization costs to be expensed as incurred.
SOP 98-5 is effective for fiscal years beginning after
December 15, 1998 with initial adoption reported as the cumulative
effect of a change in accounting principle. The Company has not yet
determined the effect that the adoption of this statement will
have on its financial statements.
LOSS PER SHARE
Loss per share is based on the weighted average number of common shares
outstanding during the period.
4. CAPITAL ASSETS
<TABLE>
<S> <C> <C> <C>
Molds and dyes $ 16,415 $ 1,642 $ 14,773
Computer equipment 782 78 704
17,197 1,720 15,477
</TABLE>
5. LOAN PAYABLE
The Company entered into a Loan Agreement dated January 18, 1999,
whereby the Company is obligated to pay $37,500 plus 20% interest by
May 19, 1999. Pursuant to the terms of the agreement, the
loan may be repaid by:
a) cash;
b) issuance of 10% of the issued shares of the Company; or
c) issuance of shares, warrants, and options in a new public company
("Pubco")to be created by or merged with the Company. Should
the creditor elect to be repaid in the latter of the three
choices described above, the Company shall cause Pubco to issue
or grant the following shares, warrants and options:
i) 50,000 shares in Pubco at a cost of $0.75 per share
totalling $37,500;
ii) 50,000 shares in Pubco at no additional cost;
iii) a warrant for 100,000 shares in Pubco, exercisable at a
price of $0.75 per share expiring one year from the date
of grant; and
iv) options to purchase 200,000 shares in Pubco, exercisable
at a price of $0.75 per share expiring one year from the
date of grant.
<PAGE>
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
6. SUBSEQUENT EVENTS
The following events occurred subsequent to March 31, 1999:
a) Effective April 26, 1999, the Company was acquired by EPL Ventures
Corp. ("EPL"). As consideration, EPL issued 3,800,000 of its
common shares in exchange for all of the Company's issued and
outstanding shares.
Legally, EPL is the parent of the Company. However, as a result of
the share exchange described above, control of the combined
companies passed to the shareholders of the Company. This type
of share exchange, referred to as a "reverse acquisition", deems
the Company to be the acquiror for accounting purposes.
Accordingly, the net assets of the Company
will be included in the balance sheet at book values and the
deemed acquisition of EPL will be accounted
for by the purchase method with the net assets of EPL recorded at
fair market value at the date of acquisition.
b) In accordance with terms of the Loan Agreement (Note 5), Pubco
issued the shares, warrants, and options in full settlement of
the loan.
<PAGE>
EPL VENTURES CORP.
PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
<PAGE>
COMPILATION REPORT
To the Directors of
EPL Ventures Corp.
We have compiled the accompanying pro-forma consolidated balance sheet of
EPL Ventures Corp. as at March 31, 1999, which has been prepared to include
the Agreement and Plan of Reorganization. In our opinion, the pro-forma
consolidated financial statements have been properly compiled to give effect
to the proposed transaction and assumptions in the notes thereto.
The pro-forma consolidated balance sheet as at March 31, 1999 has been
compiled from the audited financial statements of the Company and the
audited financial statements of Industrial Rubber Innovations, Inc.
/s/ Davidson & Company
Vancouver, Canada
Chartered Accountants
May 27, 1999
<PAGE>
EPL VENTURES CORP.
PRO-FORMA CONSOLIDATED BALANCE SHEET
(Unaudited)
AS AT MARCH 31, 1999
<TABLE>
<S> <C> <C> <C> <C> <C>
Industrial
EPL Rubber
Ventures Innovations, Pro-forma Pro-forma Pro-forma
Corp. Inc. Adjustments Adjustments Consolidation
ASSETS
Current
Cash $ - $ 1,981 $ 540,000 $ - $ 541,981
Accounts receivable - 4,381 - - 4,381
Inventory - 37,434 - - 37,434
- 43,796 540,000 - 583,796
Capital assets - 15,477 - - 15,477
Investment 800,000 - - - 800,000
Due from Industrial
Rubber Innovations, Inc. 58,500 - (58,500) - -
$858,500 $ 59,273 $ 481,500 $ - $ 1,399,273
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness $ 23 $ - $ - $ - $ 23
Accounts payable and
accrued liabilities 108,931 24,328 - - 133,259
Loan payable - 10,000 - - 10,000
Due to related parties - 37,500 - - 37,500
Due to EPL Ventures Corp. - 58,500 (58,500) - -
108,954 130,328 (58,500) - 180,782
Shareholders' equity
Capital stock 3,720 4 540,000 745,826 1,289,550
Shares subscriptions
received 58,500 - - (58,500) -
Additional paid-in
capital 1,071,280 - - (1,071,280) -
Deficit (383,954) (71,059) - 383,954 (71,059)
749,546 (71,055) 540,000 - 1,218,491
$ 858,500 $ 59,273 $ 481,500 $ - $ 1,399,273
</TABLE>
<PAGE>
EPL VENTURES CORP.
NOTES TO THE PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 1999
1. BASIS OF PRESENTATION
The unaudited pro-forma consolidated financial statements of EPL Ventures
Corp. have been compiled from and include:
a) the audited balance sheet of EPL Ventures Corp. ("EPL") as at
March 31, 1999;
b) the audited balance sheet of Industrial Rubber Innovations, Inc.
("IRI") as at March 31, 1999; and
c) the additional information set out in Note 2.
2. PRO-FORMA TRANSACTIONS
The pro-forma consolidated financial statement was prepared on the
assumption that the following transactions occurred:
a) EPL issued 13,500,000 common shares at a price of $0.04 per share,
and received proceeds totalling $540,000.
b) The share capital of EPL was consolidated on a basis of five old
common shares for one new common share.
c) EPL issued 3,800,000 common shares in exchange for all of the
issued and outstanding common shares (3,800 common shares) of IRI.
d) IRI shall be merged with and into EPL. The separate corporate
existence of IRI will cease and EPL shall continue as the surviving
corporation.
e) The merger has been accounted for by the purchase method whereby
IRI has been identified as the acquiror. The net assets of IRI
will be included in the balance sheet at book values and the
deemed acquisition of EPL will be recorded at the fair value of
EPL's net assets at the date of acquisition.
f) At the time of the merger, EPL will issue warrants to acquire
2,000,000 shares of EPL common shares ("Warrants"). One half of
the Warrants shall be exercisable for a period of 24 months at an
exercise price of $0.50 per share and the balance shall be
exercisable for a period of 24 months at an exercise
price of $0.75 per share.
g) EPL changed its name to Industrial Rubber Innovations, Inc.
- CONTINUED -
<PAGE>
EPL VENTURES CORP.
NOTES TO THE PRO-FORMA CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
MARCH 31, 1999
3. CAPITAL STOCK
Capital stock as at March 31, 1999 in the pro-forma consolidated balance
sheet is comprised of the following:
<TABLE>
<S> <C> <C>
Number
of shares Amount
Capital stock as set out in the audited
financial statements of IRI as referred
to in Note 1. - $ 4
Capital stock as set out in the audited
financial statement of EPL as referred
to in Note 1. 3,720,000 3,720
Shares subscriptions received as set out
in the audited financial statement of
EPL as referred to in Note 1. - 58,500
Additional paid-in capital received as set
out in the audited financial statement
of EPL as referred to in Note 1. - 1,071,280
Capital stock issued for cash 13,500,000 540,000
Share consolidation (5:1) (13,766,000) -
Issued by EPL pursuant to the acquisition of IRI 3,800,000 -
Deficit of EPL at March 31, 1999 - (383,954)
7,244,000 $ 1,289,550
</TABLE>
AGREEMENT AND
PLAN OF REORGANIZATION
DATED APRIL 12, 1999
BETWEEN
EPL VENTURES CORP
AND
INDUSTRIAL RUBBER INNOVATIONS, INC.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement")
is entered into this 12th day of April, 1999 by and between EPL
VENTURES CORP, a Florida corporation ("EPL" and "Surviving
Corporation") and INDUSTRIAL RUBBER INNOVATIONS, INC., a Nevada
corporation ("IRI").
RECITALS
A. Subject to and in accordance with the terms and
conditions of this Agreement and pursuant to the Certificate of
Merger attached hereto as Exhibit A ("Certificate of Merger"), the
parties intend that IRI will merge with and into EPL (the "Merger"),
whereby at the Effective Time (and after giving effect to the
Reverse Stock Split described in Section 2.1(a) hereof), all of the
IRI Common Stock will be converted into three million eight hundred
thousand (3,800,000) shares of common stock of EPL (the "EPL Common
Stock").
B. For federal income tax purposes, it is intended that
the Merger shall qualify as a tax free reorganization within the
meaning of Section368(a)(1)(A) of the Code.
C. The parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other
as an inducement to the consummation of the Merger.
AGREEMENT
NOW, THEREFORE, in reliance on the foregoing recitals and in
and for the consideration and mutual covenants set forth herein, the
parties agree as follows:
1. CERTAIN DEFINITIONS.
1.1 "AFFILIATE" shall have the meaning set forth in the
rules and regulations promulgated by the Commission pursuant to the
Securities Act.
1.2 "CLOSING" shall mean the closing of the transactions
contemplated by this Agreement.
1.3 "CLOSING DATE" shall mean the date of the Closing.
1.4 "CODE" shall mean the United States Internal Revenue
Code of 1986, as amended.
1.5 "COMMISSION" shall mean the United States Securities
and Exchange Commission.
1.6 "DISSENTING SHARES" shall mean those shares held by
holders who perfect their appraisal rights under the applicable
state laws.
<PAGE>
1.7 "EFFECTIVE TIME" shall mean the date and time of the
effectiveness of the Merger under Florida law.
1.8 "GAAP" shall mean generally accepted accounting
principles.
1.9 "IRI COMMON STOCK" shall mean all of the outstanding
shares of Common Stock of IRI.
1.10 "MATERIAL ADVERSE EFFECT" shall mean a material
adverse effect on the operations, assets or financial condition
(financial or otherwise) of an entity considered as a whole.
1.11 "SECURITIES ACT" shall mean the Securities Act of
1933, as amended, or any similar federal statute and the rules and
regulations thereunder, all as the same shall be in effect at the time.
1.12 "TRANSACTION DOCUMENTS" shall mean all documents or
agreements attached as an exhibit or schedule hereto, and set forth
on the Table of Contents.
2. PLAN OF REORGANIZATION.
2.1 THE MERGER. Subject to the terms and conditions of
this Agreement and the Certificate of Merger, IRI shall be merged
with and into EPL in accordance with the applicable provisions of
the laws of the States of Florida and Nevada, and with the terms and
conditions of this Agreement and the Certificate of Merger, so that:
(A) At the Effective Time (as defined in Section
2.5 (below)), IRI shall be merged with and into EPL. As a result of
the Merger, the separate corporate existence of IRI shall cease, and
EPL shall continue as the surviving corporation, and shall succeed
to and assume all of the rights and obligations of IRI in accordance
with the laws of Florida. In addition, at the Effective Time, the
outstanding shares of common stock of EPL will undergo a 1 for 5
reverse stock split, resulting in an aggregate of 3,444,000 shares
of common stock issued and outstanding (without giving effect to the
shares issued to IRI hereunder).
(B) The Bylaws of EPL in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving
Corporation after the Effective Time unless and until further
amended as provided by law. The Certificate of Incorporation of EPL
shall be amended as provided in the Certificate of Merger attached
hereto as Exhibit A.
(C) Subject to the terms of this Agreement, the
directors and officers of IRI immediately prior to the Effective
Time shall be the directors and officers of the Surviving
Corporation after the Effective Time. Such directors and officers
shall hold their position until the election and qualification of
their respective successors or until their tenure is otherwise
terminated in accordance with the Bylaws of the Surviving Corporation.
(D) At the Effective Time, EPL shall cause to be
issued to the IRI shareholders (the "Warrant Holders"), pro-rata in
accordance with their stock ownership prior to the merger, warrants
to acquire an aggregate of 2,000,000 shares of EPL common stock (the
"Warrants"). One half (1/2) of the Warrants held by each Warrant
Holder shall be exercisable for a period of 24 months at an exercise
price of $0.50 per share, and the balance shall be exercisable for a
period of 24 months at an exercise price of $0.75 per share. Upon
the exercise of any or all of the Warrants, the Warrant Holders
shall receive shares of common stock which are "restricted" in
accordance with Rule 144 of the Securities Act of 1933.
<PAGE>
2.2 CONVERSION OF SHARES. Each share of IRI Common
Stock, issued and outstanding immediately prior to the Effective
Time, will, by virtue of the Merger, and at the Effective Time, and
without further action on the part of any holder thereof, be
converted into 1,000 shares of fully paid and nonassessable shares
of EPL Common Stock.
2.3 FRACTIONAL SHARES. No fractional shares of EPL
Common Stock will be issued in connection with the Merger.
2.4 THE CLOSING. Subject to termination of this
Agreement as provided in Section 10 (below), the Closing shall take
place at the offices of M. Richard Cutler, 610 Newport Center Drive,
Suite 800, Newport Beach, CA 92660, as soon as possible upon the
satisfaction or waiver of all conditions set forth in Sections 8 and
9 hereof, or such other time and place as is mutually agreeable to
the parties.
2.5 EFFECTIVE TIME. Simultaneously with the Closing, the
Certificate of Merger shall be filed in the office of the Secretary
of State of the State of Florida. The Merger shall become effective
immediately upon the filing of the Certificate of Merger with such
office.
2.6 TAX FREE REORGANIZATION. The parties intend to adopt
this Agreement as a tax-free plan of reorganization and to
consummate the Merger in accordance with the provisions of
Section368(a)(1)(A) of the Code. Each party agrees that it will not
take or assert any position on any tax return, report or otherwise
which is inconsistent with the qualification of the Merger as a
reorganization within the meaning of Section368(a) of the Code. EPL
represents now, and as of the Closing Date, that it presently
intends to continue IRI's historic business or use a significant
portion of IRI's business assets in a business.
3. REPRESENTATIONS AND WARRANTIES OF IRI. IRI
represents and warrants to EPL as set forth below. No fact or
circumstance disclosed shall constitute an exception to these
representations and warranties except as may mutually be agreed upon
in writing by the parties hereto.
3.1 ORGANIZATION. IRI is a corporation duly organized,
validly existing and in good standing under the laws of the state of
Nevada and has the corporate power and authority to carry on its
business as it is now being conducted. IRI is duly qualified or
licensed to do business and is in good standing in each jurisdiction
in which the nature of its business or properties makes such
qualification or licensing necessary except where the failure to be
so qualified would not have a Material Adverse Effect on IRI.
3.2 CAPITALIZATION.
(A) The authorized capital of IRI consists of
200,000,000 shares of Common Stock, par value $0.001 per share, of
which 3,800 shares are issued and outstanding.
<PAGE>
(B) IRI does not have outstanding any preemptive
rights, subscription rights, options, warrants, rights to convert or
exchange, capital stock equivalents, or other rights to purchase or
otherwise acquire any IRI capital stock or other securities.
(C) All of the issued and outstanding shares of
IRI capital stock have been duly authorized, validly issued, are
fully paid and nonassessable, and such capital stock has been issued
in full compliance with all applicable federal and state securities
laws. None of IRI's issued and outstanding shares of capital stock
are subject to repurchase or redemption rights.
(D) Except for any restrictions imposed by
applicable state and federal securities laws, there is no right of
first refusal, option, or other restriction on transfer applicable
to any shares of IRI's capital stock.
(E) IRI is not a party or subject to any agreement
or understanding (and, to IRI's actual knowledge, there is no
agreement or understanding between or among any persons) that
affects or relates to the voting or giving of written consent with
respect to any security.
3.3 POWER, AUTHORITY AND VALIDITY. IRI has the corporate
power to enter into this Agreement and the other Transaction
Documents to which it is a party and to carry out its obligations
hereunder and thereunder. The execution and delivery of this
Agreement and the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of IRI and no other corporate
proceedings on the part of IRI are necessary to authorize this
Agreement, the other Transaction Documents and the transactions
contemplated herein and therein. IRI is not subject to, or
obligated under, any charter, bylaw or contract provision or any
license, franchise or permit, or subject to any order or decree,
which would be breached or violated by or in conflict with its
executing and carrying out this Agreement and the transactions
contemplated hereunder and under the Transaction Documents. Except
for (i) the filing of the Certificate of Merger with the Secretary
of State of the State of Nevada and appropriate documents with the
relevant authorities of other states in which IRI is qualified to do
business, and (ii) filings under applicable securities laws, no
consent of any person who is a party to a contract which is material
to IRI's business, nor consent of any governmental authority, is
required to be obtained on the part of IRI to permit the
transactions contemplated herein and to permit IRI to continue the
business activities of IRI as previously conducted by IRI without a
Material Adverse Effect. This Agreement is, and the other
Transaction Documents when executed and delivered by IRI shall be,
the valid and binding obligations of IRI, enforceable in accordance
with their respective terms.
3.4 TAX-FREE REORGANIZATION.
(A) IRI has not taken or agreed to take any action
that would prevent the Merger from constituting a reorganization
qualifying under the provisions of Section368(a) of the Code.
(B) IRI is not an investment company as defined in
SectionSection368(a)(2)(F)(iii) and (iv) of the Code.
<PAGE>
3.5 EXEMPT REORGANIZATION. For purposes of the
transactions contemplated hereunder and in accordance with Section
25103(h) of the California Corporate Securities Code:
(A) IRI has 35 or fewer security holders, all of
which are equity security holders.
(B) all equity security holders of IRI have either
a preexisting personal or business relationship with EPL or any of
its officers, directors, or controlling persons or by reason of
their business or financial experience or the business and financial
experience of their financial advisors could be reasonably assumed
to have the capacity to protect their own interest in connection
with the transaction.
(C) all equity security holders of IRI have
consented in writing to the transaction.
(D) each equity security holder of IRI has
represented that the acquisition of the EPL Common Stock in the
transaction is for the equity security holder's own account and not
with a view to or for sale in connection with any distribution of
common stock.
3.6 NO BROKERS. IRI is not obligated for the payment of
fees or expenses of any broker or finder in connection with the
origin, negotiation or execution of this Agreement or the
Certificate of Merger or in connection with any transaction
contemplated hereby or thereby.
4. REPRESENTATIONS AND WARRANTIES OF EPL. EPL
represents and warrants to IRI as set forth below. No fact or
circumstance disclosed to IRI shall constitute an exception to these
representations and warranties except as may mutually be agreed upon
in writing by IRI and EPL.
4.1 ORGANIZATION. EPL is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida and has the corporate power and authority to carry on its
business as it is now being conducted. EPL is duly qualified or
licensed to do business and is in good standing in each jurisdiction
in which the nature of its businesses or properties makes such
qualification or licensing necessary except where the failure to be
so qualified would not have a Material Adverse Effect on EPL.
4.2 CAPITALIZATION.
(A) The authorized capital of EPL consists of
50,000,000 shares of Common Stock, of which 17,220,000 shares are
issued and outstanding (prior to the Reverse Stock Split described
in Section 2.1(a) hereof and without giving effect to the shares
issued to IRI hereunder). Immediately following the Merger and the
other transactions contemplated herein, there shall be issued an
outstanding an aggregate of 7,244,000 shares of common stock, plus
warrants to acquire an additional 2,000,000 shares of common stock
as described in Section 2.1(d) hereof.
(B) EPL has no outstanding preemptive rights,
subscription rights, options, warrants, rights to convert or
exchange, capital stock equivalents, or other rights to purchase or
otherwise acquire any EPL capital stock or other securities.
<PAGE>
(C) All of the issued and outstanding shares of
EPL capital stock have been duly authorized, validly issued, are
fully paid and nonassessable, and such capital stock has been issued
in full compliance with all applicable federal and state securities
laws. None of EPL's issued and outstanding shares of capital stock
are subject to repurchase or redemption rights.
(D) Except for any restrictions imposed by
applicable state and federal securities laws, there is no right of
first refusal, option, or other restriction on transfer applicable
to any shares of EPL capital stock.
(E) EPL is not a party or subject to any agreement
or understanding (and, to EPL's actual knowledge, there is no
agreement or understanding between or among any persons) that
affects or relates to the voting or giving of written consent with
respect to any security.
4.3 POWER, AUTHORITY AND VALIDITY. EPL has the corporate
power to enter into this Agreement and the other Transaction
Documents to which they are parties and to carry out their
obligations hereunder and thereunder. The execution and delivery of
this Agreement and the Transaction Documents and the consummation of
the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of EPL and no other corporate
proceedings on the part of EPL are necessary to authorize this
Agreement, the other Transaction Documents and the transactions
contemplated herein and therein. EPL is not subject to, or
obligated under, any charter, bylaw or contract provision or any
license, franchise or permit, or subject to any order or decree,
which would be breached or violated by or in conflict with its
executing and carrying out this Agreement and the transactions
contemplated hereunder and under the Transaction Documents. Except
for (i) the filing of the Certificate of Merger with the Secretary
of State of the State of Florida and appropriate documents with the
relevant authorities of other states in which EPL is qualified to do
business, and (ii) filings under applicable securities laws, no
consent of any person who is a party to a contract which is material
to EPL's business, nor consent of any governmental authority, is
required to be obtained on the part of EPL to permit the
transactions contemplated herein and to permit EPL to continue the
business activities of EPL as previously conducted by EPL without a
Material Adverse Effect. This Agreement is, and the other
Transaction Documents when executed and delivered by EPL shall be,
the valid and binding obligations of EPL, enforceable in accordance
with their respective terms.
4.4 TAX-FREE REORGANIZATION.
(A) EPL has not taken or agreed to take any action
that would prevent the Merger from constituting a reorganization
qualifying under the provisions of Section368(a) of the Code.
(B) EPL is not an investment company as defined in
SectionSection368(a)(2)(F)(iii) and (iv) of the Code.
4.5 EXEMPT REORGANIZATION. For purposes of the
transactions contemplated hereunder and in accordance with Section
25103(h) of the California Corporate Securities Code:
(A) EPL has not earned a majority of its revenue
from investments in the last four years.
<PAGE>
(B) The transactions contemplated hereunder have
not been accomplished by the publication of any advertisement.
4.6 NO BROKERS. EPL is not obligated for the payment of
fees or expenses of any broker or finder in connection with the
origin, negotiation or execution of this Agreement or the
Certificate of Merger or in connection with any transaction
contemplated hereby or thereby.
5. PRECLOSING COVENANTS OF EPL.
5.1 NOTICES AND APPROVALS. EPL agrees: (a) to give all
notices to third parties which may be necessary or deemed desirable
by IRI in connection with this Agreement and the consummation of the
transactions contemplated hereby; (b) to use its best efforts to
obtain all federal and state governmental regulatory agency
approvals, consents, permit, authorizations, and orders necessary or
deemed desirable by IRI in connection with this Agreement and the
consummation of the transaction contemplated hereby; and (c) to use
its best efforts to obtain, and to cause EPL to obtain, all consents
and authorizations of any other third parties necessary or deemed
desirable by IRI in connection with this Agreement and the
consummation of the transactions contemplated hereby.
5.2 INFORMATION FOR IRI S STATEMENTS AND APPLICATIONS.
EPL and its employees, accountants and attorneys shall cooperate
fully with IRI in the preparation of any statements or applications
made by IRI to any federal or state governmental regulatory agency
in connection with this Agreement and the transactions contemplated
hereby and to furnish IRI with all information concerning EPL
necessary or deemed desirable by IRI for inclusion in such
statements and applications, including, without limitation, all
requisite financial statements and schedules.
6. MUTUAL COVENANTS.
6.1 REGULATORY FILINGS; CONSENTS; REASONABLE EFFORTS.
Subject to the terms and conditions of this Agreement, IRI and EPL
shall use their respective best efforts to (i) make all necessary
filings with respect to the Merger and this Agreement under the
Securities Act, and applicable blue sky or similar securities laws
and shall use all reasonable efforts to obtain required approvals
and clearances with respect thereto and shall supply all additional
information requested in connection therewith; (ii) make merger
notification or other appropriate filings with federal, state or
local governmental bodies or applicable foreign governmental
agencies and shall use all reasonable efforts to obtain required
approvals and clearances with respect thereto and shall supply all
additional information requested in connection therewith; (iii)
obtain all consents, waivers, approvals, authorizations and orders
required in connection with the authorization, execution and
delivery of this Agreement and the consummation of the Merger; and
(iv) take, or cause to be taken, all appropriate action, and do, or
cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
6.2 FURTHER ASSURANCES. Prior to and following the
Closing, each party agrees to cooperate fully with the other parties
and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably
requested by any other party to better evidence and reflect the
transactions described herein and contemplated hereby and to carry
into effect the intents and purposes of this Agreement.
<PAGE>
7. CLOSING MATTERS.
7.1 FILING OF CERTIFICATE OF MERGER. On the date of the
Closing, but not prior to the Closing, the Certificate of Merger
shall be filed with the offices of the Secretary of State of the
State of Florida and the merger of IRI with and into EPL shall be
consummated.
7.2 EXCHANGE OF CERTIFICATES. At or within 30 days of
the Closing, EPL shall deliver and issue to each shareholder of IRI
a certificate or certificates representing the EPL Common Stock
issuable to such shareholder as consideration in this Merger.
7.3 DELIVERY OF DOCUMENTS. On or before the Closing, the
parties shall deliver the documents, and shall perform the acts,
which are set forth in Sections 8 and 9, as specified in such
Sections, including delivery of the counterpart signature pages of
the Transaction Documents executed by IRI and/or EPL, as the case
may be. All documents which IRI shall deliver or cause to be
delivered shall be in form and substance reasonably satisfactory to
EPL. All documents which EPL shall deliver or cause to be delivered
shall be in form and substance reasonably satisfactory to IRI.
8. TERMINATION OF AGREEMENT.
8.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing by the mutual written consent of each of
the parties hereto. This Agreement may also be terminated and
abandoned by either IRI or EPL, if the Merger is not effected by
April 30, 1999. Any termination of this Agreement under this
Section 8.1 shall be effected by the delivery of written notice of
the terminating party to the other parties hereto.
8.2 LIABILITY FOR TERMINATION. Any termination of this
Agreement pursuant to this Section 8 shall be without further
obligation or liability upon any party in favor of any other party
hereto; provided, that if such termination shall result from the
willful failure of a party to carry out its obligations under this
Agreement, then such party shall be liable for losses incurred by
the other parties as set forth in Section 8.5. The provisions of
this Section 8.2 shall survive termination.
8.3 CERTAIN EFFECTS OF TERMINATION. In the event of the
termination of this Agreement as provided in Section herein, each
party, if so requested by the other party, will (i) return promptly
every document (other than documents publicly available) furnished
to it by the other party (or any subsidiary, division, associate or
affiliate of such other party) in connection with the transactions
contemplated hereby, whether so obtained before or after the
execution of this Agreement, and any copies thereof which may have
been made, and will cause its representatives and any
representatives of financial institutions and investors and others
to whom such documents were furnished promptly to return such
documents and any copies thereof any of them may have made; or (ii)
destroy such documents and cause its representatives and such other
representatives to destroy such documents, and such party shall
deliver a certificate executed by its president or vice president
stating to such effect.
<PAGE>
8.4 REMEDIES. No party shall be limited to the
termination right granted in Section 8.1 hereto by reason of the
nonfulfillment of any condition to such party's closing obligations
but may, in the alternative, elect to do one of the following:
(A) proceed to close despite the nonfulfillment of
any closing condition, it being understood that consummation of the
transactions contemplated hereby shall be deemed a waiver of any
misrepresentation or breach of warranty or covenant and of any
party's rights and remedies with respect thereto to the extent that
the other party shall have actual knowledge of such
misrepresentation or breach and the Closing shall nonetheless take
place; or
(B) decline to close, terminate this Agreement as
provided in Section 8.1 hereof, and thereafter seek damages to the
extent permitted in Section 8.5 hereof.
8.5 ARBITRATION. Any dispute arising out of this
Agreement, or its performance or breach, shall be resolved by
binding arbitration conducted by JAMS/Endispute under the
JAMS/Endispute Rules for Complex Arbitration (the "JAMS Rules").
This arbitration provision is expressly made pursuant to and shall
be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-14.
The parties hereto agree that pursuant to Section 9 of the Federal
Arbitration Act, a judgment of the United States District Courts for
the Southern District of California shall be entered upon the award
made pursuant to the arbitration. A single arbitrator, who shall
have the authority to allocate the costs of any arbitration
initiated under this paragraph, shall be selected according to the
JAMS Rules within ten (10) days of the submission to JAMS/Endispute
of the response to the statement of claim or the date on which any
such response is due, whichever is earlier. The arbitrator shall
conduct the arbitration in accordance with the Federal Rules of
Evidence. The arbitrator shall decide the amount and extent of
pre-hearing discovery which is appropriate. The arbitrator shall
have the power to enter any award of monetary and/or injunctive
relief (including the power issue permanent injunctive relief and
also the power to reconsider any prior request for immediate
injunctive relief by either of the parties and any order as to
immediate injunctive relief previously granted or denied by a court
in response to a request therefor by either of the parties),
including the power to render an award as provided in Rule 43 of the
JAMS Rules; provided, however, that the arbitrator shall not have
the power to award punitive damages under any circumstances (whether
styled as punitive, exemplary, or treble damages, or any penalty or
punitive type of damages) regardless of whether such damages may be
available under applicable law, the parties hereby waiving their
rights to recover any such damages. The arbitrator shall award the
prevailing party its costs and reasonable attorneys' fees, and the
losing party shall bear the entire cost of the arbitration,
including the arbitrator's fees. All arbitration shall be held in
Orange County, California. In addition to the above court, the
arbitration award may be enforced in any court having jurisdiction
over the parties and the subject matter of the arbitration.
Notwithstanding the foregoing, the parties irrevocably submit to the
nonexclusive jurisdiction of the state and federal courts situated
where the respondent is domiciled or resides as of the Effective
Date in any action to enforce an arbitration award. With respect to
any request for immediate injunctive relief, that state and federal
courts in Orange County, California shall have exclusive
jurisdiction and venue over any such disputes.
9. MISCELLANEOUS.
9.1 GOVERNING LAWS. It is the intention of the parties
hereto that the internal laws of the State of California
(irrespective of its choice of law principles) shall govern the
validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the
parties hereto.
<PAGE>
9.2 BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and
unless otherwise provided in, this Agreement, each and all of the
covenants, terms, provisions, and agreements contained herein shall
be binding upon, and inure to the benefit of, the permitted
successors, executors, heirs, representatives, administrators and
assigns of the parties hereto.
9.3 SEVERABILITY. If any provision of this Agreement, or
the application thereof, shall for any reason and to any extent be
invalid or unenforceable, the remainder of this Agreement and
application of such provision to other persons or circumstances
shall be interpreted so as best to reasonably effect the intent of
the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible,
the economic, business and other purposes of the void or
unenforceable provision.
9.4 ENTIRE AGREEMENT. This Agreement, the exhibits
hereto, the documents referenced herein, and the exhibits thereto,
constitute the entire understanding and agreement of the parties
hereto with respect to the subject matter hereof and thereof and
supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect hereto and
thereto. The express terms hereof control and supersede any course
of performance or usage of the trade inconsistent with any of the
terms hereof.
9.5 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original as
against any party whose signature appears thereon and all of which
together shall constitute one and the same instrument. This
Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of
the parties reflected hereon as signatories.
9.6 EXPENSES. Except as provided to the contrary herein,
each party shall pay all of its own costs and expenses incurred with
respect to the negotiation, execution and delivery of this
Agreement, the exhibits hereto, and the other Transaction Documents.
9.7 AMENDMENT AND WAIVERS. Any term or provision of this
Agreement may be amended, and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a
writing signed by the party to be bound thereby. The waiver by a
party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed
to constitute a waiver of any other default or any succeeding breach
or default.
9.8 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby notwithstanding any investigation
of the parties hereto and shall terminate on the date one year after
the Closing Date.
<PAGE>
9.9 NO WAIVER. The failure of any party to enforce any
of the provisions hereof shall not be construed to be a waiver of
the right of such party thereafter to enforce such provisions.
9.10 ATTORNEYS' FEES. Should suit be brought to enforce
or interpret any part of this Agreement, the prevailing party shall
be entitled to recover, as an element of the costs of suit and not
as damages, reasonable attorneys' fees to be fixed by the court
(including without limitation, costs, expenses and fees on any
appeal). The prevailing party shall be the party entitled to
recover its costs of suit, regardless of whether such suit proceeds
to final judgment. A party not entitled to recover its costs shall
not be entitled to recover attorneys' fees. No sum for attorneys'
fees shall be counted in calculating the amount of a judgment for
purposes of determining if a party is entitled to recover costs or
attorneys' fees.
9.11 NOTICES. Any notice provided for or permitted under
this Agreement will be treated as having been given when (a)
delivered personally, (b) sent by confirmed telex or telecopy, (c)
sent by commercial overnight courier with written verification of
receipt, or (d) mailed postage prepaid by certified or registered
mail, return receipt requested, to the party to be notified, at the
address set forth below, or at such other place of which the other
party has been notified in accordance with the provisions of this
Section 9.11.
IRI:
Industrial Rubber Innovations, Inc.
4525 New Horizon Boulevard, Suite 7
Bakersfield, CA 93313
Attn: John Proulx
Facsimile (805) 833-8088
with a copy to:
Law Offices of M. Richard Cutler
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Attn: Brian A. Lebrecht, Esq.
Facsimile (949) 719-1988
EPL:
EPL Ventures Corp
_____________________________
_____________________________
_____________________________
Such notice will be treated as having been received upon actual
receipt.
9.12 TIME. Time is of the essence of this Agreement.
<PAGE>
9.13 CONSTRUCTION OF AGREEMENT. This Agreement has been
negotiated by the respective parties hereto and their attorneys and
the language hereof shall not be construed for or against any party.
The titles and headings herein are for reference purposes only and
shall not in any manner limit the construction of this Agreement
which shall be considered as a whole.
9.14 NO JOINT VENTURE. Nothing contained in this
Agreement shall be deemed or construed as creating a joint venture
or partnership between any of the parties hereto. No party is by
virtue of this Agreement authorized as an agent, employee or legal
representative of any other party. No party shall have the power to
control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party shall have any
power or authority to bind or commit any other. No party shall hold
itself out as having any authority or relationship in contravention
of this Section 9.14.
9.15 PRONOUNS. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the person, persons, entity
or entities may require.
9.16 FURTHER ASSURANCES. Each party agrees to cooperate
fully with the other parties and to execute such further
instruments, documents and agreements and to give such further
written assurances, as may be reasonably requested by any other
party to better evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
9.17 ABSENCE OF THIRD-PARTY BENEFICIARY RIGHTS. No
provisions of this Agreement are intended, nor shall be interpreted,
to provide or create any third-party beneficiary rights or any other
rights of any kind in any client, customer, affiliate, stockholder,
partner of any party hereto or any other person or entity except
employees and stockholders of IRI specifically referred to herein,
and, except as so provided, all provisions hereof shall be personal
solely between the parties to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
INDUSTRIAL RUBBER INNOVATIONS, INC. EPL VENTURES CORP.
/s/ John Proulx /s/ Nora Coccaro
By: John Proulx By: Nora Coccaro
Its: President and CEO Its: President
ATTEST: ATTEST:
/s/ Dave Foran /s/ Nora Coccaro
By: Dave Foran By: Nora Coccaro
Its: Secretary Its: Secretary
<PAGE>
Industrial Rubber Innovations, Inc.
Secretary's Certificate
The undersigned, Dave Foran, Secretary of Industrial
Rubber Innovations, Inc., a Nevada corporation and one of the
merging corporations mentioned in the foregoing Agreement and Plan
of Reorganization (the "Agreement"), certifies that the Agreement
has been adopted by the written consent of the shareholders of all
of the outstanding stock of Industrial Rubber Innovations, Inc.
entitled to vote thereon in accordance with the provisions of the
General Corporation Law of the State of Nevada.
Dated: April 12, 1999
/s/ Dave Foran
Name:
Secretary of Industrial Rubber Innovations, Inc.
<PAGE>
EPL Ventures Corp.
Secretary's Certificate
The undersigned, Nora Coccaro, Secretary of EPL Ventures
Corp, a Florida corporation and one of the merging corporations
mentioned in the foregoing Agreement and Plan of Reorganization (the
"Agreement"), certifies that the Agreement has been adopted by the
affirmative vote of the holders of a majority of the outstanding
Common Stock of EPL Ventures Corp entitled to vote thereon at a
meeting held pursuant to notice in accordance with the provisions of
the Florida General Corporation Law.
Dated: April 12, 1999
/s/ Nora Coccaro
Name:
Secretary of EPL Ventures Corp
<PAGE>
EXHIBIT A
ARTICLES OF MERGER
OF
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A NEVADA CORPORATION)
INTO
EPL VENTURES CORP
(A FLORIDA CORPORATION)
FLORIDA
<PAGE>
ARTICLES OF MERGER
OF
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A NEVADA CORPORATION)
INTO
EPL VENTURES CORP
(A FLORIDA CORPORATION)
The following articles of merger are submitted in
accordance with the Florida Business Corporation Act, pursuant to
section 607.1105, F.S.
FIRST: The name and jurisdiction of the SURVIVING corporation is:
EPL Ventures Corp, a Florida corporation
SECOND: The name and jurisdiction of each MERGING corporation is:
Industrial Rubber Innovations, Inc., a Nevada corporation
THIRD: The Plan of Merger is attached.
FOURTH: The merger shall become effective on the date the
Articles of Merger are filed with the Florida Department
of State.
FIFTH: The Plan of Merger was adopted by the
shareholders of the surviving corporation by
written consent on April 12, 1999.
SIXTH: The Plan of Merger was adopted by the
shareholders of the merging corporation by
written consent on April 12, 1999.
EPL VENTURES CORP., INDUSTRIAL RUBBER
A FLORIDA CORPORATION INNOVATIONS, INC.,
A NEVADA CORPORATION
_________________________
______________________________
By: _____________________ By: John Proulx
Its: ______________________ Its: President
<PAGE>
PLAN OF MERGER
The following plan of merger is submitted in compliance with
section 607.1101, F.S. and in accordance with the laws of any other
applicable jurisdiction of incorporation.
FIRST: The name and jurisdiction of the SURVIVING corporation is:
EPL Ventures Corp, a Florida corporation
SECOND: The name and jurisdiction of each MERGING corporation is:
Industrial Rubber Innovations, Inc., a Nevada corporation
THIRD: The terms and conditions of the merger are as follows:
Effective on the date the Articles of Merger are filed
with the State of Florida, the Merging Corporation will
merge into the Surviving Corporation, and the existence
of the Merging Corporation will cease. The shareholders
of the Merging Corporation (the "Merging Shareholders"),
representing an aggregate of 3,800 shares, will exchange
each of their shares in the Merging Corporation for
1,000 shares of common stock in the Surviving
Corporation. In addition, the Merging Shareholders will
receive an aggregate of 2,000,000 warrants to acquire
common stock of the Surviving Corporation. Prior to the
exchange by the Merging Shareholders as described above,
the outstanding common stock of the Surviving
Corporation will undergo a 1 for 5 reverse stock split
so that there will then be issued and outstanding
3,444,000 shares of common stock. Subsequent to the
transactions described herein, there will be issued and
outstanding an aggregate of 7,244,000 shares of common
stock issued and outstanding in the Surviving
Corporation. Finally, on the Effective Date, the name
of the Surviving Corporation will be changed to
Industrial Rubber Innovations, Inc. A complete executed
Plan and Agreement of Merger is on file at the Surviving
Corporation's registered office or other place of
business and shall be furnished, on request, to any
owner of either the Merging Corporation or the Surviving
Corporation.
FOURTH: The manner and basis of converting the shares of each
corporation into shares, obligations, or other
securities of the surviving corporation or any other
corporation or, in whole or in part, into cash or other
property and the manner and basis of converting rights
to acquire shares of each corporation into rights to
acquire shares, obligations, or other securities of the
surviving or any other corporation or, in whole or in
part, into cash or other property is as follows:
(1) At the time this Amendment becomes effective,
each five shares of common stock, $.001 par value
per share, of the Corporation issued and
outstanding at such time shall be, and hereby is,
changed and reclassified into one fully-paid and
nonassessable share of common stock, $.001 par
value per share, of the Corporation authorized by
such Amendment, with the result that the number of
shares of common stock of the Corporation issued
and outstanding immediately prior to the taking of
effect of this Amendment is 17,220,000 shares of
common stock, $.001 par value per share, and the
number of shares of common stock of the
Corporation issued and outstanding immediately
following the taking of effect of this Amendment
is 3,444,000 shares of common stock, $.001 par
value per share. At any time after this Amendment
becomes effective, each certificate representing
any shares of common stock, $.001 par value per
share, of the Corporation outstanding immediately
prior to the taking of effect of this Amendment
(collectively, the "Old Certificates") shall be
exchangeable for a certificate representing shares
of common stock, $.001 par value per share, of the
Corporation authorized by such Amendment
(collectively, the "New Certificates"), in the
ratio for such reclassification stated above
(i.e., 1 : 5) through the surrender of such Old
Certificates by the holders of record thereof to
the Secretary of this Corporation at the principal
office of the Corporation.
<PAGE>
(2) Upon surrender for exchange by each
shareholder of an Old Certificate, the Corporation
shall issue and deliver to each such shareholder a
New Certificate representing one share of common
stock, $.001 par value per share, of the
Corporation for each five shares of common stock,
$.001 par value per share, of the Corporation
issued and outstanding immediately prior to the
taking of effect of this Amendment. The
reclassification of issued and outstanding shares
of common stock, $.001 par value per share, of the
Corporation into shares of common stock, $.001 par
value per share, of the Corporation shall be
deemed to occur when this Amendment becomes
effective and neither the surrender of the Old
Certificates nor the issuance of the New
Certificates shall be a necessary condition for
the effectiveness of such reclassification. Each
Old Certificate shall be canceled upon its
surrender and the issuance of a New Certificate
evidencing such shares as so reclassified.
Consequently, the stated capital of this
Corporation shall remain unchanged following the
taking of effect of this Amendment.
FIFTH: Amendments to the articles of incorporation of
the surviving corporation are indicated below:
"Articles I - Name
The name of this corporation is Industrial Rubber
Innovations, Inc.
Article IV - Capital Stock
This Corporation is authorized to issue two classes of
shares of stock to be designated as "Common Stock" and
"Preferred Stock". The total number of shares of Common
Stock which this Corporation is authorized to issue is
Fifty Million (50,000,000) shares, par value $0.001.
The total number of shares of Preferred Stock which this
Corporation is authorized to issue is Five Million
(5,000,000) shares, par value $0.001.
The shares of Preferred Stock may be issued from time
to time in one or more series. The Board of Directors
of the Corporation (the "Board of Directors") is
expressly authorized to provide for the issue of all or
any of the shares of the Preferred Stock in one or more
series, and to fix the number of shares and to determine
or alter for each such series, such voting powers, full
or limited, or no voting powers, and such designations,
preferences, and relative, participating, optional, or
other rights and such qualifications, limitations, or
restrictions thereof, as shall be stated and expressed
in the resolution or resolutions adopted by the Board of
Directors providing for the issue of such shares (a
"Preferred Stock Designation") and as may be permitted
by the General Corporation Law of the State of Florida.
The Board of Directors is also expressly authorized to
increase or decrease (but not below the number of shares
of such series then outstanding) the number of shares of
any series subsequent to the issue of shares of that
series. In case the number of shares of any such series
shall be so decreased, the shares constituting such
decrease shall resume the status that they had prior to
the adoption of the resolution originally fixing the
number of shares of such series.
<PAGE>
The outstanding shares of common stock are subject to a 1 to
5 reverse stock split."
<PAGE>
EXHIBIT B
ARTICLES AND AGREEMENT OF MERGER
OF
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A NEVADA CORPORATION)
INTO
EPL VENTURES CORP
(A FLORIDA CORPORATION)
NEVADA
<PAGE>
ARTICLES AND AGREEMENT OF MERGER
OF
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A NEVADA CORPORATION)
INTO
EPL VENTURES CORP
(A FLORIDA CORPORATION)
The undersigned officers of Industrial Rubber Innovations,
Inc., a Nevada corporation as the disappearing corporation, and of
EPL Ventures Corp., a Florida corporation as the surviving
corporation, pursuant to a Plan and Agreement of Merger submit these
Articles and Agreement of Merger pursuant to the provisions of the
Nevada Revised Statutes 92A.
Article I - Constituent Corporations
The name and place of organization and governing law of each
constituent corporation is:
A. Industrial Rubber Innovations, Inc., a Nevada corporation
B. EPL Ventures Corp., a Florida corporation
The Address for Service of Process is 610 Newport Center Drive,
Suite 800, Newport Beach, California 92660, Attention Brian A.
Lebrecht, Esq.
Article II - Adoption of the Plan and Agreement of Merger
The respective Boards of Directors of the Surviving Corporation
and the Disappearing corporation have adopted a Plan and Agreement
of Merger.
Article III - Approval of the Plan and Agreement of Merger by the
Owners
The Plan and Agreement of Merger was approved by the written
consent of the owners of each class of interests of the Surviving
Corporation and the Disappearing Corporation.
Article IV - Amendments to the Articles of Incorporation of the
Surviving Corporation
The Articles of Incorporation of the Surviving Corporation
shall not be amended by these Articles of Merger.
Article V - Plan and Agreement of Merger
A. The complete executed Plan and Agreement of Merger is on
file at the Surviving Corporation's registered office or other place
of business.
B. A copy of the Plan and Agreement of Merger shall be
furnished, on request and without cost, to any owner of a
corporation which is party to the merger.
<PAGE>
Article VI - Effective Date of Merger
The merger of the Disappearing Corporation with and into the
Surviving Corporation shall take effect on April ___, 1999, which
date is not more than 90 days after the filing of these Articles and
Agreement of Merger.
Dated this 12th day of April, 1999.
"DISAPPEARING CORPORATION" "SURVIVING CORPORATION"
Industrial Rubber Innovations, Inc. EPL Ventures Corp.
4525 New Horizon Boulevard, Suite 7 ____________________
Bakersfield, CA 93313 ____________________
________________________________ ______________________________
By: John Proulx By: ________________________
Its: President Its: ________________________
STATE OF CALIFORNIA)
)ss.
COUNTY OF )
On ______________, 1999, before me, _______________________, Notary
Public, personally appeared John Proulx, ___ personally known to me,
or ___ proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the within instrument and
acknowledged to me that they executed the same in their authorized
capacity and that by their signature on the instrument, the person
or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature: ____________________
(This are for official notarial seal)
STATE OF )
)ss.
COUNTY OF )
On ______________, 1999, before me,
_________________________, Notary Public, personally
appeared ______________________________________, ___
personally known to me, or ___ proved to me on the basis of
satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me
that they executed the same in their authorized capacity and
that by their signature on the instrument, the person or the
entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature: ____________________
(This are for official notarial seal)
FILED
1986 AUG - 7 PM 12:27
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
ARTICLES OF INCORPORATION
OF
HENRY WINKLER, INC.
Article 1 - Name
The name of this corporation is Henry Winkler, Inc.
Article II - Commencement
This corporation shall commence on the date of execution and
acknowledgment of these Articles.
Article III - Purpose
This corporation is organized for the purpose of transacting in
any or all lawful business.
Article IV - Capital Stock
This corporation is authorized to issue 10,000 shares of $0.10
par value common stock.
Article V - Initial Registered Office and Agent
The street address of the initial registered office of this
corporation is 1645 Palm Beach Lakes Blvd., Suite 500, West Palm
Beach, Florida 33401 and the name and address of the initial
registered agent is Michael D. Harris, 1645 Palm Beach Lakes Blvd.,
Suite 500, West Palm Beach, Florida 33401.
<PAGE>
Article VI - Initial Board of Directors
This corporation shall have no directors initially. The number
of directors shall be established by the bylaws and may be either
increased or diminished from time to time as provided in the bylaws.
Article VII - Incorporator
The name and address of the person signing these articles is:
Michael D. Harris
Suite 500
1645 Palm Beach Lakes Boulevard
West Palm Beach, Florida 33401
Article VIII - Bylaws
The power to adopt, alter, amend or repeal bylaws shall be
vested in the Board of Directors.
Article IX - Indemnification
Subject to the qualifications contained in Florida Statutes
607.014, the corporation shall indemnify its officers and directors
and former officers and directors against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
arising out of his or her services as an officer or director of the
corporation.
Article X - Amendment
The corporation reserves the right to amend or repeal any
provisions contained in these articles of incorporation, or any
<PAGE>
amendment hereto, and any rights conferred upon the shareholders is
subject to this reservation.
IN WITNESS WHEREOF, the undersigned incorporator has executed
these Articles of Incorporation this 6th day of August, 1986.
/s/ Michael D. Harris
Incorporator
STATE OF FLORIDA )
) SS.
COUNTY OF PALM BEACH )
BEFORE ME, a notary public authorized to take acknowledgments
in the state and county set forth above, personally appeared Michael
D. Harris, known to me and known by me to be the person who executed
the foregoing Articles of Incorporation, and he acknowledged before
me that he executed those Articles of Incorporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal this 6th day of August, 1986.
/s/ NAME UNKNOWN
Notary Public
My commission expires: 11/7/88
<PAGE>
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE
SERVICE OF PROCESS WITHIN FLORIDA, NAMING AGENT UPON WHOM
PROCESS MAY BE SERVED.
IN COMPLIANCE WITH SECTION 48.091, FLORIDA STATUTES, THE
FOLLOWING IS SUBMITTED:
FIRST THAT HENRY WINKLER, INC. DESIRING TO ORGANIZE OR
QUALIFY UNDER THE LAWS OF THE STATE OF
FLORIDA, WITH ITS PRINCIPAL PACE OF BUSINESS AT CITY OF WEST PALM
BEACH, STATE OF FLORIDA, HAS NAMED MICHAEL D. HARRIS, LOCATED AT
1645 PALM BEACH LAKES BLVD., CITY OF WEST PALM BEACH, STATE OF
FLORIDA, AS ITS AGENT TO ACCEPT SERVICE OF PROCESS WITHIN FLORIDA.
SIGNATURE: /s/ Michael D. Harris
TITLE: Incorporator
DATE: August 6, 1986
HAVING BEEN NAMED TO ACCEPT SERVICE OF PROCESS FOR THE ABOVE
STATED CORPORATION, AT THE PLACE DESIGNATED IN THIS CERTIFICATE, I
HEREBY AGREE TO ACT IN THIS CAPACITY, AND I FURTHER AGREE TO COMPLY
WITH THE PROVISIONS OF ALL STATUTES RELATIVE TO THE PROPER AND
COMPLETE PERFORMANCE OF MY DUTIES.
SIGNATURE: /s/ Michael D. Harris
Registered Agent
DATE: August 6, 1986
FILED
97 JUN 23 PM 2:58
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
AMENDMENT TO
ARTICLES OF INCORPORATION
OF
HENRY WINKLER, INC.
THE UNDERSIGNED, being the sole director of HENRY WINKLER, INC.
does hereby amend the Articles of Incorporation of HENRY WINKLER,
INC., as follows:
SHARES
The capital stock of this corporation shall consist of
50,000,000 shares of common stock, $.001 par value.
I hereby certify that the following was adopted by a majority
unanimous vote of the shareholders and directors of the corporation
on June 18, 1997 and that the number of votes cast was sufficient
for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed
this Amendment to Articles of Incorporation this on June 19, 1997.
/s/ Henry Winkler
Henry Winkler, President and Sole Director
Subscribed and Sworn on this 19th day of June, 1997,
Before me:
/s/ E.P. Littmann
Notary Public
My Commission Expires: [seal]
FILED
97 NOV - 3 PM 3:25
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
SECOND AMENDMENT TO
ARTICLES OF INCORPORATION
OF
HENRY WINKLER, INC.
THE UNDERSIGNED, being the sole director of HENRY WINKLER,
INC., does hereby amend the Articles of Incorporation of the Company
as follows:
ARTICLE I
NAME
The name of this corporation shall be EPL VENTURES CORP.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all purposes
authorized under the laws of the state of Florida.
ARTICLE III
PERIOD OF EXISTENCE
The period during which the Corporation shall continue is
perpetual.
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of
50,000,00 shares of common stock, $.001 par value.
<PAGE>
ARTICLE V
PLACE OF BUSINESS
The address of the principal place of business of this
corporation in the State of Florida shall be 7695 S.W. 104th Street,
Offices at Pinecrest, Suite 210, Miami, FL 33156. The Board of
Directors may at any time and from time to time move the principal
office of this corporation.
ARTICLE VI
DIRECTORS AND OFFICERS
The business of this corporation shall be managed by its Board
of Directors. The number of such directors shall be not less than
one (1) and, subject to such minimum may be increased or decreased
from time to time in the manner provided in the By-Laws.
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No shareholder shall have any right to acquire shares or other
securities of the Corporation except to the extent such right may be
granted by an amendment to these Articles of Incorporation or by a
resolution of the board of Directors.
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the Bylaws, or the
Florida Corporation Act notwithstanding, bylaws shall not be
adopted, modified, amended or repealed by the shareholders of the
Corporation except upon the affirmative vote of a simple majority
vote of the holders of all the issued and outstanding shares of the
corporation entitled to vote thereon.
<PAGE>
ARTICLE IX
SHAREHOLDERS
9.1 Inspection of Books. The board of directors shall make
reasonable rules to determine at what times and places and under
what conditions the books of the Corporation shall be open to
inspection by shareholders or a duly appointed representative of a
shareholder.
9.2 Control Share Acquisition. The provisions relating to any
control share acquisition as contained in Florida Statutes now, or
hereinafter amended, and any successor provision shall not apply to
the Corporation.
9.3 Quorum. The holders of shares entitled to one-third of
the votes at a meeting of shareholders shall constitute a quorum.
9.4 Required Vote. Acts of shareholders shall require the
approval of holders of 50.01% of the outstanding votes of shareholders.
ARTICLE X
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
Too the fullest extent permitted by law, no director or officer
of the Corporation shall be personally liable to the Corporation or
its shareholders for damages for breach of any duty owed to the
Corporation or its shareholders. In addition, the Corporation shall
have the power, in its By-Laws or in any resolution of its
stockholders or directors, to undertake to indemnify the officers
and directors of this corporation against any contingency or peril
as may be determined to be in the best interests of this
corporation, and in conjunction therewith, to procure, at this
corporation's expense, policies of insurance.
<PAGE>
ARTICLE XI
CONTRACTS
No contract or other transaction between this corporation and
any person, firm or corporation shall be affected by the fact that
any officer or director of this corporation is such other party or
is, or at some time in the future becomes, an officer, director or
partner of such other contracting party, or has now or hereafter a
direct or indirect interest in such contract.
I hereby certify that the following was adopted by a majority
vote of the shareholders and directors of the corporation on October
29, 1997 and that the number of votes cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed
this Amendment to Articles of Incorporation this on October 29, 1997.
/s/ Eric P. Littman
Eric P. Littman, President and Sole Director
The foregoing instrument was acknowledged before me on October
29, 1997 by Eric P. Littman, who is personally known to me, or who
has produced _______________________ as identification.
/s/ Isabel J. Cantera
Notary Public
My commission expires: [seal]
FILED
99 APR 26 AM 11:36
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
ARTICLES OF MERGER
OF
INDUSTRIAL RUBBER INNOVATIONS, INC.
(A NEVADA CORPORATION)
INTO
EPL VENTURES CORP
(A FLORIDA CORPORATION)
The following articles of merger are submitted in accordance
with the Florida Business Corporation Act, pursuant to section
607.1105, F.S.
FIRST: The name and jurisdiction of the SURVIVING
corporation is:
EPL Ventures Corp, a Florida corporation
SECOND: The name and jurisdiction of each MERGING corporation is:
Industrial Rubber Innovations, Inc., a Nevada
corporation
THIRD: The Plan of Merger is attached.
FOURTH: The merger shall become effective on the date the Articles
of Merger are filed with the Florida Department of State.
FIFTH: The Plan of Merger was adopted by the shareholders of
the surviving corporation by written consent on April
12, 1999.
SIXTH: The Plan of Merger was adopted by the shareholders of
the merging corporation by written consent on April
12, 1999.
EPL VENTURES CORP., INDUSTRIAL RUBBER
A FLORIDA CORPORATION INNOVATIONS, INC.,
A NEVADA CORPORATION
/s/ Nora Coccaro /s/ John Proulx
By: Nora Coccaro By: John Proulx
Its: President Its: President
<PAGE>
FILED
99 APR 26 AM 11:36
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
PLAN OF MERGER
The following plan of merger is submitted in compliance with
section 607.1101, F.S. and in accordance with the laws of any other
applicable jurisdiction of incorporation.
FIRST: The name and jurisdiction of the SURVIVING
corporation is:
EPL Ventures Corp, a Florida corporation
SECOND: The name and jurisdiction of each MERGING corporation is:
Industrial Rubber Innovations, Inc., a Nevada
corporation
THIRD: The terms and conditions of the merger are as follows:
Effective on the date the Articles of Merger are filed
with the State of Florida, the Merging Corporation will
merge into the Surviving Corporation, and the existence of
the Merging Corporation will cease. The shareholders of
the Merging Corporation (the "Merging Shareholders"),
representing an aggregate of 3,800 shares, will exchange
each of their shares in the Merging Corporation for 1,000
shares of common stock in the Surviving Corporation. In
addition, the Merging Shareholders will receive an
aggregate of 2,000,000 warrants to acquire common stock of
the Surviving Corporation. Prior to the exchange by the
Merging Shareholders as described above, the outstanding
common stock of the Surviving Corporation will undergo a 1
for 5 reverse stock split so that there will then be
issued and outstanding 3,444,000 shares of common stock.
Subsequent to the transactions described herein, there
will be issued and outstanding an aggregate of 7,244,000
shares of common stock issued and outstanding in the
Surviving Corporation. Finally, on the Effective Date,
the name of the Surviving Corporation will be changed to
Industrial Rubber Innovations, Inc. A complete executed
Plan and Agreement of Merger is on file at the Surviving
Corporation's registered office or other place of business
and shall be furnished, on request, to any owner of either
the Merging Corporation or the Surviving Corporation.
FOURTH: The manner and basis of converting the shares of each
corporation into shares, obligations, or other securities
of the surviving corporation or any other corporation or,
in whole or in part, into cash or other property and the
manner and basis of converting rights to acquire shares of
each corporation into rights to acquire shares,
obligations, or other securities of the surviving or any
other corporation or, in whole or in part, into cash or
other property is as follows:
(1) At the time this Amendment becomes effective, each
five shares of common stock, $.001 par value per share, of
the Corporation issued and outstanding at such time shall
be, and hereby is, changed and reclassified into one
fully-paid and nonassessable share of common stock, $.001
par value per share, of the Corporation authorized by such
Amendment, with the result that the number of shares of
common stock of the Corporation issued and outstanding
immediately prior to the taking of
<PAGE>
effect of this Amendment is 17,220,000 shares of common
stock, $.001 par value per share, and the number of shares
of common stock of the Corporation issued and outstanding
immediately following the taking of effect of this
Amendment is 3,444,000 shares of common stock, $.001 par
value per share. At any time after this Amendment becomes
effective, each certificate representing any shares of
common stock, $.001 par value per share, of the
Corporation outstanding immediately prior to the taking of
effect of this Amendment (collectively, the "Old
Certificates") shall be exchangeable for a certificate
representing shares of common stock, $.001 par value per
share, of the Corporation authorized by such Amendment
(collectively, the "New Certificates"), in the ratio for
such reclassification stated above (i.e., 1 : 5) through
the surrender of such Old Certificates by the holders of
record thereof to the Secretary of this Corporation at the
principal office of the Corporation.
(2) Upon surrender for exchange by each shareholder of an
Old Certificate, the Corporation shall issue and deliver
to each such shareholder a New Certificate representing
one share of common stock, $.001 par value per share, of
the Corporation for each five shares of common stock,
$.001 par value per share, of the Corporation issued and
outstanding immediately prior to the taking of effect of
this Amendment. The reclassification of issued and
outstanding shares of common stock, $.001 par value per
share, of the Corporation into shares of common stock,
$.001 par value per share, of the Corporation shall be
deemed to occur when this Amendment becomes effective and
neither the surrender of the Old Certificates nor the
issuance of the New Certificates shall be a necessary
condition for the effectiveness of such reclassification.
Each Old Certificate shall be canceled upon its surrender
and the issuance of a New Certificate evidencing such
shares as so reclassified. Consequently, the stated
capital of this Corporation shall remain unchanged
following the taking of effect of this Amendment.
FIFTH: Amendments to the articles of incorporation of the
surviving corporation are indicated below:
"Articles I - Name
The name of this corporation is Industrial Rubber
Innovations, Inc.
Article IV - Capital Stock
This Corporation is authorized to issue two classes
of shares of stock to be designated as "Common Stock" and
"Preferred Stock". The total number of shares of Common
Stock which this Corporation is authorized to issue is
Fifty Million (50,000,000) shares, par value $0.001. The
total number of shares of Preferred Stock which this
Corporation is authorized to issue is Five Million
(5,000,000) shares, par value $0.001.
The shares of Preferred Stock may be issued from time
to time in one or more series. The Board of Directors of
the Corporation (the "Board of Directors") is expressly
authorized to provide for the issue of all or any of the
shares of the Preferred Stock in one or more series, and
to fix the number of shares and to determine or alter for
each such series, such voting powers, full or limited, or
no
<PAGE>
voting powers, and such designations, preferences, and
relative, participating, optional, or other rights and
such qualifications, limitations, or restrictions thereof,
as shall be stated and expressed in the resolution or
resolutions adopted by the Board of Directors providing
for the issue of such shares (a "Preferred Stock
Designation") and as may be permitted by the General
Corporation Law of the State of Florida. The Board of
Directors is also expressly authorized to increase or
decrease (but not below the number of shares of such
series then outstanding) the number of shares of any
series subsequent to the issue of shares of that series.
In case the number of shares of any such series shall be
so decreased, the shares constituting such decrease shall
resume the status that they had prior to the adoption of
the resolution originally fixing the number of shares of
such series.
The outstanding shares of common stock are subject to a 1
to 5 reverse stock split."
BYLAWS
OF
EPL VENTURES CORP.
(A FLORIDA CORPORATION)
<PAGE>
INDEX
PAGE NUMBER
ARTICLE ONE - OFFICES
Section 1. Principal Office . . . . . . . . . . . . . .. . . . . . . . 1
Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE TWO - MEETINGS OF SHAREHOLDERS
Section 1. Place . . . . . . . . . . . . . . . . . . . . . . . .1
Section 2. Time of Annual Meeting . . . . . . . . . . . . . . . .1
Section 3. Call of Special Meetings . . . . . . . . . . . . . . .1
Section 4. Conduct of Meetings . . . . . . . . . . . . . . . . .1
Section 5. Notice and Waiver of Notice . . . . . . . . . . . . .1
Section 6. Business and Nominations for Annual and Special
Meetings . . . . . . . . . . . .. . . . . . . . . . .2
Section 7. Quorum . . . . . . . . . . . . . . . . . . . . . . . .2
Section 8. Voting Rights Per Share . . . . . . . . . . . . . . .2
Section 9. Voting of Shares . . . . . . . . . . . . . . . . . . .2
Section 10. Proxies . . . . . . . . . . . . . . . . . . . . . . 3
Section 11. Shareholder List . . . . . . . . . . . . . . . . . . .3
Section 12. Action Without Meeting . . . . . . . . . . . . . . . .3
Section 13. Fixing Record Date . . . . . . . . . . . . . . . . . .4
Section 15. Voting for Directors. . . . . . . . . . . . . . . . . 4
ARTICLE THREE - DIRECTORS
Section 1. Number; Term; Election; Qualification . . . . . . . . .4
Section 2. Resignation; Vacancies; Removal . . . . . . . . . . .4
Section 3. Powers. . . . . . . . . . . . . . . . . . . . . . . . .4
Section 4. Place of Meetings . . . . . . . . . .. . . . . . . . .4
Section 5. Annual Meetings . . . . . . . .. . . . . . . . . . . .4
Section 6. Regular Meetings . . . . . . . . . . . . . . . .. . . .4
Section 7. Special Meetings and Notice . . . . . . . . . . . . ..4
Section 8. Quorum and Required Vote . . . . .. . . . . . . . . . .5
Section 9. Acton Without Meeting . . . . . . . .. . . . . . . . .5
Section 10. Conference Telephone or Similar Communications
Equipment Meetings .. . . . . . . . . . . . . . . . 5
Section 11. Committees. . . . . . . . . . . . . . . . . .. . . . .5
Section 12. Compensation of Directors. . . . . . . . . . . . . . .6
ARTICLE FOUR - OFFICERS
Section 1. Positions . . . . . . . . . . . . . . . . . . . . . .6
Section 2. Election of Specified Officers by Board . . . . .. . .6
Section 3. Election or Appointment of Other Officers . . . . . .6
Section 4. Compensation . . . . . . . . . . . . . . . . . . . . . 6
Section 5. Term; Resignation; Removal; Vacancies . . . . . .. . .6
Section 6. Chairman of the Board . . . . . . . . . . . . . .. . .6
Section 7. Chief Executive Officer . . . . . . . . . . . . .. . .7
Section 8. President . . . . . . . . . . . . . . . . . . . . . . 7
Section 9. Vice Presidents . . . . . . . . . . . . . . . . . . . 7
Section 10. Secretary. . . . . . . . . . . . . . . . . . . . . . .7
Section 11. Chief Financial Officer. . . . . . . . . . . . . . . .7
Section 12. Treasurer. . . . . . . . . . . . . . . . . . . . . . .7
Section 13. Other Officers; Employees and Agents. . . . . . . . . 7
ARTICLE FIVE - CERTIFICATES FOR SHARES
Section 1. Issue of Certificates . . . . . . . . . . . . . . . . 8
Section 2. Legends for Preferences and Restrictions on Transfer ..8
Section 3. Facsimile Signatures . . . . . . . . . . . . . . . . ..8
Section 4. Lost Certificates . . . . . . . . . . . . . . . . . ..8
Section 5. Transfer of Shares . . . . . . . . . . . . . . . . . ..8
Section 6. Registered Shareholders . . . . . . . . . . . . . . ..9
Section 7. Redemption of Control Shares . . . . . . . . . . . . ..9
<PAGE>
ARTICLE SIX - GENERAL PROVISIONS
Section 1. Dividends. . . . . . . . . . . . . . . . . . . . . . .9
Section 2. Reserves. . . . . . . . . . . . . . . . . . . . . . .9
Section 3. Checks. . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4. Fiscal Year. . . . . . . . . . . . . . . . . . . . . .9
Section 5. Seal. . . . . . . . . . . . . . . . . . . . . . . . . 9
Season 6. Gender. . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE SEVEN - AMENDMENT OF BYLAWS . . . . . . . . . . . . . . . . . . 9
<PAGE>
BYLAWS
OF
EPL VENTURES CORP.
ARTICLE ONE
OFFICES
Section 1. Principal Office. The principal office of EPL Ventures
Corp., a Florida corporation (the "Corporation"), shall be located at such
place determined by the Board of Directors of the Corporation (the "Board
of Directors") in accordance with applicable law.
Section 2. Other Offices. The Corporation may also have offices at such
other places, either within or without the State of Florida, as the Board of
Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE TWO
MEETINGS OF SHAREHOLDERS
Section 1. Place. All annual meetings of shareholders shall be held at such
place, within or without the State of Florida, as may be designated by the
Board of Directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof. Special meetings of shareholders may be
held at such place, within or without the State of Florida, and at such time
as shall be stated in the notice of the meeting or in a duly executed waiver
of notice thereof.
Section 2. Time of Annual Meeting. Annual meetings of shareholders shall be
held on such date and at such time fixed, from time to time, by the Board of
Directors, provided, that there shall be an annual meeting held every
calendar year at which the shareholders shall elect a board of directors and
transact such other business as may properly be brought before the meeting.
Section 3. Call of Special Meetings. Special meetings of the shareholders
shall be held if called in accordance with the procedures set forth in the
Corporation's Articles of Incorporation (the "Articles of Incorporation")
for the call of a special meeting of shareholders.
Section 4. Conduct of Meetings. The Chairman of the Board of Directors (or
in his absence, the President, or in his absence, such other designee of the
Chairman of the Board of Directors) shall preside at the annual and special
meetings of shareholders and shall be given full discretion in establishing
the rules and procedures to be followed in conducting the meetings, except
as otherwise provided by law or in these Bylaws.
Section 5. Notice and Waiver of Notice. Except as otherwise provided by law,
written or printed notice stating the place, date and time of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (110) nor more than
sixty (60) days before the date of the meeting, either personally or by
first-class mail or other legally sufficient means, by or at the direction
of the Chairman of the Board, President, or the persons calling the meeting,
to each shareholder of record entitled to vote at such meeting. If the
notice is mailed at least thirty (30) days before the date of the meeting,
it may be done by a class of United States mail other than first class. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail addressed to the shareholder at the address appearing on
the stock transfer books of the Corporation, with postage thereon prepaid.
If a meeting is adjourned to another time and/or place, and if an
announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the
Board of Directors, after adjournment, fixes a new record date for the
adjourned meeting. Whenever any notice is required to be given to any
shareholder, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether signed before, during or after the time of
the meeting stated therein, and delivered to the Corporation for inclusion
in the minutes or filing with the corporate records, shall constitute an
effective waiver of such notice. Neither the business to be transacted at,
nor the purpose
<PAGE>
of, any regular or special meeting of the shareholders need be specified in
any written waiver of notice. Attendance of a person at a meeting shall
constitute a waiver of (a) lack of or defective notice of such meeting,
unless the person objects at the beginning to the holding of the meeting or
the transacting of any business at the meeting, or (b) lack of or defective
notice of a particular matter at a meeting that is not within the purpose or
purposes described in the meeting notice, unless the person objects to
considering such matter when it is presented.
Section 6. Business and Nominations for Annual and Special Meetings.
Business transacted at any special meeting shall be confined to the purposes
stated in the notice thereof. At any annual meeting of shareholders, only
such business shall be conducted as shall have been properly brought before
the meeting in accordance with the requirements and procedures set forth in
the Articles of Incorporation. Only such persons who are nominated for
election as directors of the Corporation in accordance with the requirements
and procedures set forth in the Articles of Incorporation shall be eligible
for election as directors of the Corporation.
Section 7. Quorum. Shares entitled to vote as a separate voting group may
take action on a matter at a meeting only if a quorum of those shares exists
with respect to that matter. Except as otherwise provided in the Articles of
Incorporation or applicable law, shares representing one third of the votes
pertaining to outstanding shares which are entitled to be cast on the matter
by the voting group constitute a quorum of that voting group for action on
that matter. If less than a quorum of shares are represented at a meeting,
the holders of a majority of the shares so represented may adjourn the
meeting from time to time. After a quorum has been established at any
shareholders' meeting, the subsequent withdrawal of shareholders, so as to
reduce the number of shares entitled to vote at the meeting below the number
required for a quorum, shall not affect the validity of any action taken at
the meeting or any adjournment thereof. Once a share is represented for any
purpose at a meeting, it is deemed present for quorum purposes for the
remainder of the meeting and for any adjournment of that meeting unless a
new record date is or must be set for that adjourned meeting.
Section 8. Voting Rights Per Share. Each outstanding share, regardless of
class, shall be entitled to vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting rights of the
shares of any class are limited or denied by or pursuant to the Articles of
Incorporation or the Florida Business Corporation Act.
Section 9. Voting of Shares. A shareholder may vote at any meeting of
shareholders of the Corporation, either in person or by proxy. Shares
standing in the name of another corporation, domestic or foreign, may be
voted by the officer, agent or proxy designated by the bylaws of such
corporate shareholder or, in the absence of any applicable bylaw, by such
person or persons as the board of directors of the corporate shareholder may
designate. In the absence of any such designation, or, in case of
conflicting designation by the corporate shareholder, the chairman of the
board, the president, any vice president, the secretary and the treasurer of
the corporate shareholder, in that order, shall be presumed to be fully
authorized to vote such shares. Shares held by an administrator, executor,
guardian, personal representative, or conservator may be voted by such
person, either in person or by proxy, without a transfer of such shares into
his name. Shares standing in the name of a trustee may be voted by such
person, either in person or by proxy, but no trustee shall be entitled to
vote shares held by such person without a transfer of such shares into his
name or the name of his nominee. Shares held by or under the control of a
receiver, a trustee in bankruptcy proceedings, or an assignee for the
benefit of creditors may be voted by such person without the transfer
thereof into his name. If shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, tenants by the entirety or otherwise, or if two or more
persons have the same fiduciary relationship respecting the same shares,
unless the Secretary of the Corporation is given notice to the contrary and
is furnished with a copy of the instrument or order appointing them or
creating the relationship wherein it is so provided, then acts with respect
to voting shall have the following effect: (a) if only one votes, in person
or by proxy, his act binds all; (b) if more than one vote, in person or by
proxy, the act of the majority so voting binds all; if more than one
vote, in person or by proxy, but the vote is evenly split on any particular
matter, each faction is entitled to vote the share or shares in question
proportionally; or (d) if the instrument or order so filed shows that any
such tenancy is held in unequal interest, a majority or a vote evenly split
for purposes hereof shall be a majority or a vote evenly split in interest.
The principles of this paragraph shall apply, insofar as possible, to
execution of proxies, waivers, consents, or objections and for the purpose
of ascertaining the presence of a quorum.
Section 10. Proxies. Any shareholder of the Corporation, other person
entitled to vote on behalf of a shareholder pursuant to law, or
attorney-in-fact for such persons may vote the shareholder's shares in
person or by proxy. Any shareholder of the Corporation may appoint a proxy
to vote or otherwise act for such person by
<PAGE>
signing an appointment form, either personally or by his attorney-in-fact.
An executed telegram or cablegram appearing to have been transmitted by such
person, or a photographic, photostatic, or equivalent reproduction of an
appointment form, shall be deemed a sufficient appointment form. An
appointment of a proxy is effective when received by the Secretary of the
corporation (the "Secretary") or such other officer or agent which is
authorized to tabulate votes, and shall be valid for up to 11 months, unless
a longer period is expressly provided in the appointment form. The death or
incapacity of the shareholder appointing a proxy does not affect the right
of the corporation to accept the proxy's authority unless notice of the
death or incapacity is received by the secretary or other officer or agent
authorized to tabulate votes before the proxy authority under the
appointment is exercised. An appointment of a proxy is revocable by the
shareholder unless the appointment form conspicuously states that it is
irrevocable and the appointment is coupled with an interest.
Section 11. Shareholder List. After fixing a record date for a meeting of
shareholders, the corporation shall prepare an alphabetical list of the names
of all its shareholders who are entitled to notice of the meeting, arranged
by voting group with the address of, and the number and class and series, if
any, of shares held by each. The shareholders' list must be available for
inspection by any shareholder for a period of ten (10) days prior to the
meeting or such shorter time as exists between the record date and the
meeting and continuing through the meeting at the corporation's principal
office, at a place identified in the meeting notice in the city where the
meeting will be held, or at the office of the corporation's transfer agent
or registrar. Any shareholder of the corporation or such person's agent or
attorney is entitled on written demand to inspect the shareholders' list
(subject to the requirements of law), during regular business hours and at
his expense, during the period it is available for inspection. The
corporation shall make the shareholders' list available at the meeting of
shareholders, and any shareholder or agent or attorney of such shareholder
is entitled to inspect the list at any time during the meeting or any
adjournment. The shareholders' list is prima facie evidence of the identity
of shareholders entitled to examine the shareholders' list or to vote at a
meeting of shareholders.
Section 12. Action Without Meeting. Any action required or permitted by law
to be taken at a meeting of shareholders may be taken without a meeting or
notice if a consent, or consents, in writing, setting forth the action so
taken, shall be dated and signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all voting groups and
shares entitled to vote thereon were present and voted with respect to the
subject matter thereof, and such consent shall be delivered to the
corporation, within the period required by Section 607.0704 of the Florida
Business Corporation Act, by delivery to its principal office in the State of
Florida, its principal place of business, the secretary or another
officer or agent of the corporation having custody of the book in which
proceedings of meetings of shareholders are recorded. within ten (10) days
after obtaining such authorization by written consent, notice must be given
to those shareholders who have not consented in writing or who are not
entitled to vote on the action, in accordance with the requirements of
Section 607.0704 of the Florida Business Corporation Act.
Section 13. Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purposes,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more
than seventy (70) days, and, in case of a meeting of shareholders, not less
than ten (10) days, before the meeting or action requiring such
determination of shareholders. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting
of shareholders or the determination of shareholders entitled to receive
payment of a dividend, the date before the day on which the first notice of
the meeting is mailed or the date on which the resolutions of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of shareholders. When a determination
of shareholders entitled to vote at any meeting of shareholders has been
made as provided in this Section, such determination shall apply to any
adjournment thereof, except where the Board of Directors fixes a new record
date for the adjourned meeting.
Section 14. Inspectors and Judges. The Board of Directors in advance of any
meeting may, but need not, appoint one or more inspectors of election or
judges of the vote, as the case may be, to act at the meeting or any
adjournment thereof. If any inspector or inspectors, or judge or judges, are
not appointed, the person presiding at the meeting may, but need not,
appoint one or more inspectors or judges. In case any person who may be
appointed as an inspector or judge fails to appear or act, the vacancy may
be filled by the Board of Directors in advance of the meeting, or at the
meeting by the person presiding thereat. The inspectors or judges, if any,
shall determine the number of shares of stock outstanding and the voting
power of each, the shares of stock represented at the meeting, the existence
of a quorum, the validity and effect of proxies, and shall receive votes,
ballots and
<PAGE>
consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate votes, ballots and
consents, determine the result, and do such acts as are proper to conduct
the election or vote with fairness to all shareholders. On request of the
person presiding at the meeting, the inspector or inspectors or judge or
judges, if any, shall make a report in writing of any challenge, question or
matter determined by him or them, and execute a certificate of any fact
found by him or them.
Section 15. Voting for Directors. Unless otherwise provided in the Articles
of Incorporation, directors shall be elected by a plurality of the votes
cast by the shares entitled to vote in the election at a meeting at which a
quorum is present.
ARTICLE THREE
DIRECTORS
Section 1. Number; Term, Election; Qualification. The number of directors of
the Corporation shall be fixed from time to time, within the limits
specified by the Articles of Incorporation, by resolution of the Board of
Directors. Directors shall be elected in the manner and hold office for the
term as prescribed in the Articles of Incorporation. Directors must be
natural persons who are 18 years of age or older but need not be residents
of the State of Florida, shareholders of the Corporation or citizens of the
United States.
Section 2. Resignation; Vacancies; Removal. A director may resign at any
time by giving written notice to the Board of Directors or the Chairman of
the Board. Such resignation shall take effect at the date of receipt of such
notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make it effective. In the event the notice of resignation specifies a
later effective date, the Board of Directors may fill the pending vacancy
(subject to the provisions of the Articles of Incorporation) before the
effective date if they provide that the successor does not take office until
the effective date. director vacancies shall be filled, and directors may be
removed, in the manner prescribed in the Corporation's Articles of
Incorporation.
Section 3. Powers. The business and affairs of the Corporation shall be
managed by the Board of Directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or
by the Articles of Incorporation or by these Bylaws directed or required to
be exercised and done by the shareholders.
Section 4. Place of Meetings. Meetings of the Board of Directors,
regular or special, may be held either within or without the State of Florida.
Section 5. Annual Meetings. Unless scheduled for another time by the Board
of Directors, the first meeting of each newly elected Board of Directors
shall be held, without call or notice, immediately following each annual
meeting of shareholders.
Section 6. Regular Meetings. Regular meetings of the Board of Directors may
also be held without notice at such time and at such place as shall from
time to time be determined by the Board of Directors.
Section 7. Special Meetings and Notice. Special meetings of the Board of
Directors may be called by the President or Chairman of the Board and shall
be called by the Secretary on the written request of any two directors. At
least forty-eight (48) hours prior written notice of the date, time and
place of special meetings of the Board of Directors shall be given to each
director. Except as required by law, neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the Board of
Directors need be specified in the notice or waiver of notice of such
meeting. Notices to directors shall be in writing and delivered to the
directors at their addresses appearing on the books of the Corporation by
personal delivery, mail or other legally sufficient means. Subject to the
provisions of the preceding sentence, notice to directors may also be given
by telegram, teletype or other form of electronic communication. Notice by
mail shall be deemed to be given at the time when the same shall be
received. whenever any notice is required to be given to any director, a
waiver thereof in writing signed by the person or persons entitled to such
notice, whether before, during or after the meeting, shall constitute an
effective waiver of such notice. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting and a waiver of any and all
objections to the place of the meeting, the time of the meeting and the manner
<PAGE>
in which it has been called or convened, except when a director states, at
the beginning of the meeting or promptly upon arrival at the meeting, any
objection to the transaction of business because the meeting is not lawfully
called or convened. The Chairman may, in his discretion, adjourn a meeting
to a later time or new location.
Section 8. Quorum and Required Vote. One third of the prescribed number of
directors determined as provided in the Articles of Incorporation shall
constitute a quorum for the transaction of business and the act of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors, unless a greater number is
required by the Articles of Incorporation. Whenever, for any reason, a
vacancy occurs in the Board of Directors, a quorum shall consist of one
third of the remaining directors until the vacancy has been filled. if a
quorum shall not be present at any meeting of the board of directors, a
majority of the directors present thereat may adjourn the meeting to another
time and place, without notice other than announcement at the time of
adjournment. At such adjourned meeting at which a quorum shall be present,
any business may be transacted that might have been transacted at the
meeting as originally notified and called. In the event of a tied vote, the
Chairman shall be entitled to cast a second deciding vote.
Section 9. Action Without Meeting. Any action required or permitted to be
taken at a meeting of the Board of Directors or committee thereof may be
taken without a meeting if a consent in writing, setting forth the action
taken, is signed by all of the members of the Board of Directors or the
committee, as the case may be, and such consent shall have the same force
and effect as a unanimous vote at a meeting. action taken under this section
9 is effective when the last director signs the consent, unless the consent
specifies a different effective date. A consent signed under this Section 9
shall have the effect of a meeting vote and may be described as such in any
document.
Section 10. Conference Telephone or Similar Communications Equipment
Meetings. Directors and committee members may participate in and hold a
meeting by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each
other. Participation in such a meeting shall constitute presence in person at
the meeting, except where a person participates in the meeting for the
express purpose of objecting to the transaction of any business on the
ground the meeting is not lawfully called or convened.
Section 11. Committees. The Board of Directors, by resolution adopted by a
majority of the whole Board of Directors, may designate from among its
members an executive committee and one or more other committees, each of
which, to the extent provided in such resolution, shall have and may
exercise all of the authority of the Board of Directors in the business and
affairs of the Corporation except where the action of the full Board of
Directors is required by applicable law. Each committee must have two or
more members who serve at the pleasure of the Board of Directors. The Board
of Directors, by resolution adopted in accordance with this Article Three,
may designate one or more directors as alternate members of any committee,
who may act in the place and stead of any absent member or members at any
meeting of such committee. Vacancies in the membership of a committee may be
filled only by the Board of Directors at a regular or special meeting of the
Board of Directors. The executive committee shall keep regular minutes of
its proceedings and report the same to the Board of Directors when required.
The designation of any such committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or any member
thereof, of any responsibility imposed upon it or such member by law.
Section 12. Compensation of Directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor. Similarly, members of special or standing committees
may be allowed compensation for attendance at committee meetings or a stated
salary as a committee member and payment of expenses for attending committee
meetings. Directors may receive such other compensation as may be approved
by the Board of Directors.
<PAGE>
ARTICLE FOUR
OFFICERS
Section 1. Positions. The officers of the Corporation shall consist of a
Chairman of the Board, a Chief Executive Officer, a President, one or more
Vice Presidents (any one or more of whom may be given the additional
designation of rank of Executive Vice President or Senior Vice President), a
Secretary, a Chief Financial Officer, Chief Operating Officer, and a
Treasurer. Any two or more offices may be held by the same person. Officers
other than the Chairman of the Board need not be members of the Board of
Directors. The Chairman of the Board must be a member of the Board of
Directors.
Section 2. Election of Specified Officers by Board. The Board of Director's
at its first meeting after each annual meeting of shareholders shall elect a
Chairman of the Board, a Chief Executive Officer, a President, one or more
Vice Presidents (including any Senior or Executive Vice Presidents), a
Secretary, a Chief Financial Officer and a Treasurer.
Section 3. Election or Appointment of Other Officers. Such other officers
and assistant officers and agents as may be deemed necessary may be elected
or appointed by the Board of Directors, or, unless otherwise specified
herein, appointed by the Chairman of the Board. The Board of Directors shall
be advised of appointments by the Chairman of the Board at or before the
next scheduled Board of Directors meeting.
Section 4. Compensation. The salaries, bonuses and other compensation of the
Chairman of the Board and all officers of the Corporation to be elected by
the Board of Directors pursuant to Section 2 of this Article Four shall be
fixed from time to time by the Board of Directors or pursuant to its
direction. The salaries of all other elected or appointed officers of the
Corporation shall be fixed from time to time by the Chairman of the Board or
pursuant to his direction.
Section 5. Term; Resignation; Removal; Vacancies. The officers of the
Corporation shall hold office until their successors are chosen and
qualified. Any officer or agent elected or appointed by the Board of
Directors or the Chairman of the Board may be removed, with or without
cause, by the Board of Directors, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Any
officer or agent appointed by the Chairman of the Board pursuant to Section
3 of this Article Four may also be removed from such office or position by
the Board of Directors or the Chairman of the Board, with or without cause.
Any vacancy occurring in any office of the Corporation by death,
resignation, removal or otherwise shall be filled by the Board of Directors,
or, in the case of an officer appointed by the Chairman of the Board, by the
Chairman of the Board or the Board of Directors. Any officer of the
Corporation may resign from his respective office or position by delivering
notice to the Corporation, and such resignation shall be effective without
acceptance. Such resignation shall be effective when delivered unless the
notice specifies a later effective date. If a resignation is made effective
at a later date and the Corporation accepts the future effective date, the
Board of Directors may fill the pending vacancy before the effective date if
the Board provides that the successor does not take office until such
effective date.
Section 6. Chairman of the Board. The Chairman of the Board shall preside at
all meetings of the shareholders and the Board of Directors. The Chairman of
the Board shall also serve as the chairman of any executive committee.
Section 7. Chief Executive Officer. Subject to the control of the Board of
Directors, the Chief Executive Officer, in conjunction with the President,
shall have general and active management of the business of the Corporation,
shall see that all orders and resolutions of the Board of Directors are
carried into effect and shall have such powers and perform such duties as
may be prescribed by the Board of Directors. In the absence of the Chairman
of the Board or in the event the Board of Directors shall not have
designated a Chairman of the Board, the Chief Executive Officer shall
preside at meetings of the shareholders and the Board of Directors. The
Chief Executive Officer shall also serve as the vice-chairman of any
executive committee.
Section 8. President. Subject to the control of the Board of Directors, the
President, in conjunction with the Chief Executive Officer, shall have
general and active management of the business of the Corporation and shall
have such powers and perform such duties as may be prescribed by the Board
of Directors. In the absence of the Chairman of the Board and the Chief
Executive Officer or in the event the Board of Directors shall not have
designated a Chairman of the Board and a Chief Executive Officer shall not
have been elected, the President shall
<PAGE>
preside at meetings of the shareholders and the Board of Directors. The
President shall also serve as the Vice Chairman of any executive committee.
Section 9. Vice Presidents. The Vice Presidents, in the order of their
seniority, unless otherwise determined by the Board of Directors, shall, in
the absence or disability of the president and the Chief Executive Officer,
perform the duties and exercise the powers of the President. They shall
perform such other duties and have such other powers as the Board of
Directors, the Chairman of the Board or the Chief Executive Officer shall
prescribe or as the President may from time to time delegate. Executive Vice
Presidents shall be senior to Senior Vice Presidents, and Senior Vice
Presidents shall be senior to all other Vice Presidents.
Section 10. Secretary. The Secretary shall attend all meetings of the
shareholders and all meetings of the Board of Directors and record all the
proceedings of the meetings of the shareholders and of the Board of
Directors in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. The Secretary shall give,
or cause to be given, notice of all meetings of the shareholders and special
meetings of the Board of Directors and shall keep in safe custody the seal
of the Corporation and, when authorized by the Board of Directors, affix the
same to any instrument requiring it. The Secretary shall perform such other
duties as may be prescribed by the Board of Directors, the Chairman of the
Board, the Chief Executive Officer or the President.
Section 11. Chief Financial Officer. The Chief Financial Officer shall be
responsible for maintaining the financial integrity of the Corporation,
shall prepare the financial plans for the Corporation and shall monitor the
financial performance of the corporation and its subsidiaries, as well as
performing such other duties as may be prescribed by the Board of Directors,
the Chairman of the Board, the Chief Executive Officer or the President.
Section 12. Treasurer. The Treasurer shall have the custody of corporate
funds and securities and shall keep full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall deposit
all moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chairman of the Board and the Board
of Directors at its regular meetings or when the Board of Directors so
requires an account of all his transactions as Treasurer and of the
financial condition of the Corporation. The Treasurer shall perform such
other duties as may be prescribed by the Board of Directors, the Chairman of
the Board, the Chief Executive Officer or the President.
Section 13. Other Officers, Employees and Agents. Each and every other
officer, employee and agent of the Corporation shall possess, and may
exercise, such power and authority, and shall perform such duties, as may
from time to time be assigned to such person by the Board of Directors, the
officer so appointing such person or such officer or officers who may from
time to time be designated by the Board of Directors to exercise such
supervisory authority.
ARTICLE FIVE
CERTIFICATES FOR SHARES
Section 1. Issue of Certificates. the shares of the Corporation shall be
represented by certificates, provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any
or all classes or series of its stock shall be uncertificated shares. Any
such resolution shall not apply to shares represented by a certificate until
such certificate is surrendered to the Corporation. Notwithstanding the
adoption of such a resolution by the Board of Directors, every holder of
stock represented by certificates (and upon request every holder of
uncertificated shares) shall be entitled to have a certificate signed by or
in the name of the Corporation by the Chairman of the Board or a Vice
Chairman of the Board, or the Chief Executive Officer, President or Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation, representing the number of
shares registered in certificate form.
Section 2. Legends for Preferences and Restrictions on Transfer. The
designations, relative rights, preferences and limitations applicable to
each class of shares and the variations in rights, preferences and
limitations determined for each series within a class (and the authority of
the Board of Directors to determine variations for future series) shall be
summarized on the front or back of each certificate. Alternatively, each
certificate
<PAGE>
may state conspicuously on its front or back that the Corporation will
furnish the shareholder a full statement of this information on request and
without charge. Every certificate representing shares that are restricted as
to the sale, disposition, or transfer of such shares shall also indicate
that such shares are restricted as to transfer, and there shall be set forth
or fairly summarized upon the certificate, or the certificate shall indicate
that the Corporation will furnish to any shareholder upon request and
without charge, a full statement of such restrictions. If the Corporation
issues any shares that are not registered under the Securities Act of 1933,
as amended, or not registered or qualified under the applicable state
securities laws, the transfer of any such shares shall be restricted
substantially in accordance with the following legend:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR
UNDER ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE,
SOLD,
TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE
SECURITIES ACT OF
1933AND ANY APPLICABLE STATE LAW, OR (2) AT HOLDERS EXPENSE, AN
OPINION
(SATISFACTORY TO THE CORPORATION) OF COUNSEL (SATISFACTORY TO THE
CORPORATION) THAT REGISTRATION IS NOT REQUIRED."
Section 3. Facsimile Signatures. Any and all signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon such certificate
shall have ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the
date of issue.
Section 4. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost or destroyed. When authorizing
such issue of a new certificate or certificates, the Corporation may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require
and/or to give the Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost or destroyed.
Section 5. Transfer of Shares. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 6. Registered Shareholders. The Corporation shall be entitled to
recognize the exclusive rights of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall
not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise provided by
the laws of the State of Florida.
Section 7. Redemption of Control Shares. As provided by the Florida Business
Corporation Act, if a person acquiring control shares of the Corporation
does not file an acquiring person statement with the Corporation, the
Corporation may, at the discretion of the Board of Directors, redeem the
control shares at the fair value thereof at any time during the 60-day
period after the last acquisition of such control shares. If a person
acquiring control shares of the Corporation files an acquiring person
statement with the Corporation, the control shares may be redeemed by the
Corporation, at the discretion of the Board of Directors, only if such
shares are not accorded full voting rights by the shareholders as provided
by law.
<PAGE>
ARTICLE SIX
GENERAL PROVISIONS
Section 1. Dividends. The Board of Directors may from time to time declare,
and the Corporation may pay, dividends on its outstanding shares in cash,
property, stock (including its own shares) or otherwise pursuant to law and
subject to the provisions of the Articles of Incorporation.
Section 2. Reserves. The Board of Directors may by resolution create a
reserve or reserves out of earned surplus for any proper purpose or purposes,
and may abolish any such reserve in the same manner.
Section 3. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
Section 4. 0Fiscal Year. The fiscal year of the Corporation shall end on
December 31 of each year, unless otherwise fixed by resolution of the
Board of Directors.
Section 5. Seal. The corporate seal shall have inscribed thereon the name
and state of incorporation of the Corporation. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.
Section 6. Gender. All words used in these Bylaws in the masculine gender
shall extend to and shall include the feminine and neuter genders.
ARTICLE SEVEN
AMENDMENT OF BYLAWS
Except as otherwise set forth herein, these Bylaws may be altered, amended
or repealed or new Bylaws may be adopted at any meeting of the Board of
Directors at which a quorum is present, by the affirmative vote of a
majority of the directors present at such meeting.
SECRETARY'S CERTIFICATE OF ADOPTION OF
THE BYLAWS OF EPL VENTURES CORP.
I hereby certify:
That I am the duly elected Secretary of EPL Ventures Corp., a Florida
corporation;
That the foregoing Bylaws comprising nine (9) pages, constitute the Bylaws
of said corporation as duly
adopted by the Board of Directors of the Corporation on January 16, 1998.
IN WITNESS WHEREOF, I have hereunder subscribed my name this 16th day of
January, 1998.
/s/Nora Coccaro
Nora Coccaro, Secretary
GENCON INVESTMENTS LTD.
("Gencon")
Date: January 18, 1999
Industrial Rubber Innovations Inc.
(the "Company")
Dear Sirs:
Re: Gencon loan to the
Company of $37,500 US
(the "Loan")
This letter agreement is to set out the terms under which Gencon is
prepared to enter into the Loan with the Company. Please execute the bottom
of this letter which will indicate your acceptance and agreement with the
terms of the Loan and form the Agreement.
1. Loan
The Loan to the Company shall be $37,500US (the "Loan Proceeds") on the
following terms and conditions:
(a) Term: the Loan shall be due and payable by the Company on or before
May 19,1999;
(b) Interest rate: 20% simple interest payable before and after
maturity;
(C) Security: As security for the Loan the Company shall provide the
following security to Gencon:
(I) a Promissory Note executed by the Company in favor of Gencon;
<PAGE>
(ii) a Uniform Commercial Code charge against the inventory of
the Company;
(iii) a pledge and transfer of 14,000 shares, owned and in the
name of Dave Foran of Triad Inc., a public company.
2. Repayment of the Loan
It is agreed by the parties that the Loan Proceeds shall be repaid
in full, at the sole option of Gencon and by written notice by Gencon to the
Company on or before May 19, 1999 (provided that Gencon may extend this date
by up to 60 days at the sole option of Gencon) as follows:
(a) $37,50 cash plus interest at the rate of 20% simple interest; or
(b) The issuance of 10% of the issued shares of the Company; or
(c) The issuance of shares, warrants and options in a new
public company to be created by or merged with the Company
("Pubco") as more particularly set out in paragraph 3 below;
Provided that Gencon must exercise this option if Pubco is created or merged
with the Company.
3. Pubco
It is agreed that in the event Gencon elects to have the Loan Proceeds
repaid on the terms set out in paragraph 2(C) above, the Company
shall cause Pubco to issue or grant immediately the following shares,
warrants and options;
(a) 50,000 shares in Pubco to Gencon at a cost of $.75 per share, to
be free trading shares after 90 days of the creation of Pubco;
(b) 50,000 shares in Pubco to Gencon at no cost, to be free trading
shares after 90 days of the creation of Pubco;
(C) A warrant for 100,000 shares in Pubco to Gencon for a one year
period fro the date of the election by Gencon pursuant to paragraph
2(C) above, at a price of $.75 per share;
<PAGE>
(d) An option to purchase 100,000 shares in Pubco to Gordon Reid for
a one year period from the date of the election by Gencon pursuant to
paragraph 2(C) above, at an option price of $.75 per share, to be legend stock
for services performed as a member of the Company's Board of Directors or
Company's Advisory Board;
(e) an option to purchase 100,000 shares in Pubco to Robert Dent for a
one year period from the date of the election by Gencon pursuant to
paragraph 20 above, at an option price of $.75 per share, to be
legend stock for services performed as a member of the Company's Board of
Directors or Company's Advisory Board.
4. Additional Security
In addition to the security granted by the Company for the Loan as
set out in paragraph 10 above and in the event of the election by Gencon
pursuant to paragraph 2(C) above, the Company agrees to deliver to Haywood
Securities 200,000 free trading shares in street form of Pubco to be held by
Haywood on the following conditions:
(a) in the event that Pubco is able to raise an additional $200,OOOUS
equity capital by the issue of Pubco shares at a price of not less than $.75
per share within 90 days of the election by Gencon pursuant to
paragraph 2(C) above, the 200,000 shares of Pubco held by Haywood Securities
shall be returned to) the Company;
(b) in the event that Pubco is unable to raise an additional
$200,000US by the issue of Pubco, shares at a price of not less than $.75 per
share within 90 days of the election by Gencon pursuant to paragraph 2(c)
above, the 200,000 shares of Pubco held by Haywood Securities shall be
forfeited to Gencon.
5. Additional Compensation
As additional consideration for Gencon advancing the Loan Proceeds
to the Company, the Company agrees to grant to Gencon the exclusive
Canadian rights to distribute the Company's products on terms and conditions
similar to those for U.S. distributors.
<PAGE>
6. Formal Agreement of Purchase and Sale
The parties agree that this Agreement is a binding contract between
the parties and further agree to execute and deliver any and all further
documentation necessary to give full effect to this Agreement.
If the terms of this Agreement are acceptable to you, please execute
the bottom of this Letter of Intent on or before January 18, 1999, and
return it to us.
Yours truly,
GENCON PROPERTIES INC.
Per: /s/Gordon Reid
Gordon Reid
WE HEREBY ACCEPT AND AGREE TO THE ABOVE TERMS AND CONDITIONS THIS
18th DAY OF JANUARY, 1999
INDUSTRIAL RUBBER INNOVATIONS INC.
Per: /s/Dave Foran
Dave Foran as Director
/s/Dave Foran /s/NAME UNKNOWN
Dave Foran in his personal capacity Witness
LICENSE AGREEMENT
This License Agreement ("Agreement") is made and entered into
effective June 25, 1999 by and between Century Rubber, LLC, a
California Limited Liability Company ("Century" or "Licensor") and
Industrial Rubber Innovations, Inc., a Florida corporation ("IRI" or
"Licensee").
RECITALS
A. WHEREAS, Licensee acknowledges that Licensor is the
sole and exclusive owner of the entire right, title and interest,
together with all goodwill and intellectual property connected
therewith, in and to that certain and specific rubber compound
formula identified as NS 500 and held by Henry Noto, Esq., 1318 K
Street, Bakersfield, CA 93301 (the "Formula").
B. WHEREAS, Licensee desires to obtain the exclusive
right to manufacture, market, sell, and distribute products made
from or derived from the Formula.
C. WHEREAS, Licensor is willing to permit the
manufacture, marketing, sale, and distribution of products made from
or derived from the Formula by Licensee upon the terms, conditions,
and covenants set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties hereby agree as follows:
1. GRANT OF LICENSE.
A. Upon the terms and conditions hereinafter set forth,
Licensor hereby grants to Licensee and Licensee hereby accepts the
EXCLUSIVE, NON-TRANSFERABLE right, license, and privilege to
manufacture, market, sell, and distribute products made from or
derived from the Formula (the "Licensed Products") to the WORLD-WIDE
marketplace/territory.
B. The term of this Agreement and license hereby granted
shall commence on the date this Agreement is executed and shall
continue indefinately unless terminated in accordance with Paragraph
7 hereof. During the term of this Agreement, provided Licensee has
fulfilled all of its obligations hereunder and is not otherwise in
breach of this Agreement, Licensor will not license the Formula to
or permit the manufacture, marketing, sale, or distribution of
Licensed Products by another person or entity.
C. As a material term of this Agreement, Licensor
acknowledges and agrees that Licensee shall be granted the option to
acquire a license for any and all future formulas and products
developed, held, or owned by Licensor ("Future Products") for so
long as this Agreement is in effect, said license to be on terms
agreed upon between the parties. In addition, Licensee is hereby
granted a right of first refusal to acquire a license for any and
all Future Products on terms identical to those offered by any other
party.
<PAGE>
2. TERMS OF PAYMENT.
A. Licensee agrees to pay to Licensor as fees for the
use of the Formula the sum of one dollar ($1.00).
3. LICENSOR'S TITLE AND PROTECTION OF LICENSOR'S RIGHTS.
3.1 Licensee agrees that it will not during the term of
this Agreement or thereafter attack the title or any rights of
Licensor in and to the Formula or attack the validity of this
Agreement. Licensee agrees to assist Licensor and to cooperate
fully with Licensor to procure any protection or to protect any of
the rights of Licensor to the Formula or any patent, trademark,
service mark, trade name or copyrights or any other protection or
right pertaining thereto. Licensee shall promptly notify Licensor
in writing of any infringement or imitations by others of Licensor's
rights in the Formula which may come to Licensee's attention, and
Licensor shall have the sole right, in its discretion, to determine
whether or not any action shall be taken on account of such
infringement or imitations. Licensor may prosecute an action for
infringement and join Licensee in such action.
3.2 Disclosure of Confidential Information.
(a) Licensee shall not, during the term of this Agreement
and thereafter, communicate, divulge, or use for the benefit of
himself or any other person, partnership, association, or
corporation, either directly or indirectly, any information or
knowledge concerning the Formula and any information which may be
communicated to Licensee by Licensor during the term of this Agreement.
(b) Licensee covenants and agrees that during the term of
this Agreement he will not do any act or fail to do any act which
may be prejudicial or injurious to the business and goodwill of
Licensor.
4. INDEMNIFICATION AND INSURANCE.
Licensee agrees to assume full responsibility for compliance
with all laws in connection with the manufacture and/or sale of the
Licensed Products. Licensor assumes no liability to Licensee or any
third party with respect to the Licensed Products. Licensee hereby
agrees to indemnify, defend and hold harmless Licensor and
Licensor's officers, directors, shareholders, members, managers,
agents, employees, representatives, suppliers and related companies
against any and all claims, suits, loss and damage arising out of,
based upon, or in connection with the Licensed Products including,
without limitation, those arising out of any alleged defect thereon
or infringement thereby of any alleged patent, trademark, copyright,
trade secret, contractual statutory or judicially created rights of
others. Licensee agrees that it will obtain and maintain in full
force and effect during the entire term of this Agreement
comprehensive general liability, property damage and product
liability insurance acceptable to Licensor in its sole discretion.
<PAGE>
5. DISTRIBUTION.
Licensee agrees that during the term of this Agreement, at no
expense to Licensor, it will diligently and continuously, and to the
greatest extent possible, manufacture, promote, distribute and sell
the Licensed Products.
6. RECORDS.
Licensee agrees to keep accurate books of account and records
covering all transactions relating to the license hereby granted.
Licensor and its duly authorized representatives shall have the
right at reasonable times to examine said books of account and
records, including without limitation, any available summaries
and/or reports with respect to the Formula or this Agreement, and
the right at any reasonable time upon five (5) days prior notice to
audit Licensee's business with respect to the Formula.
7. TERMINATION.
Licensor shall have the right to terminate this Agreement
immediately in any of the following events:
(a) If Licensee shall fail to perform any condition or
covenant provided for in this Agreement within thirty (30) days
after written notice of such failure; Provided, however, that in the
event of any breach of this Agreement by Licensee, Licensor shall
provide written notice to Licensee and Licensee shall have a period
of ten (10) days to correct the breach without risk of termination
of this Agreement.
(b) If Licensee during the term of this Agreement becomes
insolvent or files any petition under any bankruptcy act, whether
state or federal, or is adjudicated a bankrupt, or an insolvency
proceeding is instituted against Licensee, or any receiver is
appointed for Licensee's business or property, or any trustee in
bankruptcy is appointed for Licensee.
8. PROCEDURE ON TERMINATION OR EXPIRATION.
Upon the termination or expiration of this Agreement,
Licensee may dispose of any Licensed Products then on hand, but only
in conformity with the following express conditions:
(a) Licensee shall deliver to Licensor a complete
inventory of Licensed Products on hand not later than thirty (30)
days following the effective date of expiration or service of the
notice of termination, whichever occurs first;
(b) Licensee shall not cause any further Licensed
Products to be manufactured after termination or service of
termination, whichever occurs first;
<PAGE>
(c) The Licensed Products specified in the inventory
furnished to Licensor pursuant to the provisions of paragraph 8(a)
hereof may be sold only during a period of one hundred twenty (120)
days after the effective date of expiration or termination.
Following the 120 period, any Licensed Products specified in the
inventory but not sold shall be delivered to Licensor.
9. EFFECT OF TERMINATION OR EXPIRATION.
Upon and after the expiration or termination of this
Agreement, (i) all rights granted to Licensee hereunder shall
forthwith revert to Licensor, and (ii) Licensee shall refrain from
further use of the Formula or any further reference to the Formula,
direct or indirect, in connection with the manufacture, sale or
distribution of Licensee's products, except as provided in paragraph 8.
10. FORCE MAJEURE.
In the event that either party hereto is delayed or hindered
from the performance of any act required hereunder by reason of
strike, lockouts, prohibitive governmental laws or regulation,
riots, war or other reasons of a like nature beyond the control of
such party, then performance of such acts shall be excused for the
period of the delay and the period of the performance of any such
acts shall be extended for a period equivalent to the period of such
delay but in no event shall said performance period be extended more
than one hundred twenty (120) days.
11. NOTICES.
All notices or other communications hereunder shall be in
writing and shall be deemed given when delivered personally or by
facsimile or three (3) days after being mailed by first class
registered or certified mail, return receipt requested, properly
addressed to Licensor and to Licensee at the following addresses:
If to Licensor: Century Rubber, LLC
6801 McDivitt Drive
Bakersfield, CA 93313
Attn: Steven Tieu
Facsimile (661) 833-8088
If to Licensee: Industrial Rubber Innovations, Inc.
6801 McDivitt Drive
Bakersfield, CA 93313
Attn: John Proulx, President
Facsimile (661) 833-8088
with a copy to: The Law Offices of M. Richard Cutler
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Attn: Brian A. Lebrecht, Esq.
Facsimile (949) 719-1988
<PAGE>
Any party may change its address for receiving notices
hereunder by written notice to the other parties.
12. NO ASSIGNMENT OR SUBLICENSE.
This Agreement is personal to Licensee and neither this
Agreement nor any of the rights or duties hereunder may be assigned,
mortgaged, sublicensed or otherwise encumbered by Licensee or by
operation of law.
13. PARTIES.
This Agreement shall inure to the benefit of and be binding
upon Licensor and Licensee, and their respective affiliates,
officers, directors, registered representatives, employees and
persons who control or are under the control of Licensor and
Licensee and their respective successors and assigns, and no other
person shall acquire or have any right by virtue of this Agreement.
14. VALIDITY OF AGREEMENT.
The invalidity of any portion of this Agreement shall not
affect the validity of the remainder thereof.
15. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement and
supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations between the parties with
respect to the Formula of this Agreement. No amendment or addition
to, or modification of, any provision contained in this Agreement
shall be effective unless fully set forth in writing signed by all
of the parties hereto.
16. FURTHER ASSURANCES.
Each of the parties hereto agrees on behalf of such party,
his, her or its successors and assigns, that such party will,
without further consideration, execute, acknowledge and deliver such
other documents and take such other action as may be necessary or
convenient to carry out the purposes of this Agreement.
17. ATTORNEY'S FEES.
If either party fails to perform any of its obligations
hereunder, or if a dispute arises concerning the meaning of
interpretation of any provision of this Agreement, the defaulting
party or the party not prevailing such in dispute, as the case may
be, shall pay any and all costs and expenses incurred by the other
party in enforcing or establishing its rights under, including,
without limitation, court costs and reasonable attorneys' fees.
<PAGE>
18. GOVERNING LAW AND SUPERSESSION; VENUE.
This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of California
and shall supersede any previous agreements, written or oral,
expressed or implied, between the parties relating to the Formula
hereof. Each of the parties hereto agrees that any action or suit
which may be brought by any party hereto against any other party
hereto in connection with this Agreement or the transactions
contemplated hereby may be brought only in a federal or state court
in Kern County, California.
19. NO PARTNERSHIP.
Nothing herein contained shall be construed to constitute an
association, partnership, unincorporated business or any other
entity between Licensor and Licensee.
20. COUNTERPARTS.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which taken
together shall constitute but one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first set forth above.
LICENSOR LICENSEE
Century Rubber, LLC, Industrial Rubber Innovations, Inc.,
a California Limited Liability Company a Florida corporation
/s/ Steven Tieu /s/ John Proulx
By: Steven Tieu By: John Proulx
Its: Manager Its: President
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 15, 1999, between Industrial
Rubber Innovations, Inc., a Florida corporation (the "Company"), and
John Proulx ("Executive").
WITNESSETH:
WHEREAS, the Company is desirous of employing Executive, and
Executive is desirous of being employed by the Company, on the terms
and subject to the conditions sets forth in this Agreement:
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby mutually acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the
indicated meanings when used in this Agreement, unless the context
requires otherwise:
(a) "Base Salary Amount" shall mean $60,000.00 during the
Initial Period and first Contract Year and $60,000.00 during the
second Contract Year.
(b) "Benefit Plan" shall mean each vacation pay, sick
pay, retirement, welfare, medical, dental, disability, life
insurance or other employee benefit plan, program or arrangement.
In addition, at the sole discretion of the Board of Directors,
benefit plan may also include one or more of the following:
incentive compensation, bonus, stock option and restricted stock
plan, program or arrangement.
(c) "Board of Directors" and " Board" shall mean the
board of directors of the Company.
(d) "Cause" shall mean (i) the conviction of Executive of
a felony which can reasonably be expected to have a material adverse
impact on the Company's business or reputation or (ii) the
commission by Executive of an act of fraud or embezzlement involving
assets of the Company or its customers, suppliers or affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been
delivered to Executive all of the following; (a) a copy of a
resolution, duly adopted by the affirmative vote of not less than a
majority of the entire non-interested membership of the Board of
Directors at a meeting which the Board of Directors called and held
for the purpose of determining whether Cause exists (after
reasonable notice to Executive and opportunity for him, together
with his counsel, to be heard before the Board of Directors),
finding that, in the good faith opinion of the Board of Directors,
Executive was guilty of the conduct set forth in this Section and
specifying the particulars thereof in detail, (b) an affidavit sworn
to by the President or Secretary of the Company stating that such
resolution was in fact adopted by the affirmative vote of not less
than a majority of the entire non-interested membership of the Board
and Directors.
<PAGE>
(e) "Chairman of The Board" shall mean the Chairman of
the Board of Directors of the Company, as determined from time to
time by the Board of Directors.
(f) "Contract Year" shall mean each year during the term
hereof commencing on June 1 and ending on the immediately following
May 31.
(g) "Date of Termination" shall mean (A) if termination
of employment occurs by reason of death, the date of Executive's
death or (B) if termination of employment occurs for any other
reason, the date on which a Notice of Termination is delivered to
the other party; provided, however, that if, within 60 days after
any Notice of Termination is given, the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination of employment, then the Date of
termination shall be the date of the Notice unless such dispute is
otherwise determined by mutual agreement or court order in favor of
Executive, in which case the Date of Termination shall be the date
on which the dispute is finally determined, either by mutual written
agreement of the parties or by a final judgment, order or decree of
a court of competent jurisdiction ( the time for appeal therefrom
having expired and no appeal having been perfected).
(h) "Good Reason" Shall mean (i) as to Executive (A) a
diminution in Executive's titles, responsibilities and/or duties,
(B) a change in the person or persons to whom Executive reports,
except as provided in Section 4(a), (C) a reassignment of Executive
to a location which increases Executive's commute from his existing
home by more than 50 miles on a daily round trip basis, (D) an
assignment of Executive to a location other than the principal
executive office of the Company, (E) the Company's failure to
continue or a substantial change in Executive's participation in any
Benefit Plans (subject to the Board's right to amend, modify or
terminate such plans), (F) the Company's failure to obtain the
agreement of any successor of the Company to assume this Agreement,
(G) any material breach of this Agreement by the Company which is
either not capable of correction or which in fact is not corrected
within (10) ten days after written notice by Executive specifying
such breach and (H) the failure to occur of any of the actions
discussed in Section 4(c); and (ii) as to the Company, the good
faith determination by a majority of the entire membership of the
Board of Directors that Executive has failed to perform his duties
as directed.
(i) "Initial Period" shall mean that portion of the term
hereof from the date of this Agreement through May 31, 1999.
(j) "Notice of Termination" shall mean a written notice
which shall indicate the specific provision in this Agreement relied
upon in connection with a termination of employment and which shall
set forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination under the provision so
indicated.
(k) "Performance Bonus" shall have the meaning ascribed
to that term in Section 6(b).
(l) "Severance Payments" shall mean any severance
payments made or to be made to Executive pursuant to any provision
of Section 7 below.
<PAGE>
2. EMPLOYMENT. The Company hereby employs Executive,
and Executive hereby accepts employment with the Company, on the
terms and subject to the conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder
shall be for the Initial Period and thereafter for a period of two
(2) years, the term hereof therefore commencing on the date hereof
and ending on May 31, 2001, subject to earlier termination as herein
provided. During the Initial Period, Executive shall be employed by
Company upon the same terms, compensation and benefits as provided
hereunder, pro-rated to cover such period. During the 90-day period
immediately preceding the end of the second Contract Year, the
Company and Executive shall negotiate, in good faith, the terms and
conditions of a two year extension to this Agreement upon terms and
conditions no less favorable to Executive than the terms and
conditions applicable during the second Contract year; provided,
however, that the foregoing obligation to negotiate in good faith
shall not apply in the event that either the Company or Executive
gives written notice to the other during such 90-day period of its
or his desire to have this Agreement terminated at the end of the
initial two (2) year term. In no event shall this Agreement be
extended beyond the initial two-year term without the written
agreement of Company and Executive.
4. POSITION AND DUTIES.
(a) Executive shall serve as the President and Chief
Executive Officer of the Company, reporting only to the Board of
Directors. Subject to the authority of the Board of Directors,
Executive shall have supervision and control over, and
responsibility for, the general management and operation of the
Company and shall have such other powers and duties as may from time
to time be prescribed by the Board of Directors, provided that such
duties are reasonable and customary for a president and chief
executive officer. Executive shall devote his entire working time,
attention and energies to the business of the Company.
(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from (i) serving the boards of
directors of a reasonable number of other corporations, or the
boards of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable activities and
community affairs, and (iii) managing his personal, investments and
affairs, provided that such activities do not materially interfere
with the proper performance of his duties and responsibilities as
the Company's President and Chief Executive Officer.
(c) Executive shall serve on the Board of Directors
during the entire term hereof. If, at any time during the term of
his employment, the shareholders of the Company shall fail to elect
Executive to the Board of Directors, or the Board of Directors shall
fail to elect Executive to the office of President or Chief
Executive Officer of the Company, or shall remove him from either of
such offices, other than as provided for in this Agreement,
Executive shall have the right to terminate his services hereunder
for Good Reason pursuant to Section 7(d) and Executive shall have no
further Obligation under this Agreement.
(d) Executive agrees to serve without additional
compensation, if elected or appointed thereto, in one or more
offices or as a director of any of the Company's subsidiaries;
<PAGE>
provided, however, that Executive shall not be required to serve as
an officer or director of any such subsidiary if such service would
expose him to potential adverse financial consequences.
5. PLACE OF PERFORMANCE.
In connection with his employment by the Company, Executive
shall be based at the Company's principal executive offices located
in Bakersfield, California. In the event that Executive consents to
any relocation requested by the Company, the Company will promptly
pay or reimburse Executive for all reasonable moving expenses
incurred by Executive relating to a change of his principal residence.
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term
hereof, the Company shall pay to Executive the Base Salary Amount.
The Company shall compensate Executive for the Initial Period as
provided herein in Section 3 hereof. The Base Salary Amount shall
be paid to Executive in accordance with the Company's regular
payroll practices with respect to senior management compensation.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract
Year, the Company shall pay to Executive such discretionary bonuses
as may be granted by the Board of Directors, in its discretion.
(c) EXPENSES. Executive shall be entitled to receive
(i) prompt reimbursement for all documented business expenses
incurred by him in the performance of his duties hereunder, provided
that Executive properly accounts therefor in accordance with the
Company's reimbursement policy and practices of the Company as of
the date hereof, and (ii) up to $500 per month in nonaccountable
automobile expenses.
(d) FRINGE BENEFITS. Executive shall be entitled to
participate in and receive benefits under all of the Company's
Benefit Plans or programs generally available to senior management
of the Company, including, but not limited to any retirement, stock
option plans, disability insurance plans and all other plans or
programs. Nothing paid to Executive under any Benefit Plan
presently in effect or made available in the future shall be deemed
to be in lieu of compensation payable to Executive hereunder.
Further the Company reserves the right to amend, modify or terminate
any and all such plans.
(e) VACATIONS. During the term hereof, Executive shall
be entitled to sick leave and paid holidays consistent with the
Company's sick leave and holiday policy for senior management and up
to two (2) weeks paid vacation during each Contract Year as
Executive deems reasonable. Any vacation time that is not taken in
a given Contract Year shall be carried forward to the following
Contract Year or Contract Years, as the case may be but in no event
more than four (4) weeks, on a cumulative basis.
<PAGE>
7. TERMINATION OF SERVICE.
(a) TERMINATION UPON DEATH. Executive's employment
hereunder shall terminate upon his death, in which event the Company
shall pay to such person as the Executive shall have designated in a
written notice filed with the Company, or if no such person shall
have been designated to his estate, as a lump sum death benefit an
amount equal to the Base Salary Amount for the one-year period
immediately following the Date of Termination plus an amount equal
to Performance Bonuses accrued through the Date of Termination and
all Base Salary Amounts, amounts due under Benefit Plans and
perquisites through the Date of Termination.
(b) TERMINATION UPON DISABILITY. If, as a result of a
permanent mental or physical disability, Executive shall have been
absent from his duties hereunder on a full-time basis for six (6)
consecutive months, ("Disability") and, within 30 days after the
Company notifies Executive in writing that it intends to replace
him, (which notice can be given at the end of the fifth month during
such six month period), Executive shall not have returned to the
performance of his duties on a full-time basis, the Company shall be
entitled to terminate Executive's employment. In addition,
executive shall, upon his Disability, have the right to terminate
his employment with Company. If such employment if terminated (
whether by the Company or by Executive) as a result of Executive's
Disability, the following shall apply:
(i) the Company shall continue to pay Executive
the Base Salary Amount to which he would otherwise be entitled
during the one-year period immediately following the Date of
Termination (offset by any disability insurance payments received by
Executive on policies provided by the Company);
(ii) the Company shall pay Executive an amount
equal to Performance Bonuses and Base Salary Amount accrued through
the Date of Termination;
(iii) the Company shall maintain in full force and
effect, for the continued benefit of Executive during the one-year
period immediately following the Date of Termination, all Benefit
Plans in which Executive was entitled to participate immediately
prior to the Date of Termination to the extent that Executive's
continued participation is possible under the general terms and
conditions of such Benefit Plans. In the event that Executive's
participation in any such Benefit Plan is barred as a result of his
Disability, Executive shall be entitled to receive an amount equal
to the annual contributions, payments, credit or allocations which
would have been made by the Company to him, to his account or on his
behalf under such Benefit Plan from which his continued
participation is barred;
(iv) the Company shall maintain a full force and
effect, for the continued benefit of Executive's estate or
dependents during the one-year period immediately following the Date
of Termination, any life, accident, disability or health and dental
insurance plans, vision care plans and any other similar welfare
plans of the Company in effect immediately prior to the Date of
Termination, or the Company shall provide equivalent benefits at no
cost to Executive's estate or his dependents;
<PAGE>
(c) TERMINATION FOR CAUSE. The Company shall be entitled
to terminate Executive's employment for Cause, in which event
Executive shall be entitled to all Base Salary amounts, amounts
under Benefit Plans and perquisites through the Date of Termination
plus an amount equal to Performance Bonuses accrued through the Date
of Termination.
(d) TERMINATION FOR GOOD REASON. Executive shall be
entitled to terminate Executive's employment for Good Reason at any
time and the Company shall be entitled to terminate Executive's
Employment for Good Reason at any time after the end of the first
Contract Year. Upon the termination of Executive's employment by
Company for Good Reason after completion of the first Contract Year,
Executive shall be entitled to receive from the Company a lump sum
payment in an amount equal to his Base Salary Amount and amounts
under Benefit Plans for the one-year period immediately following
the Date of Termination plus an amount equal to Performance Bonuses
accrued through the Date of Termination and all Base Salary Amounts,
amounts under the Benefit Plans and perquisites through the Date of
Termination, all of which shall be payable by Company within ten
(10) days after termination. Upon the termination of Executive's
employment by Executive for Good Reason all of the aforesaid
compensation, bonuses and benefits shall be paid to Executive by the
Company over the one-year period following the date of termination.
(e) NOTICE OF TERMINATION. any termination of
Executive's employment by the Company or Executive pursuant to
Sections 7(b), 7(c), or 7(d) shall be communicated by a Notice of
Termination to the other party.
(f) NO MITIGATION. Executive shall not be required to
mitigate the amount of any payment provided for in this Section 7 by
seeking other employment or otherwise, nor will the amount of
damages or severance benefits payable to Executive under this
Section 7 be reduced by reason of his securing other employment or
for any reason.
8. INDEMNIFICATION. The Company shall indemnify and
defend Executive to the fullest extent permitted under California
Law. This includes, but is not limited to, a duty to indemnify
Executive if he is made, or threatened to be made, a party to an
action or proceeding, to the fullest extent permitted by applicable
law, including an action by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that Employee
is or was an officer, director or employee of the Company (or any of
its subsidiaries), against all costs and expenses resulting from or
related to such action or proceeding, or any appeal thereof, if
Executive acted in good faith for a purpose which he reasonably
believed to be in the best interests of the Company. The
termination of any such action or proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create the presumption that
Executive did not act in good faith for a purpose which he
reasonably believed to be in the best interest of the Company. As
used in this Section, (i) "cost and expenses" means any and all
costs, expenses and liabilities incurred by Executive, including but
not limited to (A) attorneys' fees, (B) amounts paid in settlement
of, or in the satisfaction of any order or judgment in, any action
or proceeding and (C) fines, penalties and assessment asserted or
adjudged in any action or proceeding, and (ii) "action or
proceeding" means any and all suits, claims, actions, investigations
or proceedings whether civil, criminal or administrative, heretofore
or hereafter instituted or asserted.
<PAGE>
9. GENERAL PROVISIONS.
(a) NOTICES. All notices, demands and other
communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by overnight courier service, by
telecopy or by registered or certified mail to the respective
parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with in
Section):
a. If to the Company:
Industrial Rubber Innovations, Inc.
4525 New Horizon Boulevard, Suite 7
Bakersfield, CA 93313
Attn: President and Secretary
Facsimile (805) 833-8088
with a copy to:
Law Offices of M. Richard Cutler
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Attn: Brian A. Lebrecht, Esq.
Facsimile (949) 719-1988
b. If to Executive:
John Proulx
4525 New Horizon Boulevard, Suite 7
Bakersfield, CA 93313
Facsimile (805) 833-8088
(c) HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets
of the Company, by agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to compensation from the
Company in the same amount and on the same terms as he would be
entitled to hereunder if the Company terminated his employment in
the manner contemplated in Section 7(d), except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
<PAGE>
(ii) This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heir,
devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive should die while
any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided
herein shall be paid in accordance with the terms of this Agreement
to Executive's designee or, if there be no terms of this Agreement
to the Executive's heir, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement in
held to be illegal, invalid or unenforceable under existing or
future laws effective during the term of this Agreement, such
provisions shall be fully severable, the Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible and be legal, valid
and enforceable.
(f) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersedes all prior agreements and
understandings both written and oral, between the Company and the
Executive with respect to the subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties
hereunder may not be assigned or assumed by operation of law of
otherwise without the express written consent of the Company and the
Executive (which consent may be granted or withheld in the sole
discretion of the Company or the Executive, as applicable).
(h) AMENDMENT; WAIVER. This Agreement may not be amended
or modified except by an instrument in writing signed by, or on
behalf of, the Company and Executive. Either party to this
Agreement may (a) extend the time for the performance of any of the
obligations or other acts of the other party or (b) waive compliance
with any of the agreements or conditions of the other party
contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent
waiver or the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any
such rights.
<PAGE>
(i) GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
California, applicable to contracts executed in and to be performed
entirely within the state.
(j) JURISDICTION AND VENUE. The parties agree that all
actions or proceedings initiated by any party hereto and arising
directly or indirectly out of this Agreements which are brought
pursuant to judicial proceedings shall be litigated in the Superior
Court of Kern, California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of
summons and complaint or other process or paper may be made by
registered or certified mail addressed to the relevant party at the
address to which notices are to be sent pursuant to Section 9(a).
(k) ATTORNEYS' FEES. If any legal action or other
proceeding is brought for the enforcement of this Agreement, the
prevailing party shall be entitled to recover reasonable attorney's
fees and other costs incurred in that action or proceeding, in
addition to any other relief to which he or it may be entitled.
(l) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original while all of which taken together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed
this Agreement as of the date and year first written above.
Industrial Rubber Innovations, Inc.
a Florida corporation
/s/ David H. Foran /s/ John Proulx
By: David H. Foran John Proulx
Its: Secretary and Chief Financial Officer
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 15, 1999, between Industrial
Rubber Innovations, Inc., a Florida corporation (the "Company"), and
David H. Foran ("Executive").
WITNESSETH:
WHEREAS, the Company is desirous of employing Executive, and
Executive is desirous of being employed by the Company, on the terms
and subject to the conditions sets forth in this Agreement:
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby mutually acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the
indicated meanings when used in this Agreement, unless the context
requires otherwise:
(a) "Base Salary Amount" shall mean $60,000.00 during the
Initial Period and first Contract Year and $60,000.00 during the
second Contract Year.
(b) "Benefit Plan" shall mean each vacation pay, sick
pay, retirement, welfare, medical, dental, disability, life
insurance or other employee benefit plan, program or arrangement.
In addition, at the sole discretion of the Board of Directors,
benefit plan may also include one or more of the following:
incentive compensation, bonus, stock option and restricted stock
plan, program or arrangement.
(c) "Board of Directors" and " Board" shall mean the
board of directors of the Company.
(d) "Cause" shall mean (i) the conviction of Executive of
a felony which can reasonably be expected to have a material adverse
impact on the Company's business or reputation or (ii) the
commission by Executive of an act of fraud or embezzlement involving
assets of the Company or its customers, suppliers or affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been
delivered to Executive all of the following; (a) a copy of a
resolution, duly adopted by the affirmative vote of not less than a
majority of the entire non-interested membership of the Board of
Directors at a meeting which the Board of Directors called and held
for the purpose of determining whether Cause exists (after
reasonable notice to Executive and opportunity for him, together
with his counsel, to be heard before the Board of Directors),
finding that, in the good faith opinion of the Board of Directors,
Executive was guilty of the conduct set forth in this Section and
specifying the particulars thereof in detail, (b) an affidavit sworn
to by the President or Secretary of the Company stating that such
resolution was in fact adopted by the affirmative vote of not less
than a majority of the entire non-interested membership of the Board
and Directors.
<PAGE>
(e) "Chairman of The Board" shall mean the Chairman of
the Board of Directors of the Company, as determined from time to
time by the Board of Directors.
(f) "Contract Year" shall mean each year during the term
hereof commencing on June 1 and ending on the immediately following
May 31.
(g) "Date of Termination" shall mean (A) if termination
of employment occurs by reason of death, the date of Executive's
death or (B) if termination of employment occurs for any other
reason, the date on which a Notice of Termination is delivered to
the other party; provided, however, that if, within 60 days after
any Notice of Termination is given, the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination of employment, then the Date of
termination shall be the date of the Notice unless such dispute is
otherwise determined by mutual agreement or court order in favor of
Executive, in which case the Date of Termination shall be the date
on which the dispute is finally determined, either by mutual written
agreement of the parties or by a final judgment, order or decree of
a court of competent jurisdiction ( the time for appeal therefrom
having expired and no appeal having been perfected).
(h) "Good Reason" Shall mean (i) as to Executive (A) a
diminution in Executive's titles, responsibilities and/or duties,
(B) a change in the person or persons to whom Executive reports,
except as provided in Section 4(a), (C) a reassignment of Executive
to a location which increases Executive's commute from his existing
home by more than 50 miles on a daily round trip basis, (D) an
assignment of Executive to a location other than the principal
executive office of the Company, (E) the Company's failure to
continue or a substantial change in Executive's participation in any
Benefit Plans (subject to the Board's right to amend, modify or
terminate such plans), (F) the Company's failure to obtain the
agreement of any successor of the Company to assume this Agreement,
(G) any material breach of this Agreement by the Company which is
either not capable of correction or which in fact is not corrected
within (10) ten days after written notice by Executive specifying
such breach and (H) the failure to occur of any of the actions
discussed in Section 4(c); and (ii) as to the Company, the good
faith determination by a majority of the entire membership of the
Board of Directors that Executive has failed to perform his duties
as directed.
(i) "Initial Period" shall mean that portion of the term
hereof from the date of this Agreement through May 31, 1999.
(j) "Notice of Termination" shall mean a written notice
which shall indicate the specific provision in this Agreement relied
upon in connection with a termination of employment and which shall
set forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination under the provision so
indicated.
(k) "Performance Bonus" shall have the meaning ascribed
to that term in Section 6(b).
(l) "Severance Payments" shall mean any severance
payments made or to be made to Executive pursuant to any provision
of Section 7 below.
<PAGE>
2. EMPLOYMENT. The Company hereby employs Executive,
and Executive hereby accepts employment with the Company, on the
terms and subject to the conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder
shall be for the Initial Period and thereafter for a period of two
(2) years, the term hereof therefore commencing on the date hereof
and ending on May 31, 2001, subject to earlier termination as herein
provided. During the Initial Period, Executive shall be employed by
Company upon the same terms, compensation and benefits as provided
hereunder, pro-rated to cover such period. During the 90-day period
immediately preceding the end of the second Contract Year, the
Company and Executive shall negotiate, in good faith, the terms and
conditions of a two year extension to this Agreement upon terms and
conditions no less favorable to Executive than the terms and
conditions applicable during the second Contract year; provided,
however, that the foregoing obligation to negotiate in good faith
shall not apply in the event that either the Company or Executive
gives written notice to the other during such 90-day period of its
or his desire to have this Agreement terminated at the end of the
initial two (2) year term. In no event shall this Agreement be
extended beyond the initial two-year term without the written
agreement of Company and Executive.
4. POSITION AND DUTIES.
(a) Executive shall serve as the Chief Financial Officer
of the Company, reporting to the President and the Board of
Directors. Subject to the authority of the Board of Directors,
Executive shall have supervision and control over, and
responsibility for keeping and maintaining, or causing to be kept
and maintained, in accordance with generally accepted accounting
principles, adequate and correct accounts of the properties and
business transactions of the Company and shall have such other
powers and duties as may from time to time be prescribed by the
President or the Board of Directors, provided that such duties are
reasonable and customary for a chief financial officer. Executive
shall devote his entire working time, attention and energies to the
business of the Company.
(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from (i) serving the boards of
directors of a reasonable number of other corporations, or the
boards of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable activities and
community affairs, and (iii) managing his personal, investments and
affairs, provided that such activities do not materially interfere
with the proper performance of his duties and responsibilities as
the Company's Chief Financial Officer.
(c) Executive shall serve on the Board of Directors
during the entire term hereof. If, at any time during the term of
his employment, the shareholders of the Company shall fail to elect
Executive to the Board of Directors, or the Board of Directors shall
fail to elect Executive to the office of Chief Financial Officer of
the Company, or shall remove him from either of such offices, other
than as provided for in this Agreement, Executive shall have the
right to terminate his services hereunder for Good Reason pursuant
to Section 7(d) and Executive shall have no further Obligation under
this Agreement.
<PAGE>
(d) Executive agrees to serve without additional
compensation, if elected or appointed thereto, in one or more
offices or as a director of any of the Company's subsidiaries;
provided, however, that Executive shall not be required to serve as
an officer or director of any such subsidiary if such service would
expose him to potential adverse financial consequences.
5. PLACE OF PERFORMANCE.
In connection with his employment by the Company, Executive
shall be based at the Company's principal executive offices located
in Bakersfield, California. In the event that Executive consents to
any relocation requested by the Company, the Company will promptly
pay or reimburse Executive for all reasonable moving expenses
incurred by Executive relating to a change of his principal residence.
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term
hereof, the Company shall pay to Executive the Base Salary Amount.
The Company shall compensate Executive for the Initial Period as
provided herein in Section 3 hereof. The Base Salary Amount shall
be paid to Executive in accordance with the Company's regular
payroll practices with respect to senior management compensation.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract
Year, the Company shall pay to Executive such discretionary bonuses
as may be granted by the Board of Directors, in its discretion.
(c) EXPENSES. Executive shall be entitled to receive
(i) prompt reimbursement for all documented business expenses
incurred by him in the performance of his duties hereunder, provided
that Executive properly accounts therefor in accordance with the
Company's reimbursement policy and practices of the Company as of
the date hereof, and (ii) up to $500 per month in nonaccountable
automobile expenses.
(d) FRINGE BENEFITS. Executive shall be entitled to
participate in and receive benefits under all of the Company's
Benefit Plans or programs generally available to senior management
of the Company, including, but not limited to any retirement, stock
option plans, disability insurance plans and all other plans or
programs. Nothing paid to Executive under any Benefit Plan
presently in effect or made available in the future shall be deemed
to be in lieu of compensation payable to Executive hereunder.
Further the Company reserves the right to amend, modify or terminate
any and all such plans.
(e) VACATIONS. During the term hereof, Executive shall
be entitled to sick leave and paid holidays consistent with the
Company's sick leave and holiday policy for senior management and up
to two (2) weeks paid vacation during each Contract Year as
Executive deems reasonable. Any vacation time that is not taken in
a given Contract Year shall be carried forward to the following
Contract Year or Contract Years, as the case may be but in no event
more than four (4) weeks, on a cumulative basis.
<PAGE>
7. TERMINATION OF SERVICE.
(a) TERMINATION UPON DEATH. Executive's employment
hereunder shall terminate upon his death, in which event the Company
shall pay to such person as the Executive shall have designated in a
written notice filed with the Company, or if no such person shall
have been designated to his estate, as a lump sum death benefit an
amount equal to the Base Salary Amount for the one-year period
immediately following the Date of Termination plus an amount equal
to Performance Bonuses accrued through the Date of Termination and
all Base Salary Amounts, amounts due under Benefit Plans and
perquisites through the Date of Termination.
(b) TERMINATION UPON DISABILITY. If, as a result of a
permanent mental or physical disability, Executive shall have been
absent from his duties hereunder on a full-time basis for six (6)
consecutive months, ("Disability") and, within 30 days after the
Company notifies Executive in writing that it intends to replace
him, (which notice can be given at the end of the fifth month during
such six month period), Executive shall not have returned to the
performance of his duties on a full-time basis, the Company shall be
entitled to terminate Executive's employment. In addition,
executive shall, upon his Disability, have the right to terminate
his employment with Company. If such employment if terminated (
whether by the Company or by Executive) as a result of Executive's
Disability, the following shall apply:
(i) the Company shall continue to pay Executive
the Base Salary Amount to which he would otherwise be entitled
during the one-year period immediately following the Date of
Termination (offset by any disability insurance payments received by
Executive on policies provided by the Company);
(ii) the Company shall pay Executive an amount
equal to Performance Bonuses and Base Salary Amount accrued through
the Date of Termination;
(iii) the Company shall maintain in full force and
effect, for the continued benefit of Executive during the one-year
period immediately following the Date of Termination, all Benefit
Plans in which Executive was entitled to participate immediately
prior to the Date of Termination to the extent that Executive's
continued participation is possible under the general terms and
conditions of such Benefit Plans. In the event that Executive's
participation in any such Benefit Plan is barred as a result of his
Disability, Executive shall be entitled to receive an amount equal
to the annual contributions, payments, credit or allocations which
would have been made by the Company to him, to his account or on his
behalf under such Benefit Plan from which his continued
participation is barred;
(iv) the Company shall maintain a full force and
effect, for the continued benefit of Executive's estate or
dependents during the one-year period immediately following the Date
of Termination, any life, accident, disability or health and dental
insurance plans, vision care plans and any other similar welfare
plans of the Company in effect immediately prior to the Date of
Termination, or the Company shall provide equivalent benefits at no
cost to Executive's estate or his dependents;
<PAGE>
(c) TERMINATION FOR CAUSE. The Company shall be entitled
to terminate Executive's employment for Cause, in which event
Executive shall be entitled to all Base Salary amounts, amounts
under Benefit Plans and perquisites through the Date of Termination
plus an amount equal to Performance Bonuses accrued through the Date
of Termination.
(d) TERMINATION FOR GOOD REASON. Executive shall be
entitled to terminate Executive's employment for Good Reason at any
time and the Company shall be entitled to terminate Executive's
Employment for Good Reason at any time after the end of the first
Contract Year. Upon the termination of Executive's employment by
Company for Good Reason after completion of the first Contract Year,
Executive shall be entitled to receive from the Company a lump sum
payment in an amount equal to his Base Salary Amount and amounts
under Benefit Plans for the one-year period immediately following
the Date of Termination plus an amount equal to Performance Bonuses
accrued through the Date of Termination and all Base Salary Amounts,
amounts under the Benefit Plans and perquisites through the Date of
Termination, all of which shall be payable by Company within ten
(10) days after termination. Upon the termination of Executive's
employment by Executive for Good Reason all of the aforesaid
compensation, bonuses and benefits shall be paid to Executive by the
Company over the one-year period following the date of termination.
(e) NOTICE OF TERMINATION. any termination of
Executive's employment by the Company or Executive pursuant to
Sections 7(b), 7(c), or 7(d) shall be communicated by a Notice of
Termination to the other party.
(f) NO MITIGATION. Executive shall not be required to
mitigate the amount of any payment provided for in this Section 7 by
seeking other employment or otherwise, nor will the amount of
damages or severance benefits payable to Executive under this
Section 7 be reduced by reason of his securing other employment or
for any reason.
8. INDEMNIFICATION. The Company shall indemnify and
defend Executive to the fullest extent permitted under California
Law. This includes, but is not limited to, a duty to indemnify
Executive if he is made, or threatened to be made, a party to an
action or proceeding, to the fullest extent permitted by applicable
law, including an action by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that Employee
is or was an officer, director or employee of the Company (or any of
its subsidiaries), against all costs and expenses resulting from or
related to such action or proceeding, or any appeal thereof, if
Executive acted in good faith for a purpose which he reasonably
believed to be in the best interests of the Company. The
termination of any such action or proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create the presumption that
Executive did not act in good faith for a purpose which he
reasonably believed to be in the best interest of the Company. As
used in this Section, (i) "cost and expenses" means any and all
costs, expenses and liabilities incurred by Executive, including but
not limited to (A) attorneys' fees, (B) amounts paid in settlement
of, or in the satisfaction of any order or judgment in, any action
or proceeding and (C) fines, penalties and assessment asserted or
adjudged in any action or proceeding, and (ii) "action or
proceeding" means any and all suits, claims, actions, investigations
or proceedings whether civil, criminal or administrative, heretofore
or hereafter instituted or asserted.
<PAGE>
9. GENERAL PROVISIONS.
(a) NOTICES. All notices, demands and other
communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by overnight courier service, by
telecopy or by registered or certified mail to the respective
parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with in
Section):
a. If to the Company:
Industrial Rubber Innovations, Inc.
4525 New Horizon Boulevard, Suite 7
Bakersfield, CA 93313
Attn: President and Secretary
Facsimile (805) 833-8088
with a copy to:
Law Offices of M. Richard Cutler
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Attn: Brian A. Lebrecht, Esq.
Facsimile (949) 719-1988
b. If to Executive:
David H. Foran
4525 New Horizon Boulevard, Suite 7
Bakersfield, CA 93313
Facsimile (805) 833-8088
(c) HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets
of the Company, by agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to compensation from the
Company in the same amount and on the same terms as he would be
entitled to hereunder if the Company terminated his employment in
the manner contemplated in Section 7(d), except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
<PAGE>
(ii) This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heir,
devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive should die while
any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided
herein shall be paid in accordance with the terms of this Agreement
to Executive's designee or, if there be no terms of this Agreement
to the Executive's heir, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement in
held to be illegal, invalid or unenforceable under existing or
future laws effective during the term of this Agreement, such
provisions shall be fully severable, the Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible and be legal, valid
and enforceable.
(f) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersedes all prior agreements and
understandings both written and oral, between the Company and the
Executive with respect to the subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties
hereunder may not be assigned or assumed by operation of law of
otherwise without the express written consent of the Company and the
Executive (which consent may be granted or withheld in the sole
discretion of the Company or the Executive, as applicable).
(h) AMENDMENT; WAIVER. This Agreement may not be amended
or modified except by an instrument in writing signed by, or on
behalf of, the Company and Executive. Either party to this
Agreement may (a) extend the time for the performance of any of the
obligations or other acts of the other party or (b) waive compliance
with any of the agreements or conditions of the other party
contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent
waiver or the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any
such rights.
<PAGE>
(i) GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
California, applicable to contracts executed in and to be performed
entirely within the state.
(j) JURISDICTION AND VENUE. The parties agree that all
actions or proceedings initiated by any party hereto and arising
directly or indirectly out of this Agreements which are brought
pursuant to judicial proceedings shall be litigated in the Superior
Court of Kern, California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of
summons and complaint or other process or paper may be made by
registered or certified mail addressed to the relevant party at the
address to which notices are to be sent pursuant to Section 9(a).
(k) ATTORNEYS' FEES. If any legal action or other
proceeding is brought for the enforcement of this Agreement, the
prevailing party shall be entitled to recover reasonable attorney's
fees and other costs incurred in that action or proceeding, in
addition to any other relief to which he or it may be entitled.
(l) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original while all of which taken together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed
this Agreement as of the date and year first written above.
Industrial Rubber Innovations, Inc.
a Florida corporation
/s/ John Proulx /s/ David H. Foran
By: John Proulx David H. Foran
Its: President
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 15, 1999, between Industrial
Rubber Innovations, Inc., a Florida corporation (the "Company"), and
Benny Hun ("Executive").
WITNESSETH:
WHEREAS, the Company is desirous of employing Executive, and
Executive is desirous of being employed by the Company, on the terms
and subject to the conditions sets forth in this Agreement:
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby mutually acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the
indicated meanings when used in this Agreement, unless the context
requires otherwise:
(a) "Base Salary Amount" shall mean $60,000.00 during the
Initial Period and first Contract Year and $60,000.00 during the
second Contract Year.
(b) "Benefit Plan" shall mean each vacation pay, sick
pay, retirement, welfare, medical, dental, disability, life
insurance or other employee benefit plan, program or arrangement.
In addition, at the sole discretion of the Board of Directors,
benefit plan may also include one or more of the following:
incentive compensation, bonus, stock option and restricted stock
plan, program or arrangement.
(c) "Board of Directors" and " Board" shall mean the
board of directors of the Company.
(d) "Cause" shall mean (i) the conviction of Executive of
a felony which can reasonably be expected to have a material adverse
impact on the Company's business or reputation or (ii) the
commission by Executive of an act of fraud or embezzlement involving
assets of the Company or its customers, suppliers or affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been
delivered to Executive all of the following; (a) a copy of a
resolution, duly adopted by the affirmative vote of not less than a
majority of the entire non-interested membership of the Board of
Directors at a meeting which the Board of Directors called and held
for the purpose of determining whether Cause exists (after
reasonable notice to Executive and opportunity for him, together
with his counsel, to be heard before the Board of Directors),
finding that, in the good faith opinion of the Board of Directors,
Executive was guilty of the conduct set forth in this Section and
specifying the particulars thereof in detail, (b) an affidavit sworn
to by the President or Secretary of the Company stating that such
resolution was in fact adopted by the affirmative vote of not less
than a majority of the entire non-interested membership of the Board
and Directors.
<PAGE>
(e) "Chairman of The Board" shall mean the Chairman of
the Board of Directors of the Company, as determined from time to
time by the Board of Directors.
(f) "Contract Year" shall mean each year during the term
hereof commencing on June 1 and ending on the immediately following
May 31.
(g) "Date of Termination" shall mean (A) if termination
of employment occurs by reason of death, the date of Executive's
death or (B) if termination of employment occurs for any other
reason, the date on which a Notice of Termination is delivered to
the other party; provided, however, that if, within 60 days after
any Notice of Termination is given, the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination of employment, then the Date of
termination shall be the date of the Notice unless such dispute is
otherwise determined by mutual agreement or court order in favor of
Executive, in which case the Date of Termination shall be the date
on which the dispute is finally determined, either by mutual written
agreement of the parties or by a final judgment, order or decree of
a court of competent jurisdiction ( the time for appeal therefrom
having expired and no appeal having been perfected).
(h) "Good Reason" Shall mean (i) as to Executive (A) a
diminution in Executive's titles, responsibilities and/or duties,
(B) a change in the person or persons to whom Executive reports,
except as provided in Section 4(a), (C) a reassignment of Executive
to a location which increases Executive's commute from his existing
home by more than 50 miles on a daily round trip basis, (D) an
assignment of Executive to a location other than the principal
executive office of the Company, (E) the Company's failure to
continue or a substantial change in Executive's participation in any
Benefit Plans (subject to the Board's right to amend, modify or
terminate such plans), (F) the Company's failure to obtain the
agreement of any successor of the Company to assume this Agreement,
(G) any material breach of this Agreement by the Company which is
either not capable of correction or which in fact is not corrected
within (10) ten days after written notice by Executive specifying
such breach and (H) the failure to occur of any of the actions
discussed in Section 4(c); and (ii) as to the Company, the good
faith determination by a majority of the entire membership of the
Board of Directors that Executive has failed to perform his duties
as directed.
(i) "Initial Period" shall mean that portion of the term
hereof from the date of this Agreement through May 31, 1999.
(j) "Notice of Termination" shall mean a written notice
which shall indicate the specific provision in this Agreement relied
upon in connection with a termination of employment and which shall
set forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination under the provision so
indicated.
(k) "Performance Bonus" shall have the meaning ascribed
to that term in Section 6(b).
(l) "Severance Payments" shall mean any severance
payments made or to be made to Executive pursuant to any provision
of Section 7 below.
<PAGE>
2. EMPLOYMENT. The Company hereby employs Executive,
and Executive hereby accepts employment with the Company, on the
terms and subject to the conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder
shall be for the Initial Period and thereafter for a period of two
(2) years, the term hereof therefore commencing on the date hereof
and ending on May 31, 2001, subject to earlier termination as herein
provided. During the Initial Period, Executive shall be employed by
Company upon the same terms, compensation and benefits as provided
hereunder, pro-rated to cover such period. During the 90-day period
immediately preceding the end of the second Contract Year, the
Company and Executive shall negotiate, in good faith, the terms and
conditions of a two year extension to this Agreement upon terms and
conditions no less favorable to Executive than the terms and
conditions applicable during the second Contract year; provided,
however, that the foregoing obligation to negotiate in good faith
shall not apply in the event that either the Company or Executive
gives written notice to the other during such 90-day period of its
or his desire to have this Agreement terminated at the end of the
initial two (2) year term. In no event shall this Agreement be
extended beyond the initial two-year term without the written
agreement of Company and Executive.
4. POSITION AND DUTIES.
(a) Executive shall serve as the Vice President of
Production of the Company, reporting to the President and the Board
of Directors. Subject to the authority of the Board of Directors,
Executive shall have such other powers and duties as may from time
to time be prescribed by the President or the Board of Directors,
provided that such duties are reasonable and customary for a vice
president of production. Executive shall devote his entire working
time, attention and energies to the business of the Company.
(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from (i) serving the boards of
directors of a reasonable number of other corporations, or the
boards of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable activities and
community affairs, and (iii) managing his personal, investments and
affairs, provided that such activities do not materially interfere
with the proper performance of his duties and responsibilities as
the Company's Vice President of Production.
(c) Executive shall serve on the Board of Directors
during the entire term hereof. If, at any time during the term of
his employment, the shareholders of the Company shall fail to elect
Executive to the Board of Directors, or the Board of Directors shall
fail to elect Executive to the office of Vice President of
Production of the Company, or shall remove him from either of such
offices, other than as provided for in this Agreement, Executive
shall have the right to terminate his services hereunder for Good
Reason pursuant to Section 7(d) and Executive shall have no further
Obligation under this Agreement.
(d) Executive agrees to serve without additional
compensation, if elected or appointed thereto, in one or more
offices or as a director of any of the Company's subsidiaries;
provided, however, that Executive shall not be required to serve as
an officer or director of any such subsidiary if such service would
expose him to potential adverse financial consequences.
<PAGE>
5. PLACE OF PERFORMANCE.
In connection with his employment by the Company, Executive
shall be based at the Company's principal executive offices located
in Bakersfield, California. In the event that Executive consents to
any relocation requested by the Company, the Company will promptly
pay or reimburse Executive for all reasonable moving expenses
incurred by Executive relating to a change of his principal residence.
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term
hereof, the Company shall pay to Executive the Base Salary Amount.
The Company shall compensate Executive for the Initial Period as
provided herein in Section 3 hereof. The Base Salary Amount shall
be paid to Executive in accordance with the Company's regular
payroll practices with respect to senior management compensation.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract
Year, the Company shall pay to Executive such discretionary bonuses
as may be granted by the Board of Directors, in its discretion.
(c) EXPENSES. Executive shall be entitled to receive
(i) prompt reimbursement for all documented business expenses
incurred by him in the performance of his duties hereunder, provided
that Executive properly accounts therefor in accordance with the
Company's reimbursement policy and practices of the Company as of
the date hereof, and (ii) up to $500 per month in nonaccountable
automobile expenses.
(d) FRINGE BENEFITS. Executive shall be entitled to
participate in and receive benefits under all of the Company's
Benefit Plans or programs generally available to senior management
of the Company, including, but not limited to any retirement, stock
option plans, disability insurance plans and all other plans or
programs. Nothing paid to Executive under any Benefit Plan
presently in effect or made available in the future shall be deemed
to be in lieu of compensation payable to Executive hereunder.
Further the Company reserves the right to amend, modify or terminate
any and all such plans.
(e) VACATIONS. During the term hereof, Executive shall
be entitled to sick leave and paid holidays consistent with the
Company's sick leave and holiday policy for senior management and up
to two (2) weeks paid vacation during each Contract Year as
Executive deems reasonable. Any vacation time that is not taken in
a given Contract Year shall be carried forward to the following
Contract Year or Contract Years, as the case may be but in no event
more than four (4) weeks, on a cumulative basis.
<PAGE>
7. TERMINATION OF SERVICE.
(a) TERMINATION UPON DEATH. Executive's employment
hereunder shall terminate upon his death, in which event the Company
shall pay to such person as the Executive shall have designated in a
written notice filed with the Company, or if no such person shall
have been designated to his estate, as a lump sum death benefit an
amount equal to the Base Salary Amount for the one-year period
immediately following the Date of Termination plus an amount equal
to Performance Bonuses accrued through the Date of Termination and
all Base Salary Amounts, amounts due under Benefit Plans and
perquisites through the Date of Termination.
(b) TERMINATION UPON DISABILITY. If, as a result of a
permanent mental or physical disability, Executive shall have been
absent from his duties hereunder on a full-time basis for six (6)
consecutive months, ("Disability") and, within 30 days after the
Company notifies Executive in writing that it intends to replace
him, (which notice can be given at the end of the fifth month during
such six month period), Executive shall not have returned to the
performance of his duties on a full-time basis, the Company shall be
entitled to terminate Executive's employment. In addition,
executive shall, upon his Disability, have the right to terminate
his employment with Company. If such employment if terminated (
whether by the Company or by Executive) as a result of Executive's
Disability, the following shall apply:
(i) the Company shall continue to pay Executive
the Base Salary Amount to which he would otherwise be entitled
during the one-year period immediately following the Date of
Termination (offset by any disability insurance payments received by
Executive on policies provided by the Company);
(ii) the Company shall pay Executive an amount
equal to Performance Bonuses and Base Salary Amount accrued through
the Date of Termination;
(iii) the Company shall maintain in full force and
effect, for the continued benefit of Executive during the one-year
period immediately following the Date of Termination, all Benefit
Plans in which Executive was entitled to participate immediately
prior to the Date of Termination to the extent that Executive's
continued participation is possible under the general terms and
conditions of such Benefit Plans. In the event that Executive's
participation in any such Benefit Plan is barred as a result of his
Disability, Executive shall be entitled to receive an amount equal
to the annual contributions, payments, credit or allocations which
would have been made by the Company to him, to his account or on his
behalf under such Benefit Plan from which his continued
participation is barred;
(iv) the Company shall maintain a full force and
effect, for the continued benefit of Executive's estate or
dependents during the one-year period immediately following the Date
of Termination, any life, accident, disability or health and dental
insurance plans, vision care plans and any other similar welfare
plans of the Company in effect immediately prior to the Date of
Termination, or the Company shall provide equivalent benefits at no
cost to Executive's estate or his dependents;
<PAGE>
(c) TERMINATION FOR CAUSE. The Company shall be entitled
to terminate Executive's employment for Cause, in which event
Executive shall be entitled to all Base Salary amounts, amounts
under Benefit Plans and perquisites through the Date of Termination
plus an amount equal to Performance Bonuses accrued through the Date
of Termination.
(d) TERMINATION FOR GOOD REASON. Executive shall be
entitled to terminate Executive's employment for Good Reason at any
time and the Company shall be entitled to terminate Executive's
Employment for Good Reason at any time after the end of the first
Contract Year. Upon the termination of Executive's employment by
Company for Good Reason after completion of the first Contract Year,
Executive shall be entitled to receive from the Company a lump sum
payment in an amount equal to his Base Salary Amount and amounts
under Benefit Plans for the one-year period immediately following
the Date of Termination plus an amount equal to Performance Bonuses
accrued through the Date of Termination and all Base Salary Amounts,
amounts under the Benefit Plans and perquisites through the Date of
Termination, all of which shall be payable by Company within ten
(10) days after termination. Upon the termination of Executive's
employment by Executive for Good Reason all of the aforesaid
compensation, bonuses and benefits shall be paid to Executive by the
Company over the one-year period following the date of termination.
(e) NOTICE OF TERMINATION. any termination of
Executive's employment by the Company or Executive pursuant to
Sections 7(b), 7(c), or 7(d) shall be communicated by a Notice of
Termination to the other party.
(f) NO MITIGATION. Executive shall not be required to
mitigate the amount of any payment provided for in this Section 7 by
seeking other employment or otherwise, nor will the amount of
damages or severance benefits payable to Executive under this
Section 7 be reduced by reason of his securing other employment or
for any reason.
8. INDEMNIFICATION. The Company shall indemnify and
defend Executive to the fullest extent permitted under California
Law. This includes, but is not limited to, a duty to indemnify
Executive if he is made, or threatened to be made, a party to an
action or proceeding, to the fullest extent permitted by applicable
law, including an action by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that Employee
is or was an officer, director or employee of the Company (or any of
its subsidiaries), against all costs and expenses resulting from or
related to such action or proceeding, or any appeal thereof, if
Executive acted in good faith for a purpose which he reasonably
believed to be in the best interests of the Company. The
termination of any such action or proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create the presumption that
Executive did not act in good faith for a purpose which he
reasonably believed to be in the best interest of the Company. As
used in this Section, (i) "cost and expenses" means any and all
costs, expenses and liabilities incurred by Executive, including but
not limited to (A) attorneys' fees, (B) amounts paid in settlement
of, or in the satisfaction of any order or judgment in, any action
or proceeding and (C) fines, penalties and assessment asserted or
adjudged in any action or proceeding, and (ii) "action or
proceeding" means any and all suits, claims, actions, investigations
or proceedings whether civil, criminal or administrative, heretofore
or hereafter instituted or asserted.
<PAGE>
9. GENERAL PROVISIONS.
(a) NOTICES. All notices, demands and other
communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by overnight courier service, by
telecopy or by registered or certified mail to the respective
parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with in
Section):
a. If to the Company:
Industrial Rubber Innovations, Inc.
4525 New Horizon Boulevard, Suite 7
Bakersfield, CA 93313
Attn: President and Secretary
Facsimile (805) 833-8088
with a copy to:
Law Offices of M. Richard Cutler
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Attn: Brian A. Lebrecht, Esq.
Facsimile (949) 719-1988
b. If to Executive:
Benny Hun
4525 New Horizon Boulevard, Suite 7
Bakersfield, CA 93313
Facsimile (805) 833-8088
(c) HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets
of the Company, by agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to compensation from the
Company in the same amount and on the same terms as he would be
entitled to hereunder if the Company terminated his employment in
the manner contemplated in Section 7(d), except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
<PAGE>
(ii) This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heir,
devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive should die while
any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided
herein shall be paid in accordance with the terms of this Agreement
to Executive's designee or, if there be no terms of this Agreement
to the Executive's heir, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement in
held to be illegal, invalid or unenforceable under existing or
future laws effective during the term of this Agreement, such
provisions shall be fully severable, the Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible and be legal, valid
and enforceable.
(f) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersedes all prior agreements and
understandings both written and oral, between the Company and the
Executive with respect to the subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties
hereunder may not be assigned or assumed by operation of law of
otherwise without the express written consent of the Company and the
Executive (which consent may be granted or withheld in the sole
discretion of the Company or the Executive, as applicable).
(h) AMENDMENT; WAIVER. This Agreement may not be amended
or modified except by an instrument in writing signed by, or on
behalf of, the Company and Executive. Either party to this
Agreement may (a) extend the time for the performance of any of the
obligations or other acts of the other party or (b) waive compliance
with any of the agreements or conditions of the other party
contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent
waiver or the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any
such rights.
<PAGE>
(i) GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
California, applicable to contracts executed in and to be performed
entirely within the state.
(j) JURISDICTION AND VENUE. The parties agree that all
actions or proceedings initiated by any party hereto and arising
directly or indirectly out of this Agreements which are brought
pursuant to judicial proceedings shall be litigated in the Superior
Court of Kern, California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of
summons and complaint or other process or paper may be made by
registered or certified mail addressed to the relevant party at the
address to which notices are to be sent pursuant to Section 9(a).
(k) ATTORNEYS' FEES. If any legal action or other
proceeding is brought for the enforcement of this Agreement, the
prevailing party shall be entitled to recover reasonable attorney's
fees and other costs incurred in that action or proceeding, in
addition to any other relief to which he or it may be entitled.
(l) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original while all of which taken together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed
this Agreement as of the date and year first written above.
Industrial Rubber Innovations, Inc.
a Florida corporation
/s/ John Proulx /s/ Benny Hun
By: John Proulx Benny Hun
Its: President
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 15, 1999, between Industrial
Rubber Innovations, Inc., a Florida corporation (the "Company"), and
Steven Tieu ("Executive").
WITNESSETH:
WHEREAS, the Company is desirous of employing Executive, and
Executive is desirous of being employed by the Company, on the terms
and subject to the conditions sets forth in this Agreement:
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby mutually acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the
indicated meanings when used in this Agreement, unless the context
requires otherwise:
(a) "Base Salary Amount" shall mean $60,000.00 during the
Initial Period and first Contract Year and $60,000.00 during the
second Contract Year.
(b) "Benefit Plan" shall mean each vacation pay, sick
pay, retirement, welfare, medical, dental, disability, life
insurance or other employee benefit plan, program or arrangement.
In addition, at the sole discretion of the Board of Directors,
benefit plan may also include one or more of the following:
incentive compensation, bonus, stock option and restricted stock
plan, program or arrangement.
(c) "Board of Directors" and " Board" shall mean the
board of directors of the Company.
(d) "Cause" shall mean (i) the conviction of Executive of
a felony which can reasonably be expected to have a material adverse
impact on the Company's business or reputation or (ii) the
commission by Executive of an act of fraud or embezzlement involving
assets of the Company or its customers, suppliers or affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been
delivered to Executive all of the following; (a) a copy of a
resolution, duly adopted by the affirmative vote of not less than a
majority of the entire non-interested membership of the Board of
Directors at a meeting which the Board of Directors called and held
for the purpose of determining whether Cause exists (after
reasonable notice to Executive and opportunity for him, together
with his counsel, to be heard before the Board of Directors),
finding that, in the good faith opinion of the Board of Directors,
Executive was guilty of the conduct set forth in this Section and
specifying the particulars thereof in detail, (b) an affidavit sworn
to by the President or Secretary of the Company stating that such
resolution was in fact adopted by the affirmative vote of not less
than a majority of the entire non-interested membership of the Board
and Directors.
<PAGE>
(e) "Chairman of The Board" shall mean the Chairman of
the Board of Directors of the Company, as determined from time to
time by the Board of Directors.
(f) "Contract Year" shall mean each year during the term
hereof commencing on June 1 and ending on the immediately following
May 31.
(g) "Date of Termination" shall mean (A) if termination
of employment occurs by reason of death, the date of Executive's
death or (B) if termination of employment occurs for any other
reason, the date on which a Notice of Termination is delivered to
the other party; provided, however, that if, within 60 days after
any Notice of Termination is given, the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination of employment, then the Date of
termination shall be the date of the Notice unless such dispute is
otherwise determined by mutual agreement or court order in favor of
Executive, in which case the Date of Termination shall be the date
on which the dispute is finally determined, either by mutual written
agreement of the parties or by a final judgment, order or decree of
a court of competent jurisdiction ( the time for appeal therefrom
having expired and no appeal having been perfected).
(h) "Good Reason" Shall mean (i) as to Executive (A) a
diminution in Executive's titles, responsibilities and/or duties,
(B) a change in the person or persons to whom Executive reports,
except as provided in Section 4(a), (C) a reassignment of Executive
to a location which increases Executive's commute from his existing
home by more than 50 miles on a daily round trip basis, (D) an
assignment of Executive to a location other than the principal
executive office of the Company, (E) the Company's failure to
continue or a substantial change in Executive's participation in any
Benefit Plans (subject to the Board's right to amend, modify or
terminate such plans), (F) the Company's failure to obtain the
agreement of any successor of the Company to assume this Agreement,
(G) any material breach of this Agreement by the Company which is
either not capable of correction or which in fact is not corrected
within (10) ten days after written notice by Executive specifying
such breach and (H) the failure to occur of any of the actions
discussed in Section 4(c); and (ii) as to the Company, the good
faith determination by a majority of the entire membership of the
Board of Directors that Executive has failed to perform his duties
as directed.
(i) "Initial Period" shall mean that portion of the term
hereof from the date of this Agreement through May 31, 1999.
(j) "Notice of Termination" shall mean a written notice
which shall indicate the specific provision in this Agreement relied
upon in connection with a termination of employment and which shall
set forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination under the provision so
indicated.
(k) "Performance Bonus" shall have the meaning ascribed
to that term in Section 6(b).
(l) "Severance Payments" shall mean any severance
payments made or to be made to Executive pursuant to any provision
of Section 7 below.
<PAGE>
2. EMPLOYMENT. The Company hereby employs Executive,
and Executive hereby accepts employment with the Company, on the
terms and subject to the conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder
shall be for the Initial Period and thereafter for a period of two
(2) years, the term hereof therefore commencing on the date hereof
and ending on May 31, 2001, subject to earlier termination as herein
provided. During the Initial Period, Executive shall be employed by
Company upon the same terms, compensation and benefits as provided
hereunder, pro-rated to cover such period. During the 90-day period
immediately preceding the end of the second Contract Year, the
Company and Executive shall negotiate, in good faith, the terms and
conditions of a two year extension to this Agreement upon terms and
conditions no less favorable to Executive than the terms and
conditions applicable during the second Contract year; provided,
however, that the foregoing obligation to negotiate in good faith
shall not apply in the event that either the Company or Executive
gives written notice to the other during such 90-day period of its
or his desire to have this Agreement terminated at the end of the
initial two (2) year term. In no event shall this Agreement be
extended beyond the initial two-year term without the written
agreement of Company and Executive.
4. POSITION AND DUTIES.
(a) Executive shall serve as the Vice President of
Technical Support of the Company, reporting to the President and the
Board of Directors. Subject to the authority of the Board of
Directors, Executive shall have such other powers and duties as may
from time to time be prescribed by the President or the Board of
Directors, provided that such duties are reasonable and customary
for a vice president of technical support. Executive shall devote
his entire working time, attention and energies to the business of
the Company.
(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from (i) serving the boards of
directors of a reasonable number of other corporations, or the
boards of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable activities and
community affairs, and (iii) managing his personal, investments and
affairs, provided that such activities do not materially interfere
with the proper performance of his duties and responsibilities as
the Company's Vice President of Technical Support.
(c) Executive shall serve on the Board of Directors
during the entire term hereof. If, at any time during the term of
his employment, the shareholders of the Company shall fail to elect
Executive to the Board of Directors, or the Board of Directors shall
fail to elect Executive to the office of Vice President of Technical
Support of the Company, or shall remove him from either of such
offices, other than as provided for in this Agreement, Executive
shall have the right to terminate his services hereunder for Good
Reason pursuant to Section 7(d) and Executive shall have no further
Obligation under this Agreement.
(d) Executive agrees to serve without additional
compensation, if elected or appointed thereto, in one or more
offices or as a director of any of the Company's subsidiaries;
provided, however, that Executive shall not be required to serve as
an officer or director of any such subsidiary if such service would
expose him to potential adverse financial consequences.
<PAGE>
5. PLACE OF PERFORMANCE.
In connection with his employment by the Company, Executive
shall be based at the Company's principal executive offices located
in Bakersfield, California. In the event that Executive consents to
any relocation requested by the Company, the Company will promptly
pay or reimburse Executive for all reasonable moving expenses
incurred by Executive relating to a change of his principal residence.
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term
hereof, the Company shall pay to Executive the Base Salary Amount.
The Company shall compensate Executive for the Initial Period as
provided herein in Section 3 hereof. The Base Salary Amount shall
be paid to Executive in accordance with the Company's regular
payroll practices with respect to senior management compensation.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract
Year, the Company shall pay to Executive such discretionary bonuses
as may be granted by the Board of Directors, in its discretion.
(c) EXPENSES. Executive shall be entitled to receive
(i) prompt reimbursement for all documented business expenses
incurred by him in the performance of his duties hereunder, provided
that Executive properly accounts therefor in accordance with the
Company's reimbursement policy and practices of the Company as of
the date hereof, and (ii) up to $500 per month in nonaccountable
automobile expenses.
(d) FRINGE BENEFITS. Executive shall be entitled to
participate in and receive benefits under all of the Company's
Benefit Plans or programs generally available to senior management
of the Company, including, but not limited to any retirement, stock
option plans, disability insurance plans and all other plans or
programs. Nothing paid to Executive under any Benefit Plan
presently in effect or made available in the future shall be deemed
to be in lieu of compensation payable to Executive hereunder.
Further the Company reserves the right to amend, modify or terminate
any and all such plans.
(e) VACATIONS. During the term hereof, Executive shall
be entitled to sick leave and paid holidays consistent with the
Company's sick leave and holiday policy for senior management and up
to two (2) weeks paid vacation during each Contract Year as
Executive deems reasonable. Any vacation time that is not taken in
a given Contract Year shall be carried forward to the following
Contract Year or Contract Years, as the case may be but in no event
more than four (4) weeks, on a cumulative basis.
<PAGE>
7. TERMINATION OF SERVICE.
(a) TERMINATION UPON DEATH. Executive's employment
hereunder shall terminate upon his death, in which event the Company
shall pay to such person as the Executive shall have designated in a
written notice filed with the Company, or if no such person shall
have been designated to his estate, as a lump sum death benefit an
amount equal to the Base Salary Amount for the one-year period
immediately following the Date of Termination plus an amount equal
to Performance Bonuses accrued through the Date of Termination and
all Base Salary Amounts, amounts due under Benefit Plans and
perquisites through the Date of Termination.
(b) TERMINATION UPON DISABILITY. If, as a result of a
permanent mental or physical disability, Executive shall have been
absent from his duties hereunder on a full-time basis for six (6)
consecutive months, ("Disability") and, within 30 days after the
Company notifies Executive in writing that it intends to replace
him, (which notice can be given at the end of the fifth month during
such six month period), Executive shall not have returned to the
performance of his duties on a full-time basis, the Company shall be
entitled to terminate Executive's employment. In addition,
executive shall, upon his Disability, have the right to terminate
his employment with Company. If such employment if terminated (
whether by the Company or by Executive) as a result of Executive's
Disability, the following shall apply:
(i) the Company shall continue to pay Executive
the Base Salary Amount to which he would otherwise be entitled
during the one-year period immediately following the Date of
Termination (offset by any disability insurance payments received by
Executive on policies provided by the Company);
(ii) the Company shall pay Executive an amount
equal to Performance Bonuses and Base Salary Amount accrued through
the Date of Termination;
(iii) the Company shall maintain in full force and
effect, for the continued benefit of Executive during the one-year
period immediately following the Date of Termination, all Benefit
Plans in which Executive was entitled to participate immediately
prior to the Date of Termination to the extent that Executive's
continued participation is possible under the general terms and
conditions of such Benefit Plans. In the event that Executive's
participation in any such Benefit Plan is barred as a result of his
Disability, Executive shall be entitled to receive an amount equal
to the annual contributions, payments, credit or allocations which
would have been made by the Company to him, to his account or on his
behalf under such Benefit Plan from which his continued
participation is barred;
(iv) the Company shall maintain a full force and
effect, for the continued benefit of Executive's estate or
dependents during the one-year period immediately following the Date
of Termination, any life, accident, disability or health and dental
insurance plans, vision care plans and any other similar welfare
plans of the Company in effect immediately prior to the Date of
Termination, or the Company shall provide equivalent benefits at no
cost to Executive's estate or his dependents;
<PAGE>
(c) TERMINATION FOR CAUSE. The Company shall be entitled
to terminate Executive's employment for Cause, in which event
Executive shall be entitled to all Base Salary amounts, amounts
under Benefit Plans and perquisites through the Date of Termination
plus an amount equal to Performance Bonuses accrued through the Date
of Termination.
(d) TERMINATION FOR GOOD REASON. Executive shall be
entitled to terminate Executive's employment for Good Reason at any
time and the Company shall be entitled to terminate Executive's
Employment for Good Reason at any time after the end of the first
Contract Year. Upon the termination of Executive's employment by
Company for Good Reason after completion of the first Contract Year,
Executive shall be entitled to receive from the Company a lump sum
payment in an amount equal to his Base Salary Amount and amounts
under Benefit Plans for the one-year period immediately following
the Date of Termination plus an amount equal to Performance Bonuses
accrued through the Date of Termination and all Base Salary Amounts,
amounts under the Benefit Plans and perquisites through the Date of
Termination, all of which shall be payable by Company within ten
(10) days after termination. Upon the termination of Executive's
employment by Executive for Good Reason all of the aforesaid
compensation, bonuses and benefits shall be paid to Executive by the
Company over the one-year period following the date of termination.
(e) NOTICE OF TERMINATION. any termination of
Executive's employment by the Company or Executive pursuant to
Sections 7(b), 7(c), or 7(d) shall be communicated by a Notice of
Termination to the other party.
(f) NO MITIGATION. Executive shall not be required to
mitigate the amount of any payment provided for in this Section 7 by
seeking other employment or otherwise, nor will the amount of
damages or severance benefits payable to Executive under this
Section 7 be reduced by reason of his securing other employment or
for any reason.
8. INDEMNIFICATION. The Company shall indemnify and
defend Executive to the fullest extent permitted under California
Law. This includes, but is not limited to, a duty to indemnify
Executive if he is made, or threatened to be made, a party to an
action or proceeding, to the fullest extent permitted by applicable
law, including an action by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that Employee
is or was an officer, director or employee of the Company (or any of
its subsidiaries), against all costs and expenses resulting from or
related to such action or proceeding, or any appeal thereof, if
Executive acted in good faith for a purpose which he reasonably
believed to be in the best interests of the Company. The
termination of any such action or proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create the presumption that
Executive did not act in good faith for a purpose which he
reasonably believed to be in the best interest of the Company. As
used in this Section, (i) "cost and expenses" means any and all
costs, expenses and liabilities incurred by Executive, including but
not limited to (A) attorneys' fees, (B) amounts paid in settlement
of, or in the satisfaction of any order or judgment in, any action
or proceeding and (C) fines, penalties and assessment asserted or
adjudged in any action or proceeding, and (ii) "action or
proceeding" means any and all suits, claims, actions, investigations
or proceedings whether civil, criminal or administrative, heretofore
or hereafter instituted or asserted.
<PAGE>
9. GENERAL PROVISIONS.
(a) NOTICES. All notices, demands and other
communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by overnight courier service, by
telecopy or by registered or certified mail to the respective
parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with in
Section):
a. If to the Company:
Industrial Rubber Innovations, Inc.
4525 New Horizon Boulevard, Suite 7
Bakersfield, CA 93313
Attn: President and Secretary
Facsimile (805) 833-8088
with a copy to:
Law Offices of M. Richard Cutler
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Attn: Brian A. Lebrecht, Esq.
Facsimile (949) 719-1988
b. If to Executive:
Steven Tieu
4525 New Horizon Boulevard, Suite 7
Bakersfield, CA 93313
Facsimile (805) 833-8088
(c) HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets
of the Company, by agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to compensation from the
Company in the same amount and on the same terms as he would be
entitled to hereunder if the Company terminated his employment in
the manner contemplated in Section 7(d), except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
<PAGE>
(ii) This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heir,
devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive should die while
any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided
herein shall be paid in accordance with the terms of this Agreement
to Executive's designee or, if there be no terms of this Agreement
to the Executive's heir, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement in
held to be illegal, invalid or unenforceable under existing or
future laws effective during the term of this Agreement, such
provisions shall be fully severable, the Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible and be legal, valid
and enforceable.
(f) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersedes all prior agreements and
understandings both written and oral, between the Company and the
Executive with respect to the subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties
hereunder may not be assigned or assumed by operation of law of
otherwise without the express written consent of the Company and the
Executive (which consent may be granted or withheld in the sole
discretion of the Company or the Executive, as applicable).
(h) AMENDMENT; WAIVER. This Agreement may not be amended
or modified except by an instrument in writing signed by, or on
behalf of, the Company and Executive. Either party to this
Agreement may (a) extend the time for the performance of any of the
obligations or other acts of the other party or (b) waive compliance
with any of the agreements or conditions of the other party
contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent
waiver or the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any
such rights.
<PAGE>
(i) GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
California, applicable to contracts executed in and to be performed
entirely within the state.
(j) JURISDICTION AND VENUE. The parties agree that all
actions or proceedings initiated by any party hereto and arising
directly or indirectly out of this Agreements which are brought
pursuant to judicial proceedings shall be litigated in the Superior
Court of Kern, California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of
summons and complaint or other process or paper may be made by
registered or certified mail addressed to the relevant party at the
address to which notices are to be sent pursuant to Section 9(a).
(k) ATTORNEYS' FEES. If any legal action or other
proceeding is brought for the enforcement of this Agreement, the
prevailing party shall be entitled to recover reasonable attorney's
fees and other costs incurred in that action or proceeding, in
addition to any other relief to which he or it may be entitled.
(l) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original while all of which taken together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed
this Agreement as of the date and year first written above.
Industrial Rubber Innovations, Inc.
a Florida corporation
/s/ John Proulx /s/ Steven Tieu
By: John Proulx Steven Tieu
Its: President
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 15, 1999, between Industrial
Rubber Innovations, Inc., a Florida corporation (the "Company"), and
Nancy Sheo ("Executive").
WITNESSETH:
WHEREAS, the Company is desirous of employing Executive, and
Executive is desirous of being employed by the Company, on the terms
and subject to the conditions sets forth in this Agreement:
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby mutually acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the
indicated meanings when used in this Agreement, unless the context
requires otherwise:
(a) "Base Salary Amount" shall mean $60,000.00 during the
Initial Period and first Contract Year and $60,000.00 during the
second Contract Year.
(b) "Benefit Plan" shall mean each vacation pay, sick
pay, retirement, welfare, medical, dental, disability, life
insurance or other employee benefit plan, program or arrangement.
In addition, at the sole discretion of the Board of Directors,
benefit plan may also include one or more of the following:
incentive compensation, bonus, stock option and restricted stock
plan, program or arrangement.
(c) "Board of Directors" and " Board" shall mean the
board of directors of the Company.
(d) "Cause" shall mean (i) the conviction of Executive of
a felony which can reasonably be expected to have a material adverse
impact on the Company's business or reputation or (ii) the
commission by Executive of an act of fraud or embezzlement involving
assets of the Company or its customers, suppliers or affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been
delivered to Executive all of the following; (a) a copy of a
resolution, duly adopted by the affirmative vote of not less than a
majority of the entire non-interested membership of the Board of
Directors at a meeting which the Board of Directors called and held
for the purpose of determining whether Cause exists (after
reasonable notice to Executive and opportunity for him, together
with his counsel, to be heard before the Board of Directors),
finding that, in the good faith opinion of the Board of Directors,
Executive was guilty of the conduct set forth in this Section and
specifying the particulars thereof in detail, (b) an affidavit sworn
to by the President or Secretary of the Company stating that such
resolution was in fact adopted by the affirmative vote of not less
than a majority of the entire non-interested membership of the Board
and Directors.
<PAGE>
(e) "Chairman of The Board" shall mean the Chairman of
the Board of Directors of the Company, as determined from time to
time by the Board of Directors.
(f) "Contract Year" shall mean each year during the term
hereof commencing on June 1 and ending on the immediately following
May 31.
(g) "Date of Termination" shall mean (A) if termination
of employment occurs by reason of death, the date of Executive's
death or (B) if termination of employment occurs for any other
reason, the date on which a Notice of Termination is delivered to
the other party; provided, however, that if, within 60 days after
any Notice of Termination is given, the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination of employment, then the Date of
termination shall be the date of the Notice unless such dispute is
otherwise determined by mutual agreement or court order in favor of
Executive, in which case the Date of Termination shall be the date
on which the dispute is finally determined, either by mutual written
agreement of the parties or by a final judgment, order or decree of
a court of competent jurisdiction ( the time for appeal therefrom
having expired and no appeal having been perfected).
(h) "Good Reason" Shall mean (i) as to Executive (A) a
diminution in Executive's titles, responsibilities and/or duties,
(B) a change in the person or persons to whom Executive reports,
except as provided in Section 4(a), (C) a reassignment of Executive
to a location which increases Executive's commute from his existing
home by more than 50 miles on a daily round trip basis, (D) an
assignment of Executive to a location other than the principal
executive office of the Company, (E) the Company's failure to
continue or a substantial change in Executive's participation in any
Benefit Plans (subject to the Board's right to amend, modify or
terminate such plans), (F) the Company's failure to obtain the
agreement of any successor of the Company to assume this Agreement,
(G) any material breach of this Agreement by the Company which is
either not capable of correction or which in fact is not corrected
within (10) ten days after written notice by Executive specifying
such breach and (H) the failure to occur of any of the actions
discussed in Section 4(c); and (ii) as to the Company, the good
faith determination by a majority of the entire membership of the
Board of Directors that Executive has failed to perform his duties
as directed.
(i) "Initial Period" shall mean that portion of the term
hereof from the date of this Agreement through May 31, 1999.
(j) "Notice of Termination" shall mean a written notice
which shall indicate the specific provision in this Agreement relied
upon in connection with a termination of employment and which shall
set forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination under the provision so
indicated.
(k) "Performance Bonus" shall have the meaning ascribed
to that term in Section 6(b).
(l) "Severance Payments" shall mean any severance
payments made or to be made to Executive pursuant to any provision
of Section 7 below.
<PAGE>
2. EMPLOYMENT. The Company hereby employs Executive,
and Executive hereby accepts employment with the Company, on the
terms and subject to the conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder
shall be for the Initial Period and thereafter for a period of two
(2) years, the term hereof therefore commencing on the date hereof
and ending on May 31, 2001, subject to earlier termination as herein
provided. During the Initial Period, Executive shall be employed by
Company upon the same terms, compensation and benefits as provided
hereunder, pro-rated to cover such period. During the 90-day period
immediately preceding the end of the second Contract Year, the
Company and Executive shall negotiate, in good faith, the terms and
conditions of a two year extension to this Agreement upon terms and
conditions no less favorable to Executive than the terms and
conditions applicable during the second Contract year; provided,
however, that the foregoing obligation to negotiate in good faith
shall not apply in the event that either the Company or Executive
gives written notice to the other during such 90-day period of its
or his desire to have this Agreement terminated at the end of the
initial two (2) year term. In no event shall this Agreement be
extended beyond the initial two-year term without the written
agreement of Company and Executive.
4. POSITION AND DUTIES.
(a) Executive shall serve as the Vice President of
Development of the Company, reporting to the President and the Board
of Directors. Subject to the authority of the Board of Directors,
Executive shall have such other powers and duties as may from time
to time be prescribed by the President or the Board of Directors,
provided that such duties are reasonable and customary for a vice
president of development. Executive shall devote his entire working
time, attention and energies to the business of the Company.
(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from (i) serving the boards of
directors of a reasonable number of other corporations, or the
boards of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable activities and
community affairs, and (iii) managing his personal, investments and
affairs, provided that such activities do not materially interfere
with the proper performance of his duties and responsibilities as
the Company's Vice President of Development.
(c) If, at any time during the term of her employment,
the Board of Directors shall fail to elect Executive to the office
of Vice President of Development of the Company, or shall remove her
from such office, other than as provided for in this Agreement,
Executive shall have the right to terminate her services hereunder
for Good Reason pursuant to Section 7(d) and Executive shall have no
further Obligation under this Agreement.
(d) Executive agrees to serve without additional
compensation, if elected or appointed thereto, in one or more
offices or as a director of any of the Company's subsidiaries;
provided, however, that Executive shall not be required to serve as
an officer or director of any such subsidiary if such service would
expose him to potential adverse financial consequences.
<PAGE>
5. PLACE OF PERFORMANCE.
In connection with his employment by the Company, Executive
shall be based at the Company's principal executive offices located
in Bakersfield, California. In the event that Executive consents to
any relocation requested by the Company, the Company will promptly
pay or reimburse Executive for all reasonable moving expenses
incurred by Executive relating to a change of his principal residence.
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term
hereof, the Company shall pay to Executive the Base Salary Amount.
The Company shall compensate Executive for the Initial Period as
provided herein in Section 3 hereof. The Base Salary Amount shall
be paid to Executive in accordance with the Company's regular
payroll practices with respect to senior management compensation.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract
Year, the Company shall pay to Executive such discretionary bonuses
as may be granted by the Board of Directors, in its discretion.
(c) EXPENSES. Executive shall be entitled to receive
(i) prompt reimbursement for all documented business expenses
incurred by him in the performance of his duties hereunder, provided
that Executive properly accounts therefor in accordance with the
Company's reimbursement policy and practices of the Company as of
the date hereof, and (ii) up to $500 per month in nonaccountable
automobile expenses.
(d) FRINGE BENEFITS. Executive shall be entitled to
participate in and receive benefits under all of the Company's
Benefit Plans or programs generally available to senior management
of the Company, including, but not limited to any retirement, stock
option plans, disability insurance plans and all other plans or
programs. Nothing paid to Executive under any Benefit Plan
presently in effect or made available in the future shall be deemed
to be in lieu of compensation payable to Executive hereunder.
Further the Company reserves the right to amend, modify or terminate
any and all such plans.
(e) VACATIONS. During the term hereof, Executive shall
be entitled to sick leave and paid holidays consistent with the
Company's sick leave and holiday policy for senior management and up
to two (2) weeks paid vacation during each Contract Year as
Executive deems reasonable. Any vacation time that is not taken in
a given Contract Year shall be carried forward to the following
Contract Year or Contract Years, as the case may be but in no event
more than four (4) weeks, on a cumulative basis.
<PAGE>
7. TERMINATION OF SERVICE.
(a) TERMINATION UPON DEATH. Executive's employment
hereunder shall terminate upon his death, in which event the Company
shall pay to such person as the Executive shall have designated in a
written notice filed with the Company, or if no such person shall
have been designated to his estate, as a lump sum death benefit an
amount equal to the Base Salary Amount for the one-year period
immediately following the Date of Termination plus an amount equal
to Performance Bonuses accrued through the Date of Termination and
all Base Salary Amounts, amounts due under Benefit Plans and
perquisites through the Date of Termination.
(b) TERMINATION UPON DISABILITY. If, as a result of a
permanent mental or physical disability, Executive shall have been
absent from his duties hereunder on a full-time basis for six (6)
consecutive months, ("Disability") and, within 30 days after the
Company notifies Executive in writing that it intends to replace
him, (which notice can be given at the end of the fifth month during
such six month period), Executive shall not have returned to the
performance of his duties on a full-time basis, the Company shall be
entitled to terminate Executive's employment. In addition,
executive shall, upon his Disability, have the right to terminate
his employment with Company. If such employment if terminated (
whether by the Company or by Executive) as a result of Executive's
Disability, the following shall apply:
(i) the Company shall continue to pay Executive
the Base Salary Amount to which he would otherwise be entitled
during the one-year period immediately following the Date of
Termination (offset by any disability insurance payments received by
Executive on policies provided by the Company);
(ii) the Company shall pay Executive an amount
equal to Performance Bonuses and Base Salary Amount accrued through
the Date of Termination;
(iii) the Company shall maintain in full force and
effect, for the continued benefit of Executive during the one-year
period immediately following the Date of Termination, all Benefit
Plans in which Executive was entitled to participate immediately
prior to the Date of Termination to the extent that Executive's
continued participation is possible under the general terms and
conditions of such Benefit Plans. In the event that Executive's
participation in any such Benefit Plan is barred as a result of his
Disability, Executive shall be entitled to receive an amount equal
to the annual contributions, payments, credit or allocations which
would have been made by the Company to him, to his account or on his
behalf under such Benefit Plan from which his continued
participation is barred;
(iv) the Company shall maintain a full force and
effect, for the continued benefit of Executive's estate or
dependents during the one-year period immediately following the Date
of Termination, any life, accident, disability or health and dental
insurance plans, vision care plans and any other similar welfare
plans of the Company in effect immediately prior to the Date of
Termination, or the Company shall provide equivalent benefits at no
cost to Executive's estate or his dependents;
<PAGE>
(c) TERMINATION FOR CAUSE. The Company shall be entitled
to terminate Executive's employment for Cause, in which event
Executive shall be entitled to all Base Salary amounts, amounts
under Benefit Plans and perquisites through the Date of Termination
plus an amount equal to Performance Bonuses accrued through the Date
of Termination.
(d) TERMINATION FOR GOOD REASON. Executive shall be
entitled to terminate Executive's employment for Good Reason at any
time and the Company shall be entitled to terminate Executive's
Employment for Good Reason at any time after the end of the first
Contract Year. Upon the termination of Executive's employment by
Company for Good Reason after completion of the first Contract Year,
Executive shall be entitled to receive from the Company a lump sum
payment in an amount equal to his Base Salary Amount and amounts
under Benefit Plans for the one-year period immediately following
the Date of Termination plus an amount equal to Performance Bonuses
accrued through the Date of Termination and all Base Salary Amounts,
amounts under the Benefit Plans and perquisites through the Date of
Termination, all of which shall be payable by Company within ten
(10) days after termination. Upon the termination of Executive's
employment by Executive for Good Reason all of the aforesaid
compensation, bonuses and benefits shall be paid to Executive by the
Company over the one-year period following the date of termination.
(e) NOTICE OF TERMINATION. any termination of
Executive's employment by the Company or Executive pursuant to
Sections 7(b), 7(c), or 7(d) shall be communicated by a Notice of
Termination to the other party.
(f) NO MITIGATION. Executive shall not be required to
mitigate the amount of any payment provided for in this Section 7 by
seeking other employment or otherwise, nor will the amount of
damages or severance benefits payable to Executive under this
Section 7 be reduced by reason of his securing other employment or
for any reason.
8. INDEMNIFICATION. The Company shall indemnify and
defend Executive to the fullest extent permitted under California
Law. This includes, but is not limited to, a duty to indemnify
Executive if he is made, or threatened to be made, a party to an
action or proceeding, to the fullest extent permitted by applicable
law, including an action by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that Employee
is or was an officer, director or employee of the Company (or any of
its subsidiaries), against all costs and expenses resulting from or
related to such action or proceeding, or any appeal thereof, if
Executive acted in good faith for a purpose which he reasonably
believed to be in the best interests of the Company. The
termination of any such action or proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create the presumption that
Executive did not act in good faith for a purpose which he
reasonably believed to be in the best interest of the Company. As
used in this Section, (i) "cost and expenses" means any and all
costs, expenses and liabilities incurred by Executive, including but
not limited to (A) attorneys' fees, (B) amounts paid in settlement
of, or in the satisfaction of any order or judgment in, any action
or proceeding and (C) fines, penalties and assessment asserted or
adjudged in any action or proceeding, and (ii) "action or
proceeding" means any and all suits, claims, actions, investigations
or proceedings whether civil, criminal or administrative, heretofore
or hereafter instituted or asserted.
<PAGE>
9. GENERAL PROVISIONS.
(a) NOTICES. All notices, demands and other
communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by overnight courier service, by
telecopy or by registered or certified mail to the respective
parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with in
Section):
a. If to the Company:
Industrial Rubber Innovations, Inc.
4525 New Horizon Boulevard, Suite 7
Bakersfield, CA 93313
Attn: President and Secretary
Facsimile (805) 833-8088
with a copy to:
Law Offices of M. Richard Cutler
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Attn: Brian A. Lebrecht, Esq.
Facsimile (949) 719-1988
b. If to Executive:
Nancy Sheo
4525 New Horizon Boulevard, Suite 7
Bakersfield, CA 93313
Facsimile (805) 833-8088
(c) HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets
of the Company, by agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to compensation from the
Company in the same amount and on the same terms as he would be
entitled to hereunder if the Company terminated his employment in
the manner contemplated in Section 7(d), except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
<PAGE>
(ii) This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heir,
devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive should die while
any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided
herein shall be paid in accordance with the terms of this Agreement
to Executive's designee or, if there be no terms of this Agreement
to the Executive's heir, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement in
held to be illegal, invalid or unenforceable under existing or
future laws effective during the term of this Agreement, such
provisions shall be fully severable, the Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible and be legal, valid
and enforceable.
(f) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersedes all prior agreements and
understandings both written and oral, between the Company and the
Executive with respect to the subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties
hereunder may not be assigned or assumed by operation of law of
otherwise without the express written consent of the Company and the
Executive (which consent may be granted or withheld in the sole
discretion of the Company or the Executive, as applicable).
(h) AMENDMENT; WAIVER. This Agreement may not be amended
or modified except by an instrument in writing signed by, or on
behalf of, the Company and Executive. Either party to this
Agreement may (a) extend the time for the performance of any of the
obligations or other acts of the other party or (b) waive compliance
with any of the agreements or conditions of the other party
contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent
waiver or the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any
such rights.
<PAGE>
(i) GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
California, applicable to contracts executed in and to be performed
entirely within the state.
(j) JURISDICTION AND VENUE. The parties agree that all
actions or proceedings initiated by any party hereto and arising
directly or indirectly out of this Agreements which are brought
pursuant to judicial proceedings shall be litigated in the Superior
Court of Kern, California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of
summons and complaint or other process or paper may be made by
registered or certified mail addressed to the relevant party at the
address to which notices are to be sent pursuant to Section 9(a).
(k) ATTORNEYS' FEES. If any legal action or other
proceeding is brought for the enforcement of this Agreement, the
prevailing party shall be entitled to recover reasonable attorney's
fees and other costs incurred in that action or proceeding, in
addition to any other relief to which he or it may be entitled.
(l) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original while all of which taken together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed
this Agreement as of the date and year first written above.
Industrial Rubber Innovations, Inc.
a Florida corporation
/s/ John Prouls /s/ Nancy Sheo
By: John Proulx Nancy Sheo
Its: President
Southern California Chapter of the Society of Industrial
Realtors, Inc.
INDUSTRIAL REAL ESTATE LEASE
ARTICLE ONE: BASIC TERMS
This Article One contains the Basic Terms of this Lease between the
Landlord
and Tenant named below. Other Articles, Sections and Paragraphs of
the Lease
referred to in this Article One explain and define the Basic Terms
and are
to be read In conjunction with the Basic Terms.
Section 1.01. Date of Lease: JUNE 3 1999
Section 1.02. Landlord: MC DIVITT-SRI, LLC
Address of Landlord: 601 STH MILLIKEN AVE SUITE K100
ONTARIO, CALIFORNIA 91761
Section 1.03. Tenant: INDUSTRIAL RUBBER INNOVATIONS, INC.
A FLORIDA CORPORATION
Address of Tenant: 4525 NEW HORIZON BLVD. SUITE 7
BAKERSFIELD, CALIF 93313
Section 1.04. Property: (Include street address, approximate square
footage and description)
6801 MC DIVITT BAKERSFIELD, CALIFORNIA
CONSISTING OF APPROX. 29,300 SQ FT WHICH INCLUDES
APPROX. 4900 SQ FT OF MEZANINE AND APPROX. 1280 SQ FT OF OFFICE
LOCATED ON APPROX. 1.35 ACRES OF LAND
LEGAL: APN# 385-412-05004 & 385-412-2500-2
Section 1.05. Lease Term: FIVE (5) YEARS beginning on SEPTEMBER 1,
1999
or such other date as is specified in this Lease, and ending on
AUGUST 31, 2004
Section 1.06. Permitted Uses: (See Section 5.01) OFFICE, WAREHOUSE
AND LIGHT INDUSTRIAL AS APPROVED BY CITY OF BAKERSFIELD.
Section 1.07. Tenant's Guarantor: (If none, so state) ATTACHED PER
SCHED 1.07
Section 1.08. Landlord's Broker: (See Article Fourteen)(If none, so
state)
HANS VAN NOORD (KERN COMMERCIAL BROKERS)
Section 1.09. Tenant's Broker: (if none, so state) NONE
Section 1.10. Commission Payable to Landlords Broker: (See Article
Fourteen) $ 25,500
Section 1.11 Initial Security Deposit: (See Paragraphs 3.03 find
13.03(c))
$ 8,500
Section 1.12. Vehicle Parking Spaces Allocated to Tenant: (See
Multi-Tenant
Facility Lease Rider, if attached) ALL-AVAILABLE
Section 1.13. Rent and Other Charges Payable by Tenant:
(a) BASE RENT: Per sched 1.13A shall be increased
(b) OTHER PERIODIC PAYMENTS: (I) Real Property Taxes (See Section
4.02); (ii)
Utilities (See Section 4.03); (iii) Insurance Premiums (See Section
4.04);
(iv) Common Area Charges (See Section 4.05 or Multi-Tenant Facility
Lease
Rider, if attached. The initial monthly common area charge is $N/A);
(v)
Impounds for Insurance Premiums and Property Taxes (See Section
4.08);
(vi) Maintenance, Repairs and Alternations (See Article Six). PER
SCHED 1.13B
Section 1.14. Riders: The following Riders are attached to and
made part
of this Lease: (If none, so state) ALL SCHEDULES AND ADDENDUM TO LEASE.
<PAGE>
ARTICLE TWO: LEASE TERM
Section 2.01. LEASE OF PROPERTY FOR LEASE TERM. Landlord leases the
Property
to Tenant and Tenant leases the Property from Landlord for the Lease
Term.
The Lease Term is for the period stated in Section 1.05 above and shall
begin and end on the dates specified in Section 1.05 above, unless the
beginning or end of the Lease Term is changed under any provision of
this
Lease. The "Commencement Date" shall be the date specified in
Section 1.05
above for the beginning of the Lease Term, unless advanced or
delayed under
any provision of this Lease.
Section 2.02. DELAY IN COMMENCEMENT. Landlord shall not be liable
to Tenant
if Landlord does not deliver possession of the Property to Tenant on
the
Commencement Date. Landlord's non-delivery of the Property to Tenant
on that date shall not affect this Lease or the obligations of
Tenant under
this Lease except that the Commencement Date shall be delayed until
Landlord delivers possession of the Property to Tenant and the Lease
Term
shall be extended for a period equal to the delay in delivery of
possession of the Property to Tenant, plus the number of days
necessary to end the Lease Term on the last day of a month. If
Landlord does
not deliver possession of the Property to
Tenant within sixty (60) days after the Commencement Date, Tenant
may elect
to cancel this Lease by giving written
notice to Landlord within ten (10) days after the sixty (60) -day
period
ends. If Tenant gives such notice, the Lease
shall be canceled and neither Landlord nor Tenant shall have any
further
obligations to the other. If Tenant does not
give such notice, Tenant's right to cancel the Lease shall expire
and the
Lease Term shall commence upon the
delivery of possession of the Property to Tenant. If delivery of
possession
of the Property to Tenant is delayed,
Landlord and Tenant shall, upon such delivery, execute an amendment
to this
Lease setting forth the actual
Commencement Date and expiration date of the Lease. Failure to
execute such
amendment shall not affect tile actual
Commencement Date and expiration date of the Lease.
Section 2.03. EARLY OCCUPANCY. If Tenant occupies the Property prior
to the
Commencement Date, Tenant's occupancy of the Property shall be
subject to
all of the provisions of this Lease. Early occupancy of the Property
shall
not advance the expiration date of this Lease. Tenant shall pay Base
Rent
and all other charges specified in this Lease for the early
occupancy Period.
Section 2.04. HOLDING OVER. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. Tenant shall reimburse
Landlord for and indemnify Landlord against all damages which Landlord
incurs from Tenant's delay in vacating the Property. If Tenant does not
vacate the Property upon the expiration or earlier termination of
the Lease
and Landlord thereafter accepts rent from Tenant, Tenant's occupancy
of the
Property shall be a "month-to-month" tenancy, subject to all of the
terms of
this Lease applicable to a month-to-month tenancy, except that the
Base Rent
then in effect shall be increased by twenty-five percent (25%).
ARTICLE THREE: BASE RENT
Section 3.01. TIME AND MANNER OF PAYMENT. Upon execution of this Lease,
Tenant shall pay Landlord the Base Rent in the amount stated in
Paragraph
1.12(a) above for the first month of the Lease Term. On the first
day of the
second month of the Lease Term and each month thereafter, Tenant
shall pay
Landlord the Base Rent, in advance, without offset, deduction or prior
demand. The Base Rent shall be payable at Landlord's address or at such
other place as Landlord may designate in writing.
Section 3.02. COST OF LIVING INCREASES. [OMITTED]
<PAGE>
Section 3.03. SECURITY DEPOSIT; INCREASES.
(a) Upon the execution of this Lease, Tenant shall deposit with
Landlord a
cash Security Deposit in the amount set forth in Section 1.10 above.
Landlord may apply all or part of the Security Deposit to any unpaid
rent or
other charges due from Tenant or to cure any other defaults of
Tenant. If
Landlord uses any part of the Security Deposit, Tenant shall restore
the
Security Deposit to its full amount within ten (10) days after
Landlord's
written request. Tenant's failure to do so shall be a material
default under
this Lease. No interest shall be paid on the Security Deposit. Landlord
shall not be required to keep the Security Deposit separate from its
other
accounts and no trust relationship is created with respect to the
Security
Deposit.
(b) Each time the Base Rent is increased, Tenant shall deposit
additional
funds with Landlord sufficient to increase the Security Deposit to
an amount
which bears the same relationship to the adjusted Base Rent as the
initial
Security Deposit bore to the initial Base Rent.
Section 3.04. TERMINATION; ADVANCE PAYMENTS. Upon termination of
this Lease
under Article Seven (Damage or Destruction), Article Eight
(Condemnation) or
any other termination not resulting from Tenant's default, and after
Tenant
has vacated the Property in the manner required by this Lease, Landlord
shall refund or credit to Tenant (or Tenant's, successor) the unused
portion
of the Security Deposit, any advance rent or other advance payments
made by
Tenant to Landlord, and any amounts paid for real property taxes and
other
reserves which apply to any time periods after termination of the
Lease.
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT
Section 4.01. ADDITIONAL RENT. All charges payable by Tenant other than
Base Rent are called "Additional Rent." Unless this Lease provides
otherwise, Tenant shall pay all Additional Rent then due with the next
monthly installment of Base Rent. The term "rent" shall mean Base
Rent and
Additional Rent.
Section 4.02. PROPERTY TAXES.
(a) REAL PROPERTY TAXES. [OMITTED]
(b) DEFINITION OF "REAL PROPERTY TAX." [OMITTED]
(C) JOINT ASSESSMENT. [OMITTED]
(d) PERSONAL PROPERTY TAXES.
(I) Tenant shall pay all taxes charged against trade fixtures,
furnishings.,
equipment or any other personal property belonging to Tenant. Tenant
shall
try to have personal property taxed separately from the Property.
(ii) If any of Tenant's personal property is taxed with the
Property, Tenant
shall pay Landlord the taxes for the personal property within
fifteen (15)
days after Tenant receives a written statement from Landlord for such
personal property taxes.
Section 4.03. UTILITIES. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer
service,
telephone, water, refuse disposal and other utilities and services
supplied to the Property. However, if any services or utilities are
jointly metered with other property, Landlord shall make a
reasonable
determination of Tenant's proportionate share of the cost of such
utilities and services and Tenant shall pay such share to Landlord
within fifteen (15) days after receipt of Landlord's written statement.
<PAGE>
Section 4.04. Insurance Policies.
(a) LIABILITY INSURANCE. During the Lease Term, Tenant shall
maintain a
policy of commercial general liability insurance (sometimes known as
broad
form comprehensive general liability insurance) insuring Tenant against
liability for bodily injury, property damage (including loss of use of
property) and personal injury arising out of the operation, use or
occupancy
of the Property. Tenant shall name Landlord as an additional insured
under
such Policy. The initial amount of such insurance shall be One Million
Dollars ($1,000,000) per occurrence and shall he subject to periodic
increase based upon inflation, increased liability awards,
recommendation of
Landlord's professional insurance advisers and other relevant
factors. The
liability insurance obtained by Tenant under this Paragraph 4.04(a)
shall
(I) be primary and non-contributing; (ii) contain cross-liability
endorsements; and (iii) insure Landlord against Tenant's performance
under
Section 5.05, if the matters giving rise to the indemnity under
Section 5.05
result from the negligence of Tenant. The amount and coverage of such
insurance shall not limit Tenant's liability nor relieve Tenant of
any other
obligation under this Lease. Landlord may also obtain comprehensive
public,
liability insurance in an amount and with coverage determined by
Landlord
insuring Landlord against liability arising out of ownership,
operation,
use or occupancy of the Property. The policy obtained by Landlord
shall not
be contributory and shall not provide primary insurance.
(b) Property and Rental Income Insurance. During the Lease Term,
Landlord
shall maintain policies of insurance covering loss of or damage to the
Property in the full amount of its replacement value. Such policy shall
contain an Inflation Guard Endorsement and shall provide protection
against
all perils included within the classification of fire, extended
coverage,
vandalism, malicious mischief, special extended perils (all risk),
sprinkler
leakage and any other perils which Landlord deems reasonably necessary.
Landlord shall have the right to obtain flood and earthquake
insurance if
required by any lender holding a security interest in the Property.
Landlord
shall not obtain insurance for Tenant's fixtures or equipment or
building
improvements installed by Tenant on the Property. During the Lease
Term,
Landlord shall also maintain a rental income insurance policy, with
loss
payable to Landlord, in an amount equal to one year's Base Rent, plus
estimated real properly taxes and insurance premiums. Tenant shall
be liable
for the payment of any deductible amount under Landlord's or Tenant's
insurance policies maintained pursuant to this Section 4.04, in an
amount
not to exceed Ten Thousand Dollars ($10,000). Tenant shall not do or
permit
anything to be done which invalidates any such insurance policies.
(C) Payment of Premiums. Subject to Section 4.08, Tenant shall pay all
premiums for the insurance policies described in Paragraphs 4.04(a)
and (b)
(whether obtained by Landlord or Tenant) within fifteen (15) days after
Tenant's receipt of a copy of the premium statement or other
evidence of
the amount due, except Landlord shall pay all premiums for non-primary
comprehensive public liability insurance which Landlord elects to
obtain as
provided in Paragraph 4.04(a). For insurance policies maintained by
Landlord which cover improvements on the entire Project, Tenant
shall pay
Tenant's prorated share of the premiums, in accordance with the
formula in
Paragraph 4.05(e) for determining Tenant's share of Common Area
costs. If
insurance policies maintained by Landlord cover improvements on real
property other than the Project, Landlord shall deliver to Tenant a
statement of the premium applicable to the Property showing in
reasonable
detail how Tenant's share of the premium was computed. If the Lease
Term expires before the expiration Of all insurance policy
maintained by
Landlord, Tenant shall be liable for Tenant's prorated share of the
insurance premiums. Before the Commencement Date, Tenant shall
deliver to
Landlord a copy of any policy of insurance which Tenant is required to
maintain under this Section 4,04. At least thirty (30) days prior to
the
expiration of any such policy, Tenant shall deliver to Landlord a
renewal of
such policy. As an alternative to providing a policy of insurance,
Tenant
shall have the right to provide Landlord a certificate of insurance,
executed by an authorized officer of the insurance company, showing
that the
insurance which Tenant is required to maintain under this Section
4.04 is in
full force and effect and containing such other information which
Landlord
reasonably requires.
(d) GENERAL INSURANCE PROVISIONS.
(I) Any insurance which Tenant is required to maintain under this Lease
shall include a provision which requires the insurance carrier to give
Landlord not less than thirty (30) days' written notice prior to any
cancellation or modification of such coverage.
(ii) If Tenant fails to deliver any policy, certificate or renewal to
Landlord required under this Lease within the prescribed time period
or if
any such policy is canceled or modified during the Lease Term without
Landlord's consent, Landlord may obtain such insurance, in which
case Tenant
shall reimburse Landlord for the cost of such insurance within
fifteen (15)
days after receipt of a statement that indicates the cost Of such
insurance.
(iii) Tenant shall maintain all insurance required under this Lease
with
companies holding a "General Policy Rating" of A-12 or better, as
set forth
in the most current issue of "Best Key Rating Guide". Landlord and
Tenant
acknowledge the insurance markets are rapidly changing and that
insurance in
the form and amounts described in this Section 4.04 may not be
available in the
future. Tenant acknowledges that the insurance described in this
Section 4.04
is for the primary benefit of Landlord. If at any time during the
Lease Term,
Tenant is unable to maintain the insurance required under the Lease,
Tenant
shall nevertheless maintain insurance coverage which is customary and
commercially reasonable in the insurance industry for Tenant's type of
business, as that coverage may change from time to time. Landlord
makes no
representation as to the adequacy of such insurance to protect
Landlord's
or Tenant's interests. Therefore, Tenant shall obtain any such
additional
property or liability insurance which Tenant deems necessary to
protect
Landlord and Tenant.
<PAGE>
(iv) Unless prohibited under any applicable insurance policies
maintained,
Landlord and Tenant each hereby waive any and all rights of recovery
against
the other, or against the officers, employees, agents or
representatives of
the other, for loss of or damage to its property or the property of
others
under its control, if such loss or damage is covered by any insurance
policy in force (whether or not described in this Lease) at the time of
such loss or damage. Upon obtaining the required policies of insurance,
Landlord and Tenant shall give notice to the insurance carriers of this
mutual waiver of subrogation.
Section 4.05. COMMON AREAS; USE, MAINTENANCE AND COSTS.
(a) COMMON AREAS. [OMITTED]
(b) USE OF COMMON AREAS. [OMITTED]
(C) SPECIFIC PROVISION RE: VEHICLE PARKING. [OMITTED]
(d) MAINTENANCE OF COMMON AREAS. Landlord shall maintain the Common
Areas in
good order, condition and repair and shall operate the Project, in
Landlord's
sole discretion, as a first-class industrial/commercial real
property development.
<PAGE>
(e) TENANT'S SHARE AND PAYMENT. [OMITTED]
SECTION 4.06. LATE CHARGES. Tenant's failure to pay rent promptly
may cause
Landlord to incur unanticipated costs. The exact amount of such
costs are
impractical or extremely difficult to ascertain. Such costs may
include, but
are not limited to, processing and accounting charges and late
charges which
may be imposed on Landlord by any ground lease, mortgage or trust deed
encumbering the Property. Therefore, if Landlord does not receive
any rent
payment within ten (10) days after it becomes due, Tenant shall pay
Landlord
a late charge equal to ten percent (10%) of the overdue amount. The
parties
agree that such late charge represents a fair and reasonable
estimate of
the costs Landlord will incur by reason of such late payment.
Section 4.07. INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by
Tenant to
Landlord which is not paid when due shall bear interest at the rate of
fifteen percent (15%) per annum from the due date of such amount.
However,
interest shall not be payable on late charges to be paid by Tenant
under this Lease. The payment of interest on such amounts shall not
excuse
or cure any default by Tenant under this Lease. If the interest rate
specified in this Lease is higher than the rate permitted by law, the
interest rate is hereby decreased to the maximum legal interest rate
permitted by law.
Section 4.08. IMPOUNDS FOR INSURANCE PREMIUMS AND REAL PROPERTY
TAXES. If
requested by any ground lessor or lender to whom Landlord has
granted a
security interest in tire Property, or if Tenant is more than ten
(10) days
late in the payment of rent more than once in any consecutive twelve
(12)
- -month period. Tenant, shall pay Landlord a sum equal to one-twelfth
(1/12)
of the annual real property taxes and, insurance premiums payable by
Tenant
under this Lease, together with each payment of Base Rent. Landlord
shall
hold such payments in a non-interest bearing impound account. If
unknown,
Landlord shall reasonably estimate the amount of real property taxes
and
insurance premiums when due. Tenant shall pay any deficiency. of
funds in
the impound account to Landlord upon written request. If Tenant
defaults
under this Lease, Landlord may apply any funds in the impound
account to
any obligation then due under this Lease.
ARTICLE FIVE: USE OF PROPERTY
SECTION 5.01. PERMITTED USES. Tenant may use the Property only for the
Permitted Uses set forth in Section 1.06 above.
SECTION 5.02. MANNER OF USE. Tenant shall not cause or permit the
Property
to be used in any way which constitutes a violation of any law,
ordinance,
or governmental regulation or order, which annoys or interferes with
tile
rights of tenants of the Project, or which constitutes a nuisance or
waste.
Tenant shall obtain and pay for all permits, including a Certificate of
Occupancy, required for Tenant's occupancy of the Property and shall
promptly take all actions necessary to comply with all applicable
statutes,
ordinances, rules, regulations, orders and requirements regulating
tile use
by Tenant of the Property, including the Occupational Safety and
Health Act.
Section 5.03. HAZARDOUS MATERIALS. As used in this Lease, the term
"Hazardous Material" means any flammable items, explosives, radioactive
materials, hazardous or toxic substances, material or waste or related
materials, including any substances defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous
materials" or "toxic substances" now or subsequently regulated under
any applicable federal, state or local laws or regulations, including
without limitation petroleum-based products, paints, solvents, lead,
cyanide, DDT, printing inks, acids, pesticides, ammonia compounds and
other chemical products, asbestos, PCBs and similar compounds, and
including any different products and materials which are subsequently
found to have adverse effects on the environment or the health and
safety of persons. Tenant shall not cause or permit any Hazardous
Material to be generated, produced, brought upon, used, stored, treated
or disposed of in or about the Property by Tenant, its agents,
employees
contractors, sublessees or invitees without the prior written consent
of Landlord. Landlord shall be entitled to take into account such
other factors or facts as Landlord may reasonably determine to be
relevant in determining whether to grant or withhold consent to
Tenant's proposed activity with respect to Hazardous Material. In no
event, however, shall Landlord be required to consent to the
installation or use of any storage tanks on the Property.
<PAGE>
Section 5.04. SIGNS AND AUCTIONS. Tenant shall not place any signs
on the
Property without Landlord's prior written consent. Tenant shall not
conduct
or permit any auctions or sheriff's sales at the Property.
Section 5.05. INDEMNITY. Tenant shall indemnify Landlord against and
hold
Landlord harmless from any and all costs, claims or liability
arising from:
(a) Tenant's use of the Property; (b) the conduct of Tenant's
business or
anything else done or permitted by Tenant to be done in or about the
Property, including any contamination of the Property or any other
property
resulting from the presence or use of Hazardous Material caused or
permitted
by Tenant; (C) any breach or default in the performance of Tenant's
obligations under this Lease; (it) any misrepresentation or breach of
warranty by Tenant under this Lease; or (e) other acts or omissions of
Tenant. Tenant shall defend Landlord against any such cost, claim or
liability at Tenant's expense with counsel reasonably acceptable to
Landlord
or, at Landlord's election, Tenant shall reimburse Landlord for any
legal
fees or costs incurred by Landlord in connection with any such
claim. As a
material part of the consideration to Landlord, Tenant assumes all
risk of
damage to property or injury to persons in or about the Property
arising
from any cause, and Tenant hereby waives all claims in respect thereof
against Landlord, except for any claim arising out of Landlord's gross
negligence or willful misconduct. As used in this Section, the term
"Tenant"
shall include Tenant's employees, agents, contractors and invitees,
if
applicable.
Section 5.06. LANDLORD'S ACCESS. Landlord or its agents may enter the
Property at all reasonable times to show the Property to potential
buyers,
investors or tenants or other parties-, to do any other act or to
inspect
and conduct tests in order to monitor Tenant's compliance with all
applicable environmental laws and all laws governing the presence
and use of
Hazardous Material; or for any other purpose Landlord deems necessary.
Landlord shall give Tenant prior notice of such entry, except in the
case of
an emergency. Landlord may place customary "For Sale" or "For Lease"
signs
on the Property.
Section 5.07. QUIET POSSESSION. If Tenant pays the rent and complies
with
all other terms of this Lease, Tenant may occupy and enjoy the
Property for
the full Lease Term, subject to the provisions of this Lease.
ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND
ALTERATIONS
Section 6.01. EXISTING CONDITIONS. Tenant accepts the Property in its
condition as of the execution of the Lease, subject to all recorded
matters,
laws, ordinances, and governmental regulations and orders. Except as
provided herein, Tenant acknowledges that neither Landlord nor any
agent of
Landlord has made any representation as to the condition of the
Property or
the suitability of the Property for Tenant's intended use. Tenant
represents
and warrants that Tenant has made its own inspection of and inquiry
regarding the condition of the Property and is not relying on any
representations of Landlord or any Broker with respect thereto. If
Landlord
or Landlord's Broker has provided a Property Information Sheet or other
Disclosure Statement regarding the Property, a copy is attached as an
exhibit to the Lease.
Section 6.02. EXEMPTION OF LANDLORD FROM LIABILITY. Landlord shall
not be
liable for any damage or injury to the person, business (or any loss of
income therefrom), goods, wares, merchandise or other property of
Tenant,
Tenant's employees, invitees, customers or any other person in or
about the
Property, whether such damage or injury is caused by or results
from: (a)
fire, steam, electricity, water, gas or rain; (b) the breakage,
leakage,
obstruction or other defects of pipes, sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures or any other cause; (C)
conditions arising in or about the Property or upon other portions
of the
Project, or from other sources or places; or (d) any act or omission
of any
other tenant of the Project. Landlord shall not be liable for any such
damage or injury even though the cause of or the means of repairing
such
damage or injury are not accessible to Tenant. The provisions of this
Section 6.02 shall not, however, exempt Landlord from liability for
Landlord's gross negligence or willful misconduct.
Section 6.03. LANDLORD'S OBLIGATIONS.
(a) Except as provided in Article Seven (Damage or Destruction) and
Article
Eight (Condemnation), Landlord shall keep the following in good order,
condition and repair: the foundations, exterior walls and roof of the
Property (including painting the exterior surface of the exterior
walls of
the Property not more often than once every five (5) years, if
necessary)
and all components of electrical, mechanical, plumbing, heating and air
conditioning systems and facilities located in the Property which are
concealed or used in common by tenants of the Project. However,
Landlord
shall not be obligated to maintain or repair windows, doors, plate
glass or
the interior surfaces of exterior walls. Landlord shall make repairs
under
this Section 6.03 within a reasonable time after receipt of written
notice
from Tenant of the need for such repairs.
(b) Tenant shall pay or reimburse Landlord for all costs Landlord
incurs
under Paragraph 6.03(a) above as Common Area costs as provided for in
Section 4.05 of the Lease. Tenant waives the benefit of any statute in
effect now or in the future which might give Tenant the right to make
repairs at Landlord's expense or to terminate this Lease due to
Landlord's
failure to keep the Property in good order, condition and repair.
<PAGE>
SECTION 6.04. TENANT'S OBLIGATIONS.
(a) Except as provided in Section 6.03, Article Seven (Damage or
Destruction) and Article Eight (Condemnation), Tenant shall keep all
portions of the Property (including structural, nonstructural,
interior,
systems and equipment) in good order, condition and repair (including
interior repainting and refinishing, as needed). If any portion of the
Property or any system or equipment in the Property which Tenant is
obligated to repair cannot be fully repaired or restored, Tenant shall
promptly replace such portion of the Property or system or equipment
in the
Property, regardless of whether the benefit of such replacement extends
beyond the Lease Term; but if the benefit or useful, life of such
replacement extends beyond the Lease Term (as such term may be
extended by
exercise of any options), the useful life of such replacement shall be
prorated over the remaining portion of the Lease Term (as extended),
and
Tenant shall be liable only for that portion of the cost which is
applicable
to the Lease Term (as extended). Tenant shall maintain a preventive
maintenance contract providing for the regular inspection and
maintenance of
the heating and air conditioning system by a licensed heating and air
conditioning contractor, unless Landlord maintains such equipment under
Section 6.03 above. If any part of the Property or the Project is
damaged by
any act or omission of Tenant, Tenant shall pay Landlord the cost of
repairing or replacing such damaged property, whether or not
Landlord would
otherwise be obligated to pay the cost of maintaining or repairing such
property. It is the intention of Landlord and Tenant that at all times
Tenant shall maintain the portions of the Property which Tenant is
obligated
to maintain in an attractive, first-class and fully operative
condition.
(b) Tenant shall fulfill all of Tenant's obligations under this
Section
6.04 at Tenant's sole expense. If Tenant
fails to maintain, repair or replace the Property as required by this
Section 6.04, Landlord may, upon ten (10) days'
prior notice to Tenant (except that no notice shall be required in
the case
of an emergency), enter the Property and
perform such maintenance or repair (including replacement, as
needed) on
behalf of Tenant. In such case, Tenant
shall reimburse Landlord for all costs incurred in performing such
maintenance or repair immediately upon demand.
Section 6.05. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
(a) Tenant shall not make any alterations, additions, or
improvements to the
Property Without Landlord's prior written consent, except for
non-structural
alterations which do not exceed Ten Thousand Dollars ($10,000) in cost
cumulatively over the Lease Term and which are not visible from the
outside
of any building of which the Property is part. Landlord may require
Tenant
to provide demolition and/or lien and completion bonds in form and
amount
satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Paragraph
6.05(a) upon Landlord's written request. All alterations, additions,
and
improvements .shall be done in a good and workmanlike manner, in
conformity
with all applicable laws and regulations, and by a contractor
approved by
Landlord. Upon completion of any such work, Tenant shall provide
Landlord
with "as built" plans, copies of all construction contracts, and
proof of
payment for all labor and materials.
(b) Tenant shall pay when due all claims for labor and material
furnished to
the Property. Tenant shall give Landlord at least twenty (20) days'
prior
written notice of the commencement of any work on the Property,
regardless
of whether Landlord's consent to such work is required. Landlord may
elect
to record and post notices of non-responsibility on the Property.
Section 6.06. CONDITION UPON TERMINATION. Upon the termination of
the Lease,
Tenant shall surrender the Property to Landlord, broom clean and in
the same
condition as received except for ordinary wear and tear which Tenant
was not
otherwise obligated to remedy under any provision of this Lease.
However,
Tenant shall not be obligated to repair any damage which Landlord is
required to repair under Article Seven (Damage or Destruction). In
addition,
Landlord may require Tenant to remove any alterations, additions or
improvements (whether or not made with Landlord's consent) prior to the
expiration of the Lease and to restore the Property to its prior
condition,
all at Tenant's expense. All alterations, additions and improvements
which
Landlord has not required Tenant to remove shall become Landlord's
property
and shall be surrendered to Landlord upon the expiration or earlier
termination of the Lease, except that Tenant may remove any of Tenant's
machinery or equipment which can be removed without material damage
to the
Property. Tenant shall repair, at Tenant's expense, any damage to the
Property caused by the removal of any such machinery or equipment.
In no
event, however, shall Tenant remove any of the following materials or
equipment (which shall be deemed Landlord's property) without
Landlord's
prior written consent: any power wiring or power panels; lighting or
lighting fixtures; wall coverings; drapes, blinds or other window
coverings;
carpets or other floor coverings; heaters, air conditioners or any
other
heating or air conditioning equipment; fencing or security gates; or
other
similar building operating equipment and decorations.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
SECTION 7.01. PARTIAL DAMAGE TO PROPERTY.
(a) Tenant shall notify Landlord in writing immediately upon the
occurrence
of any damage to the Property. If the Property is only partially
damaged
(i.e., less than fifty percent (50%) of the Property is untenantable
as a
result of such damage or less than fifty percent (50%) of Tenant's
operations
are materially impaired) and if the proceeds received by Landlord
from
the insurance policies described in Paragraph 4.04(b) are sufficient
to
pay for the necessary repairs, this Lease shall remain in effect and
Landlord shall repair the damage as soon as reasonably possible.
Landlord
may elect (but is not required) to repair any damage to Tenant's
fixtures,
equipment, or improvements.
(b) If the insurance proceeds received by Landlord are not
sufficient to pay
the entire cost of repair, or if the cause of the damage is not
covered by
the insurance policies which Landlord maintains under Paragraph
4.04(b),
Landlord may elect either to (I) repair the damage as soon as
reasonably
possible, in which case this Lease shall remain in full force and
effect, or
(ii) terminate this Lease as of the date the damage occurred.
Landlord shall
notify Tenant within thirty (30) days after receipt of notice of the
occurrence of the damage whether Landlord elects to repair the
damage or
terminate the Lease. If Landlord elects to repair the damage, Tenant
shall
pay Landlord the "deductible amount" (if any) under Landlord's
insurance
policies and, if the damage was due to an act or omission of Tenant, or
Tenant's employees, agents, contractors or invitees, the difference
between
the actual cost of repair and any insurance proceeds received by
Landlord.
If Landlord elects to terminate this Lease, Tenant may elect to
continue
this Lease in full force and effect, in which case Tenant shall
repair any
damage to the Property and any building in which the Property is
located.
Tenant shall pay the cost of such repairs, except that upon
satisfactory
completion of such repairs, Landlord shall deliver to Tenant any
insurance
proceeds received by Landlord for the damage repaired by Tenant. Tenant
shall give Landlord written notice of such election within ten (10)
days
after receiving Landlord's termination notice.
(C) If the damage to the Property occurs during the last six (6)
months of
the Lease Term and such damage will require more than thirty (30)
days to
repair, either Landlord or Tenant may elect to terminate this Lease
as of
the date the damage occurred, regardless of the sufficiency of any
insurance
proceeds. The party electing to terminate this Lease shall give written
notification to the other party of such election within thirty (30)
days
after Tenant's notice to Landlord of the occurrence of the damage.
Section 7.02. SUBSTANTIAL OR TOTAL DESTRUCTION. if the Property is
substantially or totally destroyed by any cause whatsoever (i.e., the
damage to the Property is greater than partial damage as described in
Section 7.01), and regardless of whether Landlord receives any
insurance
proceeds, this Lease shall terminate as of the date the destruction
occurred. Notwithstanding the preceding sentence, if the Property
can be
rebuilt within six (6) months after the date of destruction,
Landlord may
elect to rebuild the Property at Landlord's own expense, in which
case this
Lease shall remain in full force and effect. Landlord shall notify
Tenant of
such election within thirty (30) days after Tenant's notice of the
occurrence of total or substantial destruction. If Landlord so elects,
Landlord shall rebuild the Property at Landlord's sole expense,
except that
if the destruction was caused by an act or omission of Tenant,
Tenant shall
pay Landlord the difference between the actual cost of rebuilding
and any
insurance proceeds received by Landlord.
Section 7.03. TEMPORARY REDUCTION OF RENT. If the Property is
destroyed or
damaged and Landlord or Tenant repairs or restores the Property
pursuant to
the provisions of this Article Seven, any rent payable during the
period of
such damage, repair and/or restoration shall be reduced according to
the
degree, if any, to which Tenant's use of the Property is impaired.
However,
the reduction shall not exceed the sum of one year's payment of Base
Rent,
insurance premiums and real property taxes. Except for such possible
reduction in Base Rent, insurance premiums and real property taxes,
Tenant
shall not be entitled to any compensation, reduction, or
reimbursement from
Landlord as a result of any damage, destruction, repair, or
restoration of
or to the Property.
Section 7.04. WAIVER. Tenant waives the protection of any statute,
code or
judicial decision which grants a tenant the right to terminate a
lease in
the event of the substantial or total destruction of the leased
property.
Tenant agrees that the provisions of Section 7.02 above shall govern
the
rights and obligations of Landlord and Tenant in the event of any
substantial or total destruction to the Property.
ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the power of
eminent
domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or
sold on
the date the condemning authority takes title or possession, whichever
occurs first. If more than twenty percent (20%) of the floor area of
the
building in which the Property is located, or which is located on the
Property, is taken, either Landlord or Tenant may terminate this
Lease. as
of the date the condemning authority takes title or possession, by
delivering written notice to the other within ten (10) days after
receipt of
written notice of such taking (or in the absence of such notice,
within ten
(10) days after the condemning authority takes title or possession). If
neither Landlord nor Tenant terminates this Lease, this Lease shall
remain
in effect as to the portion of the Property not taken, except that
the Base
Rent and Additional Rent shall be reduced in proportion to the
reduction in
the floor area of the Property. Any Condemnation award or payment
shall be
distributed in the following order: (a) first, to any ground lessor,
mortgagee or beneficiary under a deed of trust encumbering the
Property, the
amount of its interest in the Property; (b) second, to Tenant, only the
amount of any award specifically designated for loss of or damage to
Tenant's trade fixtures or removable personal property; and (C)
third, to
Landlord, the remainder of such award, whether as compensation for
reduction
in the value of the leasehold, the taking of the fee, or otherwise.
If this
Lease is not terminated, Landlord shall repair any damage to the
Property
caused by the Condemnation, except that Landlord shall not be
obligated to
repair any damage for which Tenant has been reimbursed by the
condemning
authority. If the severance damages received by Landlord are not
sufficient to pay for such repair, Landlord shall have the right to
either terminate this Lease or make such repair at Landlord's expense.
<PAGE>
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
SECTION 9.01. Landlord's Consent Required. No portion of the
Property or of
Tenant's interest in this Lease may be acquired by any other person or
entity, whether by sale, assignment, mortgage, sublease, transfer,
operation
of law, or act of Tenant, without Landlord's prior written consent,
except
as provided in Section 9.02 below. Landlord has the right to grant or
withhold its consent as provided in Section 9.05 below. Any attempted
transfer without consent shall be void and shall constitute a
noncurable
breach of this Lease. If Tenant is a partnership, any cumulative
transfer of
more than twenty percent (20%) of the partnership interests shall
require
Landlord's consent. If Tenant is a corporation, any change in the
ownership
of a controlling interest of the voting stock of the corporation shall
require Landlord's consent.
Section 9.02. Tenant Affiliate. Tenant may assign this Lease or
sublease the
Property, without Landlord's consent, to any corporation which
controls, is
controlled by or is under common control with Tenant, or to any
corporation
resulting from the merger of or consolidation with Tenant ("Tenant's
Affiliate"). In such case, any Tenant's Affiliate shall assume in
writing
all of Tenant's obligations under this Lease.
Section 9.03. No Release of Tenant. No transfer permitted by this
Article
Nine, whether with or without Landlord's consent, shall release
Tenant or
change Tenant's primary liability to pay the rent and to perform all
other
obligations of Tenant under this Lease. Landlord's acceptance of
rent from
any other person is not a waiver of any provision of this Article Nine.
Consent to one transfer is not a consent to any subsequent transfer. If
Tenant's transferee defaults under this Lease, Landlord may proceed
directly
against Tenant without pursuing remedies against the transferee.
Landlord
may consent to subsequent assignments or modifications of this Lease by
Tenant's transferee, without notifying Tenant or obtaining its
consent. Such
action shall not relieve Tenant's liability under this Lease.
Section 9.04. Offer to Terminate. If Tenant desires to assign the
Lease or
sublease the Property, Tenant shall have the right to offer,- in
writing, to
terminate the Lease as of a date specified in the offer. If Landlord
elects
in writing to accept the offer to terminate within twenty (20) days
after
notice of the offer, the Lease shall terminate as of the date
specified and
all the terms and provisions of the Lease governing termination
shall apply.
If Landlord does not so elect, the Lease shall continue in effect until
otherwise terminated and the provisions of Section 9.05 with respect
to any
proposed transfer shall continue to apply.
Section 9.05. Landlord's Consent.
(a) Tenant's request for consent to any transfer described in
Section 9.01
shall set forth in writing the details of the proposed transfer,
including
the name, business and financial condition of the prospective
transferee,
financial details of the proposed transfer (e.g., the term of and
the rent
and security deposit payable -under any proposed assignment or
sublease),
and any other information Landlord deems relevant. Landlord shall
have the
right to withhold consent, if reasonable, or to grant consent, based
on the
following factors: (I) the business of the proposed assignee or
subtenant
and the proposed use of the Property; (ii) the net worth and financial
reputation of the proposed assignee or subtenant; (iii) Tenant's
compliance
with all of its obligations under the Lease; and (iv) such other
factors as
Landlord may reasonably deem relevant. If Landlord objects to a
proposed
assignment solely because of the net worth and/or financial
reputation of
the proposed assignee, Tenant may nonetheless sublease (but not
assign), all
or a portion of the Property to the proposed transferee, but only on
the
other terms of the proposed transfer.
(b) If Tenant assigns or subleases, the following shall apply:
(I) Tenant shall pay to Landlord as Additional Rent under the Lease the
Landlord's Share (stated in Section 1.13) of the Profit (defined
below) on
such transaction as and when received by Tenant, unless Landlord gives
written notice to Tenant and the assignee or subtenant that
Landlord's Share
shall be paid by the assignee or subtenant to Landlord directly. The
"Profit" means (A) all amounts paid to Tenant for such assignment or
sublease, including "key" money, monthly rent in excess of the
monthly rent
payable under the Lease, and all fees and other consideration paid
for the
assignment or sublease, including fees under any collateral
agreements, less
(B) costs and expenses directly incurred by Tenant in connection
with the
execution and performance of such assignment or sublease for real
estate
broker's commissions and costs of renovation or construction of tenant
improvements required under such assignment or sublease. Tenant is
entitled
to recover such costs and expenses before Tenant is obligated to pay
the
Landlord's Share to Landlord. The Profit in the case of a sublease
of less
than all the Property is the rent allocable to the subleased space
as a
percentage on a square footage basis.
(ii) Tenant shall provide Landlord a written statement certifying all
amounts to be paid from any assignment or sublease of the Property
within
thirty (30) days after the transaction documentation is signed, and
Landlord
may inspect Tenant's books and records to verify the accuracy of such
statement. On written request, Tenant shall promptly furnish to
Landlord
copies of all the transaction documentation, all of which shall be
certified by Tenant to be complete, true and correct. Landlord's
receipt
of Landlord's Share shall not be a consent to any further assignment or
subletting. The breach of Tenant's obligation under this Paragraph
9.05(b)
shall be a material default of the Lease.
Section 9.06. No Merger. No merger shall result from Tenant's
sublease
of the Property under this Article Nine, Tenant's surrender of this
Lease or the termination of this Lease in any other manner. In any
such
event, Landlord may terminate any or all subtenancies or succeed to the
interest of Tenant as sublandlord under any or all subtenancies.
<PAGE>
ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.01. COVENANTS AND CONDITIONS. Tenant's performance of
each of
Tenant's obligations under this Lease is a condition as well as a
covenant.
Tenant's right to continue in possession of the Property is
conditioned upon
such performance. Time is of the essence in the performance of all
covenants
and conditions.
Section 10.02. DEFAULTS. Tenant shall be in material default under
this Lease:
(a) If Tenant abandons the Property or if Tenant's vacation of the
Property
results in the cancellation of any insurance described in Section 4.04;
(b) If Tenant fails to pay rent or any other charge when due;
(C) If Tenant fails to perform any of Tenant's non-monetary obligations
under this Lease for a period of thirty (30) days after written
notice from
Landlord; provided that if more than thirty (30) days are required to
complete such performance, Tenant shall not be in default if Tenant
commences such performance within the thirty (30) -day period and
thereafter
diligently pursues its completion. However, Landlord shall not be
required
to give such notice if Tenant's failure to perform constitutes a
non-curable
breach of this Lease. The notice required by this Paragraph is
intended to
satisfy any and all notice requirements imposed by law on Landlord
and is
not in addition to any such requirement.
(d) (I) If Tenant makes a general assignment or general arrangement
for the
benefit of creditors; (ii) if a petition for adjudication of
bankruptcy or
for reorganization or rearrangement is' filed by or against Tenant
and is
not dismissed within thirty (30) days; (iii) if a trustee or
receiver is
appointed to take possession of substantially all of Tenant's assets
located
at the Property or of Tenant's interest in this Lease and possession
is not
restored to Tenant within thirty (30) days; or (iv) if substantially
all of
Tenant's assets located at the Property or of Tenant's interest in this
Lease is subjected to attachment, execution or other judicial
seizure which
is not discharged within thirty (30) days. If a court of competent
jurisdiction determines that any of the acts described in this
subparagraph
(d) is not a default under this Lease, and a trustee is appointed to
take
possession (or if Tenant remains a debtor in possession) and such
trustee or
Tenant transfers Tenant's interest hereunder, then Landlord shall
receive,
as Additional Rent, the excess, if any, of the rent (or any other
consideration) paid in connection with such assignment or sublease
over the
rent payable by Tenant under this Lease.
(e) If any guarantor of the Lease revokes or otherwise terminates, or
purports to revoke or otherwise terminate, any guaranty of all or any
portion of Tenant's obligations under the Lease. Unless otherwise
expressly
provided, no guaranty of the Lease is revocable.
Section 10.03. REMEDIES. On the occurrence of any material default by
Tenant, Landlord may, at any time thereafter, with or without notice or
demand and without limiting Landlord in the exercise of any right or
remedy
which Landlord may have:
(a) Terminate Tenant's right to possession of the Property by any
lawful
means, in which case this Lease shall terminate and Tenant shall
immediately
surrender possession of the Property to Landlord. In such event,
Landlord
shall be entitled to recover from Tenant all damages incurred by
Landlord by
reason of Tenant's default, including (I) the worth at the time of
the award
of the unpaid Base Rent, Additional Rent and other charges which
Landlord
had earned at the time of the termination; (ii) the worth at the
time of the
award of the amount by which the unpaid Base Rent, Additional Rent
and other
charges which Landlord would have earned after termination until the
time of
the award exceeds the amount of such rental loss that Tenant proves
Landlord
could have reasonably avoided; (iii) the worth at the time of the
award-of
the amount by which the unpaid Base Rent, Additional Rent and other
charges
which Tenant would have paid for the balance of the Lease term after
the
time of award exceeds the amount of such rental loss that Tenant proves
Landlord could have reasonably avoided; and (iv) any other amount
necessary
to compensate Landlord for all the detriment proximately caused by
Tenant's
failure to perform its obligations under the Lease or which in THE
ORDINARY
COURSE of things would be likely to result therefrom, including, but
not
limited to, any costs or expenses Landlord incurs in maintaining or
preserving the Property after such default, the cost of recovering
possession of the Property, expenses of reletting, including necessary
renovation or alteration of the Property, Landlord's reasonable
attorneys'
fees incurred in connection therewith, and any real estate
commission paid
or payable. As used in subparts (I) and (ii) above, the "worth at
the time
of the award" is computed by allowing interest on unpaid amounts at
the rate
of fifteen percent (15%) per annum, or such lesser amount as may
then be the
maximum lawful rate. As used in subpart (iii) above, the "worth at
the time
of the award" is computed by discounting such amount at the discount
rate of
the Federal Reserve Bank of San Francisco at the time of the award,
plus one
percent (1%). If Tenant has abandoned the Property, Landlord shall
have the
option of (I) retaking possession of the Property and recovering
from Tenant
the amount specified in this Paragraph .10.03(a), or (ii) proceeding
under
Paragraph 10.03(b);
(b) Maintain Tenant's right to possession, in which case this Lease
shall continue in effect whether or not Tenant has abandoned the
Property. In such event, Landlord shall be entitled to enforce all
of Landlord's rights and remedies under this Lease, including the
right to recover the rent as it becomes due;
(C) Pursue any other remedy now or hereafter available to Landlord
under
the laws or judicial decisions of the state in which the Property is
located.
<PAGE>
Section 10.04. REPAYMENT OF "FREE" RENT. If this Lease provides for a
postponement of any monthly rental payments, a period of "free" rent or
other rent concession, such postponed rent or "free" rent is called the
"Abated Rent". Tenant shall be credited with having paid all of the
Abated
Rent on the expiration of the Lease Term only if Tenant has fully,
faithfully, and punctually performed all of Tenant's obligations
hereunder,
including the payment of all rent (other than the Abated Rent) and
all other
monetary obligations and the surrender of the Property in the physical
condition required by this Lease. Tenant acknowledges that its right to
receive credit for the Abated Rent is absolutely conditioned upon
Tenant's
full, faithful and punctual performance of its obligations under
this Lease.
If Tenant defaults and does not cure within any applicable grace
period, the
Abated Rent shall immediately become due and payable in full and
this Lease
shall be enforced as if there were no such rent abatement -or other
rent
concession. In such case Abated Rent shall be calculated based on
the full
initial rent payable under this Lease.
Section 10.05. AUTOMATIC TERMINATION. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate on the
occurrence of any act which affirms the Landlord's intention to
terminate
the Lease as provided in Section 10.03 hereof, including the filing
of an
unlawful detainer action against Tenant. On such termination,
Landlord's
damages for default shall include all costs and fees, including
reasonable
attorneys' fees that Landlord incurs in connection with the filing,
commencement, pursuing and/or defending of any action in any bankruptcy
court or other court with respect to the Lease; the obtaining of
relief from
any stay in bankruptcy restraining any action to evict Tenant; or the
pursuing of any action with respect to Landlord's right to
possession of the
Property. All such damages suffered (apart from Base Rent and other
rent
payable hereunder) shall constitute pecuniary damages which must be
reimbursed to Landlord prior to assumption of the Lease by Tenant or
any
successor to Tenant in any bankruptcy or other proceeding.
Section 10.06. CUMULATIVE REMEDIES. Landlord's exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.
ARTICLE ELEVEN: PROTECTION OF LENDERS
Section 11.01. SUBORDINATION. Landlord shall have the right to
subordinate
this Lease to any ground lease, deed of trust or mortgage
encumbering the
Property, any advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof,
whenever
made or recorded. Tenant shall cooperate with Landlord and any
lender which
is acquiring a security interest in the Property or the Lease.
Tenant shall
execute such further documents and assurances as such lender may
require,
provided that Tenant's obligations under this Lease shall not be
increased
in any material way (the performance of ministerial acts shall not
be deemed
material), and Tenant shall not be deprived of its rights under this
Lease.
Tenant's right to quiet possession of the Property during the Lease
Term
shall not be disturbed if Tenant pays the rent and performs all of
Tenant's
obligations under this Lease and is not otherwise in default. If any
ground
lessor, beneficiary or mortgagee elects to have this Lease prior to
the lien
of its ground lease, deed of trust or mortgage and gives written notice
thereof to Tenant, this Lease shall be deemed prior to such ground
lease,
deed of trust or mortgage whether this Lease is dated prior or
subsequent to
the date of said ground lease, deed of trust or mortgage or the date of
recording thereof.
Section 11.02. ATTORNMENT. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust,
mortgagee,
or purchaser at a foreclosure sale. Tenant shall attorn to the
transferee of
or successor to Landlord's interest in the Property and recognize such
transferee or successor as Landlord under this Lease. Tenant waives the
protection of any statute or rule of law which gives or purports to
give
Tenant any right to terminate this Lease or surrender possession of the
Property upon the transfer of Landlord's interest.
Section 11.03. SIGNING OF DOCUMENTS. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such
attornment or subordination or agreement to do so. If Tenant fails
to do so
within ten (10) days after writt6n- request, Tenant hereby makes,
constitutes and irrevocably appoints Landlord, or any transferee or
successor of Landlord, the attorney-in-fact of Tenant to execute and
deliver
any such instrument or document.
Section 11.04. Estoppel Certificates.
(a) Upon Landlord's written request, Tenant shall execute,
acknowledge and
deliver to Landlord a written statement certifying: (I) that none of
the
terms or provisions of this Lease have been changed (or if they have
been
changed, stating how they have been changed); (ii) that this Lease
has not
been canceled or terminated; (iii) the last date of payment of the Base
Rent and other charges and the time period covered by such payment;
(iv)
that Landlord is not in default under this Lease (or, if Landlord is
claimed
to be in default, stating why); and (v) such other representations or
information with respect to Tenant or the Lease as Landlord may
reasonably
request or which any prospective purchaser or encumbrancer of the
Property
may require. Tenant shall deliver such statement to Landlord within
ten (10)
days after Landlord's request. Landlord may give any such statement by
Tenant to any prospective purchaser or encumbrancer of the Property.
Such
purchaser or encumbrancer may rely conclusively upon such statement
as true
and correct.
(b) If Tenant does not deliver such statement to Landlord within such
ten (10) -day period, Landlord, and any prospective purchaser or
encumbrancer, may conclusively presume and rely upon the following
facts: (I) that the terms and provisions of this Lease have not been
changed except as otherwise represented by Landlord; (ii) that this
Lease has not been canceled or terminated except as otherwise
represented by Landlord; (iii) that not more than one month's Base Rent
or other charges have been paid in advance; and (iv) that Landlord
is not in default under the Lease. In such event, Tenant shall be
estopped from denying the truth of such facts.
<PAGE>
Section 11.05. TENANT'S FINANCIAL CONDITION. Within ten (10) days after
written request from Landlord, Tenant shall deliver to Landlord such
financial statements as Landlord reasonably requires to verify the
net worth
of Tenant or any assignee, subtenant, or guarantor of Tenant. In
addition,
Tenant shall deliver to any lender designated by Landlord any financial
statements required by such lender to facilitate the financing or
refinancing of the Property. Tenant represents and warrants to
Landlord that
each such financial statement is a true and accurate statement as of
the
date of such statement. All financial statements shall be
confidential and
shall be used only for the purposes set forth in this Lease.
ARTICLE TWELVE: LEGAL COSTS
SECTION 12.01 LEGAL PROCEEDINGS. If Tenant or Landlord shall be in
breach or
default under this Lease, such party (the "Defaulting Party") shall
reimburse the other party (the "Nondefaulting Party") upon demand
for any
costs or expenses that the Nondefaulting Party incurs in connection
with any
breach or default of the Defaulting Party under this Lease, whether
or not
suit is commenced or judgment entered. Such costs shall include
legal fees
and costs incurred for the negotiation of a settlement, enforcement of
rights or otherwise. Furthermore, if any action for breach of or to
enforce
the provisions of this Lease is commenced, the court in such action
shall
award to the party in whose favor a judgment is entered, a
reasonable sum as
attorneys' fees and costs. The losing party in such action shall pay
such
attorneys' fees and costs. Tenant shall also indemnify Landlord
against and
hold Landlord harmless from all costs, expenses, demands and liability
Landlord may incur if Landlord becomes or is made a party to any
claim or
action (a) instituted by Tenant against any third party, or by any
third
party against Tenant, or by or against any person holding any
interest under
or using the Property by license, of or agreement with Tenant, (b) for
foreclosure of any lien for labor or material furnished to or for
Tenant or
such other person; (C) otherwise arising out of or resulting from
any act or
transaction of Tenant or such other person" or (d) necessary to protect
Landlord's interest under this Lease in a bankruptcy proceeding, or
other
proceeding under Title 11 of the United States Code, as amended. Tenant
shall defend Landlord against any such claim or action at Tenant's
expense
with counsel reasonably acceptable to Landlord or, at Landlord's
election,
Tenant shall reimburse Landlord for any legal fees or costs Landlord
incurs
in any such claim or action.
Section 12.02. LANDLORD'S CONSENT. Tenant shall pay Landlord's
reasonable
attorneys' fees incurred in connection with Tenant's request for
Landlord's
consent under Article Nine (Assignment and Subletting), or in
connection
with any other act which Tenant proposes to do and which requires
Landlord's
consent.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01. NON-DISCRIMINATION. Tenant promises, and it is a
condition to
the continuance of this Lease, that there will be no discrimination
against,
or segregation of, any person or group of persons on the basis of race,
color, sex, creed, national origin or ancestry in the leasing,
subleasing,
transferring, occupancy, tenure or use of the Property or any
portion thereof.
Section 13.02. LANDLORD'S LIABILITY; CERTAIN DUTIES.
(a) As used in this Lease, the term "Landlord" means only the
current owner
or owners of the fee title to the Property or Project or the leasehold
estate under a ground lease of the Property or Project at the time in
question. Each Landlord is obligated to perform the obligations of
Landlord
under this Lease only during the time such Landlord owns such
interest or
title. Any Landlord who transfers its title or interest is relieved
of all
liability with respect to the obligations of Landlord under this
Lease to be
performed on or after the date of transfer. However, each Landlord
shall
deliver to its transferee all funds that Tenant previously paid if such
funds have not yet been applied under the terms of this Lease.
(b) Tenant shall give written notice of any failure by Landlord to
perform
any of its obligations under this Lease to Landlord and to any ground
lessor, mortgagee or beneficiary under any deed of trust encumbering
the
Property whose name and address have been furnished to Tenant in
writing.
Landlord shall not be in default under this Lease unless Landlord
(or such
ground lessor, mortgagee or beneficiary) fails to cure such
non-performance
within thirty (30) days after receipt of Tenant's notice. However,
if such
non-performance reasonably requires more than thirty (30) days to cure,
Landlord shall not be in default if such cure is commenced within such
thirty (30) -day period and thereafter diligently pursued to
completion.
(C) Notwithstanding any term or provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations
under this Lease is limited to Landlord's interest in the Property
and the
Project, and neither the Landlord nor its partners, shareholders,
officers
or other principals shall have any personal liability under this Lease.
Section 13.03. Severability. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is
illegal
or any part thereof is illegal or unenforceable shall not cancel or
invalidate the remainder of such provision or this Lease, which shall
remain in full force and effect.
Section 13.04.. Interpretation. The captions of the Articles or
Sections of
this Lease are to assist the parties in reading this Lease and are
not a
part of the terms or provisions of this Lease. Whenever required by
the
context of this Lease, the singular shall include the plural and the
plural
shall include the singular. The masculine, feminine and neuter genders
shall each include the other. In any provision relating to the
conduct,
acts or omissions of Tenant, the term "Tenant" shall include
Tenant's agents,
employees, contractors, invitees, successors or others using the
Property
with Tenant's expressed or implied permission.
<PAGE>
Section 13.05. INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS.
This Lease
is the only agreement between the parties pertaining to the lease of
the
Property and no other agreements are effective. All amendments to
this Lease
shall be in writing and signed by all parties. Any other attempted
amendment
shall be void.
Section 13.06. NOTICES. All notices 'required or permitted under
this Lease
shall be in writing and shall be personally delivered or sent by
certified
mail, return receipt requested, postage prepaid. Notices to Tenant
shall be
delivered to the address specified in Section 1.03 above, except
that upon
Tenant's taking possession of the Property, the Property shall be
Tenant's
address for notice purposes. Notices to Landlord shall be -delivered
to the
address specified in Section 1.02 above. All notices shall be
effective upon
delivery. Either party may change its notice address upon written
notice to
the other party.
Section 13.07. WAIVERS. All waivers must be in writing and signed by
the
waiving party. Landlord's failure to enforce any provision of this
Lease or
its acceptance of rent shall not be a waiver and shall not prevent
Landlord
from enforcing that provision or any other provision of this Lease
in the
future. No statement on a payment check from Tenant or in a letter
accompanying a payment check shall be binding on Landlord. Landlord
may,
with or without notice to Tenant, negotiate such check without being
bound
to the conditions of such statement.
Section 13.08. NO RECORDATION. Tenant shall not record this Lease
without
prior written consent from Landlord. However, either Landlord or
Tenant may
require that a "Short Form" memorandum of this Lease executed by both
parties be recorded. The party requiring such recording shall pay all
transfer taxes and recording fees.
Section 13.09. BINDING EFFECT; CHOICE OF LAW. This Lease binds any
party who
legally acquires any rights or interest in this Lease from Landlord or
Tenant. However, Landlord shall have no obligation to Tenant's
successor
unless the rights or interests of Tenant's successor are acquired in
accordance with the terms of this Lease. The laws of the state in
which the
Property is located shall govern this Lease.
Section 13.10. CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. If Tenant
is a
corporation, each person signing this Lease on behalf of Tenant
represents
and warrants that he has full authority to do so and that this Lease
binds
the corporation. Within thirty (30) days after this Lease is signed,
Tenant
shall deliver to Landlord a certified copy of a resolution of
Tenant's Board
of Directors authorizing the execution of this Lease or other
evidence of
such authority reasonably acceptable to Landlord. If Tenant is a
partnership, each person or entity signing this Lease for Tenant
represents
and warrants that he or it is a general partner of the partnership,
that he
or it has full authority to sign for the partnership and that this
Lease
binds the partnership and all general partners of the partnership.
Tenant
shall give written notice to Landlord of any general partner's
withdrawal or
addition. Within thirty (30) days after this Lease is signed, Tenant
shall
deliver to Landlord a copy of Tenant's recorded statement of
partnership or
certificate of limited partnership.
Section 13.11. JOINT AND SEVERAL LIABILITY. All parties signing this
Lease
as Tenant shall be jointly and severally liable for all obligations
of Tenant.
Section 13.12. FORCE MAJEURE. If Landlord cannot perform any of its
obligations due to events beyond Landlord's control, the time
provided for
performing such obligations shall be extended by a period of time
equal to
the duration of such events. Events beyond Landlord's control
include, but
are not limited to, acts of God, war, civil commotion, labor disputes,
strikes, fire, flood or other casualty, shortages of labor or material,
government regulation or restriction and weather conditions.
Section 13.13. EXECUTION OF LEASE. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the
counterparts shall constitute a single binding instrument. Landlord's
delivery of this Lease to Tenant shall not be deemed to be an offer
to lease
and shall not be binding upon either party until executed and
delivered by
both parties.
Section 13.14. SURVIVAL. All representations and warranties of
Landlord and
Tenant shall survive the termination of this Lease.
ARTICLE FOURTEEN: BROKERS
Section 14.01. BROKER'S FEE. when this Lease is signed by and
delivered to
both Landlord and Tenant, Landlord shall pay a real estate
commission to
Landlord's Broker named in Section 1.08 above, if any, as provided
in the
written agreement between Landlord and Landlord's Broker, or the sum
stated
in Section 1.09 above for services rendered to Landlord by Landlord's
Broker in this transaction. Landlord shall pay Landlord's Broker a
commission if Tenant exercises any option to extend the Lease Term
or to buy
the Property, or any similar option or right which Landlord may
grant to
Tenant, or if Landlord's Broker is the procuring cause of any other
lease or
sale entered into between Landlord and Tenant covering the Property.
Such
commission shall be the amount set forth in Landlord's Broker's
commission
schedule in effect as of the execution of this Lease. If a Tenant's
Broker
is named in Section 1.08 above, Landlord's Broker shall pay an
appropriate
portion of its commission to Tenant's Broker if so provided in any
agreement
between Landlord's Broker and Tenant's Broker. Nothing contained in
this
Lease shall impose any obligation on Landlord to pay a commission or
fee to
any party other than Landlord's Broker.
Section 14.02. PROTECTION OF BROKERS. If Landlord sells the Property,
or assigns Landlord's interest in this Lease, the buyer or assignee
shall, by accepting such conveyance of the Property or assignment of
the Lease, be conclusively deemed to have agreed to make all
payments to
Landlord's Broker thereafter required of Landlord under this Article
Fourteen. Landlord's Broker shall have the right to bring a legal
action to enforce or declare rights under this provision. The
prevailing party in such action shall be entitled to reasonable
attorneys' fees to be paid by the losing party. Such attorneys'
fees shall be fixed by the court in such action. This paragraph
is included in this Lease for the benefit of Landlord's Broker.
<PAGE>
Section 14.03. BROKER'S DISCLOSURE OF AGENCY. Landlord's Broker hereby
discloses to Landlord and Tenantless 'and Landlord and Tenant hereby
consent
to Landlord's Broker acting in this transaction as the agent of
(check one):
[X] Landlord exclusively; or
[ ] both Landlord and Tenant.
Section 14.04. No Other Brokers. Tenant represents and warrants to
Landlord
that the brokers named in Section 1.08 above are the only agents,
brokers,
finders or other parties with whom Tenant has dealt who are or may be
entitled to any commission or fee with respect to this Lease or the
Property.
ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED
HERETO
OR IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE
INSERTED, PLEASE
DRAW A LINE THROUGH THE SPACE BELOW.
LANDLORD HEREBY GRANTS TENANT FIRST RIGHT OF REFUSAL TO
PURCHASE THE PROPERTY DESCRIBED IN SECTION 1.04 PAGE 1 OF THIS LEASE.
LANDLORD HEREBY GRANTS TENANT AN OPTION TO RENEW LEASE FOR AN
ADDITIONAL 5
YEARS STARTING AT $9877.00 PER MONTH WITH 3% INCREASES PER ANNUM.
TENANT TO
GIVE LANDLORD WRITTEN NOTICE OF INTENT ON OR BEFORE APRIL 1 2004.
Landlord
and Tenant have signed this Lease at the place and on the dates
specified
adjacent to their signatures below and have initialed all Riders
which are
attached to or incorporated by reference in this Lease.
"LANDLORD"
MC DIVITT - SRI, LLC
By: /s/M. Mills
M MILLS
Its: PRESIDENT
Signed on June 9, 1999 at Ontario, California.
"TENANT"
INDUSTRIAL RUBBER INNOVATIONS INC.
A FLORIDA CORPORATION
By: /s/John Proulx
Its: President/CEO
By: /s/Steven Tieu
Its: Vice President of Technical Support
Signed on June 7, 1999 at Bakersfield, California 9:30 AM.
IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT
WITH
A PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR
OTHER
PERSON WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY
THE
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND
STORAGE TANKS.
THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE
DIRECTION OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF
INDUSTRIAL AND OFFICE REALTORS, INC. NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE SOUTHERN CALIFORNIA CHAPTER OF THE
SOCIETY OF INDUSTRIAL AND OFFICE REALTORS, INC., ITS LEGAL COUNSEL,
THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR
AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX
CONSEQUENCES OF THIS LEASE OR OF THIS TRANSACTION. LANDLORD
AND TENANT SHOULD RETAIN LEGAL COUNSEL TO ADVISE THEM ON SUCH
MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL COUNSEL.
<PAGE>
ADDENDUM TO LEASE
This Addendum to Lease is made effective as of the Agreement Date by
and
between Summers Ranch, Inc., a California corporation ("Seller" or
"Landlord"), and Industrial Rubber Innovations, Inc., a Florida
corporation,
("Buyer" or "Tenant"), with reference to the following facts:
WHEREAS, the parties are entering into that certain Industrial Real
Estate
Lease (the "Lease"); and
WHEREAS, this Agreement is incorporated by reference into Lease and is
material to the Lease;
IN CONSIDERATION OF THE PREMISES, the terms, conditions and covenants
contained herein and for other valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as
follows:
AGREEMENT
1 . DEFINITIONS. As used in this Agreement, the 'terms below shall
have the
following meanings unless the context requires otherwise.
1.1 "AGREEMENT." This Addendum to Lease, as amended or
supplemented
from time to time.
1.2 "AGREEMENT DATE." The effective date of this Agreement,
which is
June 1, 1999.
1.3 "APPLICABLE ENVIRONMENTAL LAWS." The Federal Water Pollution
Control Act
(33 U.S.C. ' 1251 et seq.), the Resource Conservation and Recovery
Act of
1976 (42 U.S.C. '6901 et seq.), the Safe Drinking Water Act (42 U.S.C.
'3600(f) et seq.) the Toxic Substances Control Act (15 U.S.C. '2601 et
seq.), the Clean Air Act (42 U.S.C. '7401 et seq.), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C.
'9601 et seq.), the Clean Water Act (33 U.S.C. '1251 et seq.), the
Hazardous
Materials Transportation Act of 1974 (49 U.S.C. '1801 et seq.) the
Occupational Safety and Health Act (29 U.S.C. '651 et seq.), the
Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ' 136 et seq.),
the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. '1101
et seq.)
and California environmental laws, including but not limited to:
Health and
Safety '25396 et seq., Health and Safety '25570 et seq., Health and
Safety
'59000 et seq., Health and Safety '218000 et seq., and Pub. Res. C.
'21000.,
and any other law, rule, regulation, ordinance or statute now
existing or
hereinafter enacted relating to air, soil, water, environmental or
health
and safety conditions.
<PAGE>
1.4 "BUSINESS DAY." Any day of the year, excluding Saturday, Sunday
and any
day which is a legal holiday or a day on which banking institutions are
authorized by law or other governmental actions to close and are
actually
closed in Bakersfield, California.
1.5 "COUNTY." The County of Kern, California.
1.6 "HAZARDOUS SUBSTANCE", "SOLID WASTE" AND "HAZARD" each shall have
the broadest meanings specified in the Applicable Environmental Laws.
1.7 "LEASE." That certain Industrial/Real Estate Lease dated
effective as of
June 1, 1999 wherein Seller is the Landlord and Buyer is the Tenant,
whereby
Seller has leased the Property to Buyer.
1.8 "LEASE PAYMENTS." The lease payments paid by the lessee to the
lessor under the Lease.
1.9 "PROPERTY." The real property described in EXHIBIT A
attached hereto.
2. ENVIRONMENTAL MATTERS.
LANDLORD
2.1 SELLER'S RIGHT TO REMOVE HAZARDOUS SUBSTANCES. In the event
Buyer
discovers prior to the Feasibility Period that Hazardous Substances,
Solid
Wastes or Hazards are located on or in or affect any portion of the
Property,
Buyer shall give Seller written notice as soon as reasonably
possible of
such discovery ("BUYER'S ENVIRONMENTAL NOTICE"). Within thirty (30)
days
after Buyer's Environmental Notice has been given, Seller, at its
option,
may commence and complete the clean up and removal of such Hazardous
Substances, Solid Wastes or Hazards in accordance with 911 Applicable
Environmental Laws, to the satisfaction of Buyer. In the event Seller
elects not to commence and complete the clean up and removal of such
Hazardous Substances, Solid Wastes or Hazards in accordance with all
Applicable Environmental Laws, and to the satisfaction of Buyer,
Seller
give written notice to Buyer within thirty (30) days after Buyers
Environmental Notice has been given, of such an election.
TENANT
2.2 BUYER'S RIGHT TO REMOVE HAZARDOUS SUBSTANCES. In the event
Seller elects
not to clean up the Property as provided in paragraph ___ hereof, or
Seller,
after having made the election to clean up the Property, fails,
refuses or
neglects to commence and complete the clean up and removal of such
Hazardous
Substances, Solid Wastes or Hazards in accordance with the
provisions of
paragraph 16.00 hereof, Buyer shall have the right, but not the
obligation,
without in any way limiting Buyer's other rights and remedies under
this
Agreement or at law, to enter onto the Property or to take such other
actions as it deems necessary or advisable to clean up, remove,
resolve, or
minimize the impact of,
<PAGE>
or otherwise deal with, any Hazardous Substances, Solid Wastes or
Hazards on
or affecting the Property.
LANDLORD
2.3 SELLER'S ENVIRONMENTAL INDEMNITY. Seller covenants that Seller will
indemnify, defend and hold harmless Buyer and any current or former
officer, director, employee, shareholder, partner, member or agent
of Buyer
(the "Buyer Indemnitees") for, from and against any and all claims,
losses,
damages, response costs, clean-up costs and expenses arising out of
or in
any way relating to the existence of Hazardous Substances, Solid
Waste or
Hazards over, beneath, in or upon any of the Property purchased by
Buyer
from Seller under the terms of this Agreement, which exist as a
result of
the actions or inactions of Seller or any other persons prior to the
June 1,
1999, including, but not limited to reasonable attorneys' fees,
incurred at,
before and after any trial or appeal therefrom whether or not
taxable as
costs (the ENVIRONMENTAL EXPENSES), all of which shall be paid by
Seller to
the Buyer Indemnitees upon demand. In the event of the existence of
Environmental Expenses, Seller agrees to pay the first Fifty Thousand
Dollars ($50,000), on a cumulative basis, of the Environmental
Expenses.
Once Seller has paid said Fifty Thousand Dollars ($50,000), Seller's
obligations in regard to the payment of the Environmental Expenses
shall
terminate and Buyer thereafter shall be solely responsible for the
Environmental Expenses.
TENANT
2.4 BUYER'S ENVIRONMENTAL INDEMNITY. Buyer covenants that Buyer will
indemnify, defend and hold harmless Seller and any current or former
officer, director, employee, shareholder, partner, member or agent
of Seller
(the "Seller Indemnitees") for, from and against any and all claims,
losses,
damages, response costs, clean-up costs and expenses arising out of
or in
any way relating to the existence of Hazardous Substances, Solid
Waste or
Hazards over, beneath., in or upon any of the Property leased by
Buyer from
Seller under the terms of this Agreement or the Lease, which exist
as a
result of the actions or inactions of Buyer or any other persons on
or after
June 1, 1999, including, but not limited to reasonable attorneys' fees,
incurred at, before and after any trial or appeal therefrom whether
or not
taxable as costs, all of which shall be paid by Buyer to the Seller
Indemnitees upon demand.
2.5 EXHIBITS AND SCHEDULES. All exhibits and schedules attached
hereto and
referred to in this Agreement are incorporated herein by this
reference and
are part of this Agreement.
2.6 COUNTERPARTS. This Agreement may be executed simultaneously or in
counterparts, each of which shall be deemed an original, but all of
which
together shall constitute one and the same Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Agreement Date.
LANDLORD
MC DIVITT - SRI, LLC
By: /s/Michael L. Mills
Michael L. Mills
Its: President
Date of Execution: June 9, 1999
TENANT
INDUSTRIAL RUBBER INNOVATIONS, INC., a Florida corporation
By: /s/John Proulx
Its: President/CEO
Date of Execution: June 7, 1999
<PAGE>
SCHEDULE 1.07
Guarantees
The following officers of Tenant and their spouses, if any, shall
provide
personal guarantees in the form attached hereto.
MR JOHN PROULX
9903 CASA DEL SOL
BAKERSFIELD, CALIF 93311
/s/John Proulx June 7, 1999
JOHN PROULX DATE
C.E.0 INDUSTRIAL RUBBER INNOVATIONS
A FLORIDA CORPORATION
MRS LEILA PROULX
9903 CASA DEL SOL
BAKERSFIELD, CALIF 93311
/s/Leila Proulx June 7, 1999
LEILA PROULX DATE
/s/name unknown June 7, 1999
WITNESSED DATE
<PAGE>
SCHEDULE 1.13(a)
Base Rent
September 1, 1999 to August 31, 2000 - $8,500.00 per month
September 1, 2000 to August 31, 2001 - $8,775.00 per month
September 1, 2001 to August 31, 2002 - $9,038.00 per month
September 1, 2002 to August 31, 2003 - $9,309.00 per month
September 1, 2003 to August 31, 2004 - $9,589.00 per month
<PAGE>
SCHEDULE 1.13(b)
Other Periodic Payments
LANDLORD
TO PAY: PROPERTY TAXES ONLY
TENANT
TO PAY: UTILITIES
JANITORIAL
INSURANCE
PERSONAL PROPERTY TAXES
GARDENING
INDUSTRIAL RUBBER INNOVATIONS, INC.
a Florida corporation
OMNIBUS STOCK OPTION PLAN
1. Name, Effective Date and Purpose.
1.1 This Plan document is intended to
implement and govern two separate stock option plans
of INDUSTRIAL RUBBER INNOVATIONS, INC. (the
"Company"): The Incentive Stock option plan ("Plan
A") and the Nonstatutory Stock Option Plan ("Plan
B"). Plan A provides for the granting of options
that are intended to qualify as incentive stock
options ("Incentive Stock Options") within the
meaning of Section 422A(b) of the Internal Revenue
Code (the "Code"), as amended. Plan B provides for
the granting of options that are not intended to so
qualify. Unless specified otherwise, all the
provisions of this Plan relate equally to both Plan
A and Plan B and are condensed for convenience into
one Plan document.
1.2 Plan A and Plan B are each
established effective as of July 1, 1999. The
purpose of Plan A and Plan B (sometimes together
referred to as the "Plan" or this "Plan") is to
promote the growth and general prosperity of the
Company and its Affiliated Companies. This Plan
will permit the Company to grant options ("Options")
to purchase shares of its common stock ("Common
Stock"). The granting of Options will help the
Company attract and retain the best available
persons for positions of substantial responsibility,
and will provide certain key employees with an
additional incentive to contribute to the success of
the Company and its Affiliated Companies. For
purposes of this Plan, the term "Affiliated
Companies" shall mean any component member of a
controlled group of corporations, as defined under
Code Section 1563, in which the Company is also a
component member.
2. Administration.
2.1 The Plan shall be administered solely
by the Board of Directors (the "Board"). All
decisions, determinations and interpretations of the
Board shall be final and binding on all Optionees.
2.2 The Board shall have sole authority,
in its absolute discretion, to determine which of
the eligible persons of the Company and its
Affiliated Companies shall receive Options
("Optionees"), and, subject to the express
provisions and restrictions of this Plan, shall have
sole authority, in its absolute discretion, to
determine the time when Options shall be granted,
the terms and conditions of any Option other than
those terms and conditions fixed under this Plan,
the number of shares which may be issued upon
exercise of an Option and the means of payment for
such shares, and shall have authority to do
everything necessary or appropriate to administer
the Plan.
2.3 Aggregate limitations with respect to
all participants in the Plan:
2.3.1 The Board shall not grant
Options covering more than the number of Available
Shares of Common Stock to any employee in any Plan
Year.
<PAGE>
2.4 Aggregate limitations with respect to
the participation of directors and officers in the
Plan:
2.4.1 No more than the number of
Available Shares of Common Stock may be optioned and
sold to directors of the Company under Plan A and
Plan B considered in the aggregate in any Plan Year.
2.4.2 No more than the Available
Shares of Common Stock may be optioned and sold to
non-director officers of the Company under Plan A
and Plan B considered in the aggregate in any Plan
Year.
2.5 Definitions:
2.5.1 Available Shares: Those shares
specified in Section 4.1 as available for issuance
pursuant to this Plan in any Plan Year.
2.5.2 Officer: The chief executive
officer, president, chief financial officer, chief
accounting officer, any vice president in charge of
a principal business function (such as sales,
administration, finance, or legal) and any other
person who performs similar policy-making functions
for the Company.
2.5.3 Parent Corporation: A
corporation as defined in Section 425(e) of the Code.
2.5.4 Plan Year: Any twelve (12)
month period (or shorter period during the final
year of this Plan) commencing July 1 during the term
of this Plan.
2.5.5 Restricted Shareholder: An
individual who, at the time an Option is granted
under either Plan A or Plan B, owns stock possessing
more than 10% of the total combined voting power of
all classes of stock of the employer corporation or
of its Parent Corporation or Subsidiary Corporation,
with stock ownership to be determined in light of
the attribution rules set forth in Section 425(d) of
the Code.
2.5.6 Subsidiary Corporation: A
corporation as defined in Section 425(f) of the Code.
3. Eligibility.
3.1 Plan A: The Board may, in its
discretion, grant one or more Options under Plan A
to any key employee of the Company or its Affiliated
Companies, including any employee who is a director
of the Company or of any of its Affiliated Companies
presently existing or hereinafter organized or
acquired. Such Options may be granted to one or
more such employees without being granted to other
eligible employees, as the Board may deem fit.
<PAGE>
3.2 Plan B: The Board may, in its
discretion, grant one or more options under Plan B
to any key management employee, any employee or
non-employee director of the Company or its
Affiliated Companies, including any employee who is
a director of the Company or of any of its
Affiliated Companies presently existing or
hereinafter organized or acquired, or any person who
performs consulting or other services for the
Company or its Affiliated Companies and who is
designated by the Board as eligible to participate
in Plan B. Such Options may be granted to one or
more such persons without being granted to other
eligible persons, as the Board may deem fit.
4. Stock to be Optioned.
4.1 The aggregate number of shares which
may be optioned and sold under Plan A and Plan B in
any Plan Year shall not exceed the following amounts
of the shares of Authorized Common Stock of the
Company:
<TABLE>
<S> <C>
Plan Year Available Shares
July 1, 1999 - June 30, 2000 750,000 shares
Each subsequent Plan Year beginning 10% of outstanding stock on July 1 of
July 1, 2000 each such Plan Year
</TABLE>
The foregoing constitutes an absolute cumulative
limitation on the total number of shares, that may
be optioned under both Plan A and Plan B in any Plan
Year. Therefore, at any particular date during a
Plan Year, the maximum aggregate number of shares
which may be optioned under either Plan A or Plan B
or both is equal to the Available Shares minus the
number of shares previously optioned and sold under
both Plan A and Plan B during that Plan Year. All
shares to be optioned and sold under either Plan A
or Plan B may be either authorized but unissued
shares or shares held in the treasury.
4.2 Shares of Common Stock that: (i) are
repurchased by the Company after issuance hereunder
pursuant to the exercise of an Option, or (ii) are
not purchased by the Optionee prior to the
expiration or termination of the applicable Option,
shall again become available to be covered by
Options to be issued hereunder and shall not, as of
the effective date of such repurchase or expiration,
be counted as covered by an outstanding Option for
purposes of the above-described maximum number of
shares which may be optioned hereunder.
5. Option Price. The Option Price for
shares of Common Stock to be issued under either
Plan A or Plan B shall be 100% of the fair market
value of such shares on the date on which the Option
covering such shares is granted by the Board (or the
Committee, if authorized by the Board), except that
if on the date on which such Option is granted the
Optionee is a Restricted Shareholder, then such
Option Price for Options granted under Plan A shall
be 110% of the fair market value of the shares of
Common Stock subject to the Option on the date such
Option is granted by the Board. The fair market
value of the shares of Common Stock for all purposes
of this Plan is to be determined by the Board in its
sole discretion, exercised in good faith.
<PAGE>
6. Term of Plan. Plan A and Plan B
shall become effective on July 1, 1999. Both Plan A
and Plan B shall continue in effect until June 30,
2009 unless terminated earlier by action of the
Board. No Option may be granted hereunder after
June 30, 2009.
7. Exercise of Option. Subject to the
actions, conditions and/or limitations set forth in
this Plan document and/or any applicable Stock
Option Agreement entered into hereunder, Options
granted under this Plan shall be exercisable in
accordance with the following rules:
7.1 No Option granted under Plan A may be
exercised in whole or in part until six (6) months
after the date on which the Option is granted by the
Board, or by the Committee if so authorized
(hereinafter the "Option Grant Date").
7.2 Subject to the specific provisions of
this Section 7, Options shall become exercisable at
such times and in such installments (which may be
cumulative) as the Board shall provide in the terms
of each individual Option; provided, however, each
Option granted under the Plan shall become
exercisable in installments of not more than 20% of
the number of shares covered by such Option each
year from the Option Grant Date; and provided,
further, that by a resolution adopted after an
Option is granted the Board may, on such terms and
conditions as it may determine to be appropriate and
subject to the specific provisions of this section
7, accelerate the time at which such Option or
installment thereof may be exercised. For purposes
of this Plan, any accrued installment of an Option
granted hereunder shall be referred to as an
"Accrued Installment."
7.3 Subject to the specific restrictions
contained in this Section 7, an Option may be
exercised when Accrued Installments accrue, as
provided in the terms under which such Option was
granted, for a period of up to ten (10) years from
the Option Grant Date. In no event shall any Option
be exercised on or after the expiration of said
maximum applicable period, regardless of the
circumstances then existing (including but not
limited to the death or termination of employment of
the Optionee).
7.4 The Board shall fix the expiration
date of the Option (the "Option Expiration Date") at
the time the Option grant is authorized.
8. Rules Applicable to Certain
Dispositions.
8.1 Notwithstanding the foregoing
provisions of Section 7, in the event the Company or
the shareholders of the Company enter into an
agreement to dispose of all or substantially all of
the assets or capital stock of the Company by means
of a sale, merger, consolidation, reorganization,
liquidation, or otherwise, an Option shall become
immediately exercisable with respect to the full
number of shares subject to that Option during the
period commencing as of the later of (i) date of
execution of such agreement or (ii) six (6) months
after the Option Grant Date, and ending as of the
earlier of:
8.1.1 the Option Expiration Date; or
<PAGE>
8.1.2 the date on which the
disposition of assets or capital stock contemplated
by the agreement is consummated.
The exercise of any Option made exercisable solely
by reason of this Section 8.1 shall be conditioned
upon the consummation of the disposition of assets
or stock under the above referenced agreement. Upon
the consummation of any such disposition of assets
or stock, the Plan and any unexercised Options
issued hereunder (or any unexercised portion
thereof) shall terminate and cease to be effective.
8.2 Notwithstanding the foregoing, in the
event that any such agreement shall be terminated
without consummating the disposition of said stock
or assets, any unexercised non-vested installments
that had become exercisable solely by reason of the
provisions of section 8.1 shall again become
non-vested and unexercisable as of said termination
of such agreement.
8.3 Notwithstanding the provisions set
forth in Section 8.1, the Board may, at its election
and subject to the approval of the corporation
purchasing or acquiring the stock or assets of the
Company (the "Surviving Corporation"), arrange for
the Optionee to receive upon surrender of Optionee's
Option a new option covering shares of the Surviving
Corporation in the same proportion, at an equivalent
option price and subject to the same terms and
conditions as the old Option. For purposes of the
preceding sentence, the excess of the aggregate fair
market value of the shares subject to such new
option immediately after consummation of such
disposition of stock or assets over the aggregate
option price of such shares of the Surviving
Corporation shall not be more than the excess of the
aggregate fair market value of all shares subject to
the old Option immediately before consummation of
such disposition of stock or assets over the
aggregate Option Price of such shares of the
Company, and the new option shall not give the
Optionee additional benefits which such Optionee did
not have under the old Option or deprive the
Optionee of benefits which the Optionee had under
the old Option. If such substitution of options is
effectuated, the Optionee's rights under the old
Option shall thereupon terminate.
9. Mergers and Acquisitions.
9.1 If the Company at any time should
succeed to the business of another corporation
through a merger or consolidation, or through the
acquisition of stock or assets of such corporation,
Options may be granted under the Plan to option
holders of such corporation or its subsidiaries, in
substitution for options or rights to purchase stock
of such corporation held by them at the time of
succession. The Board shall have sole and absolute
discretion to determine the extent to which such
substitute Options shall be granted (if at all), the
person or persons within the eligible group to
receive such substitute Options (who need not be all
option holders of such corporation), the number of
Options to be received by each person, the Option
Price of such Option, and the terms and conditions
of such substitute Options; provided however, that
the terms and conditions of the substitute Options
shall comply with the provisions of Section 425 of
the Code, such that the excess of the aggregate fair
market value of the shares subject to such
substitute Option immediately after the substitution
or assumption over the aggregate option price of
such shares is not more than the excess of the
aggregate fair market value of all shares subject to
the substitution Option immediately before such
substitution or assumption over the aggregate option
price of such shares, and the substitution Option or
the assumption of the old option does not give the
holder thereof additional benefits which he or she
did not have under such old option.
<PAGE>
9.2 Notwithstanding anything to the
contrary herein, no Option shall be granted, nor any
action taken, permitted or omitted, which could
cause the Plan, or any Options granted hereunder as
to which Rule 16b-3 under the Securities Exchange
Act of 1934 may apply, not to comply with such Rule.
10. Termination of Employment.
10.1 In the event that the Optionee's
employment, directorship or consulting or other
arrangement with the Company (or Affiliated Company)
is terminated for any reason other than death or
disability, any unexercised Accrued Installments of
the Option granted hereunder to such terminated
Optionee shall expire and become unexercisable as of
the earlier of:
10.1.1 the applicable Option
Expiration Date; or
10.1.2 a date 30 days after such
termination occurs, provided, however, that the
Board may, in the exercise of its discretion, extend
said date up to and including a date three months
following such termination with respect to Options
granted under Plan A, or up to and including a date
two years following such termination with respect to
Options granted under Plan B.
10.2 In the event that Optionee's
employment, directorship or consulting or other
arrangement with the Company is terminated due to
the death or disability of the Optionee, any
unexercised Accrued Installments of the Option
granted hereunder to such Optionee shall expire and
become unexercisable as of the earlier of:
10.2.1 the applicable Option
Expiration Date; or
10.2.2 the first anniversary of the
date of death of such Optionee (if applicable); or
10.2.3 the first anniversary of the
date of the termination of employment, directorship
or consulting or other arrangement by reason of
disability (if applicable). Any such Accrued
Installments of a deceased Optionee may be exercised
prior to their expiration by (and only by) the
person or persons to whom the Optionee's Option
right shall pass by will or by the laws of descent
and distribution, if applicable, subject, however,
to all the terms and conditions of this Plan and the
applicable Stock Option Agreement governing the
exercise of Options granted hereunder.
10.3 For purposes of this section 10, an
Optionee shall be deemed employed by the Company (or
Affiliated Company) during any period of leave of
absence from active employment as authorized by the
Company (or Affiliated Company).
<PAGE>
11. Exercise of Options.
11.1 An Option shall be deemed exercised
when written notice of such exercise has been given
to the Company at its principal business office by
the person entitled to exercise the Option and full
payment in cash or cash equivalents (or with shares
of Common Stock pursuant to section 14) for the
shares with respect to which the Option is exercised
has been received by the Company. The Board may
cause the Company to give or arrange for financial
assistance (including without limitation direct
loans, with or without interest, secured or
unsecured, or guarantees of third party loans) to an
Optionee for the purpose of providing funds for the
purchase of shares pursuant to the exercise of
Options, when in the judgment of the Board such
assistance is in the best interests of the Company,
is consistent with the Certificate of Incorporation
and Bylaws of the Company and applicable laws, and
will permit the shares to be fully paid and
nonassessable when issued.
11.2 An Option may be exercised in
accordance with this section 11 as to all or any
portion of the shares covered by an Accrued
Installment of the Option from time to time during
the applicable Option period, but shall not be
exercisable with respect to fractions of a share.
11.3 As soon as practicable after any
proper exercise of an Option in accordance with the
provisions of this Plan, the Company shall deliver
to the Optionee at the main office of the Company,
or such other place as shall be mutually acceptable,
a certificate or certificates representing the
shares of Common Stock as to which the Option has
been exercised. The time of issuance and delivery
of the Common Stock may be postponed by the Company
for such period as may be required for it with
reasonable diligence to comply with any applicable
listing requirements of any national or regional
securities exchange and any law or regulation
applicable to the issuance and delivery of such shares.
12. Authorization to Issue Options and
Shareholder Approval. Unless in the judgment of
counsel to the Company such permit is not necessary
with respect to particular grants, Options granted
under the Plan shall be conditioned upon the Company
obtaining any required permit from the California
Department of Corporations and/or other appropriate
governmental agencies, free of any conditions not
acceptable to the Board, authorizing the Company to
grant such Options, provided, however, such
condition shall lapse as of the effective date of
issuance of such permit(s) in a form to which the
Company does not object within sixty (60) days. The
grant of Options under the Plan also is conditioned
on approval of the Plan by the vote or consent of
the holders of a majority of the outstanding shares
of the Company's Common Stock and no Option granted
hereunder shall be effective or exercisable unless
and until the Plan has been so approved.
13. Limit on Value of Optioned Shares.
The aggregate fair market value (determined as of
the Option Grant Date) of the shares of Common Stock
to which Options granted under Plan A are
exercisable for the first time by any employee of
the Company during any calendar year under all
incentive stock option plans of the Company and its
Affiliated Companies shall not exceed $100,000. The
limitation imposed by this section 13 shall not
apply to Options granted under Plan B.
<PAGE>
14. Payment of Exercise Price with
Company Stock. The Board may provide that, upon
exercise of the Option, the Optionee may elect to
pay for all or some of the shares of Common Stock
underlying the Option with shares of Common Stock of
the Company previously acquired and owned at the
time of exercise by the Optionee, subject to all
restrictions and limitations of applicable laws,
rules and regulations, including Section 425(c)(3)
of the Code, and provided that the Optionee will
make representations and warranties satisfactory to
the Company regarding his or her title to the shares
used to effect the purchase, including without
limitation representations and warranties that the
Optionee has good and marketable title to such
shares free and clear of any and all liens,
encumbrances, charges, equities, claims, security
interests, options or restrictions, and has full
power to deliver such shares without obtaining the
consent or approval of any person or governmental
authority other than those which have already given
consent or approval in a form satisfactory to the
Company. The equivalent dollar value of the shares
used to effect the purchase shall be the fair market
value of the shares on the date of the purchase as
determined by the Board in its sole discretion,
exercised in good faith.
15. Stock Option Agreements. The terms
and conditions of Options granted under the Plan
shall be evidenced by a Stock Option Agreement
(hereinafter referred to as the "Agreement")
executed by the Company and the person to whom the
Option is granted. Each agreement shall contain the
following provisions:
15.1 A provision fixing the number of
shares which may be issued upon exercise of the Option;
15.2 A provision establishing the Option
exercise price per share;
15.3 A provision establishing the times
and the installments in which Options may be
exercised, provided, however, such times and
installments shall not be more than 20% of the
number of shares covered by such Option each year
from the Option Grant Date;
15.4 A provision incorporating therein
this Plan by reference;
15.5 A provision clarifying which Options
are intended to be Incentive Stock Options under
Plan A and which are intended to be nonstatutory
stock options under Plan B;
15.6 A provision fixing the maximum
duration of the Option as not more than five (5)
years from the Option Grant Date for Options granted
under Plan A and not more than ten (10) years from
the Option Grant Date for Options granted under Plan B;
15.7 Such representations and warranties
by the Optionee as may be required by section 25 of
this Plan or as may be required by the Board in its
discretion;
15.8 Any other restriction (in addition to
those established under this Plan) as may be
established by the Board with respect to the
exercise of the Option, the transfer of the Option,
and/or the transfer of the shares purchased by
exercise of the Option, provided that such
restrictions are not in conflict with this Plan; and
<PAGE>
15.9 Such other terms and conditions
consistent with this Plan as may be established by
the Board.
16. Taxes, Fees and Expenses. The
Company shall pay all original issue and transfer
taxes (but not income taxes, if any) with respect to
the grant of Options and/or the issue and transfer
of shares pursuant to the exercise of such Options,
and all other fees and expenses necessarily incurred
by the Company in connection therewith, and will
from time to time use its best efforts to comply
with all laws and regulations which, in the opinion
of counsel for the Company, shall be applicable
thereto.
17. Withholding of Taxes. The grant of
Options hereunder and the issuance of Common Stock
pursuant to the exercise of such Options is
conditioned upon the Company's reservation of the
right to withhold, in accordance with any applicable
law, from any compensation payable to the Optionee
any taxes required to be withheld by federal, state
and local law as a result of the grant or exercise
of any such Option.
18. Amendment or Termination of the Plan.
18.1 The Board may amend this Plan from
time to time in such respects as the Board may deem
advisable, provided, however, that no such amendment
shall operate to (i) affect adversely an Optionee's
rights under this Plan with respect to any Option
granted hereunder prior to the adoption of such
amendment, except as may be necessary, in the
judgment of counsel to the Company, to comply with
any applicable law, (ii) increase the maximum
aggregate number of shares which may be optioned and
sold under the Plan (unless shareholders approve
such increase), (iii) change the manner of
determining the option exercise price, (iv) change
the classes of persons eligible to receive Options
under the Plan, or (v) extend the maximum duration
of the Option or the Plan.
18.2 The Board may at any time terminate
this Plan. Any such termination of the Plan shall
not, without the written consent of the Optionee,
alter the terms of Options already granted, and such
Options shall remain in full force and effect as if
this Plan had not been terminated.
19. Options Not Transferable. Options
granted under this Plan may not be sold, pledged,
hypothecated, assigned, encumbered, gifted or
otherwise transferred or alienated in any manner,
either voluntarily or involuntarily by operation of
law, other than by will or the laws of descent of
distribution, and may be exercised during the
lifetime of an Optionee only by such Optionee.
20. No Restrictions on Transfer of Stock.
Common Stock issued pursuant to the exercise of an
Option granted under this Plan (hereinafter
"Optioned Stock"), or any interest in such Optioned
Stock, may be sold, assigned, gifted, pledged,
hypothecated, uncumbered or otherwise transferred or
alienated in any manner by the holder(s) thereof,
subject, however, to any representations or
warranties requested under section 25 of this Plan
and also subject to compliance with any applicable
federal, state or other local law, regulation or
rule governing the sale or transfer of stock or
securities.
<PAGE>
21. Reservation of Shares of Common
Stock. The Company, during the term of this Plan,
shall at all times reserve and keep available such
number of shares of its Common Stock sufficient to
satisfy the requirements of the Plan.
22. Restrictions on Issuance of Shares.
The Company, during the term of this Plan, shall use
its best efforts to obtain from the appropriate
regulatory agencies any requisite authorization to
grant Options or issue and sell such number of
shares of its Common Stock as necessary to satisfy
the requirements of the Plan. The inability of the
Company to obtain from any such regulatory agency
having jurisdiction thereof the authorization deemed
by the Company's counsel to be necessary to the
lawful grant of Options or the issuance and sale of
any shares of its stock hereunder or the inability
of the Company to confirm to its satisfaction that
any grant of Options or issuance and sale of any
shares of such stock will meet applicable legal
requirements shall relieve the Company of any
liability in respect of the non-issuance or sale of
such stock as to which such authorization or
confirmation have not been obtained.
23. Notices. Any notice to be given to
the Company pursuant to the provisions of this Plan
shall be addressed to the Company in care of its
Secretary at its principal office, and any notice to
be given to a person to whom an Option is granted
hereunder shall be addressed to him or her at the
address given beneath his or her signature on his or
her Stock Option Agreement, or at such other address
as such person or his or her transferee (upon the
transfer of Optioned Stock) may hereafter designate
in writing to the Company. Any such notice shall be
deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid,
registered or certified, and deposited, postage and
registry or certification fee prepaid, in a post
office or branch post office regularly maintained by
the United States Postal Service. It should be the
obligation of each Optionee and each transferee
holding optioned stock to provide the Secretary of
the Company, by letter mailed as provided
hereinabove, with written notice of his or her
correct mailing address.
24. Adjustments Upon Changes in
Capitalization. If the outstanding shares of Common
Stock of the Company are increased, decreased,
changed into or exchanged for a different number or
kind of shares of the Company through
reorganization, recapitalization, reclassification,
stock dividend, stock split or reverse stock split,
then an appropriate and proportionate adjustment
shall be made in the number or kind of shares which
may be issued upon exercise or Options granted under
the Plan; provided, however, that no such adjustment
need be made if, upon the advice of counsel, the
Board determines that such adjustment may result in
the receipt of federally taxable income to holders
of Options granted hereunder or the holders of
Common Stock or other classes of the Company's
securities.
25. Representations and Warranties. As a
condition to the grant of any Option hereunder or
the exercise of any portion of an Option, the
Company may require the person to be granted or
exercising such Option to make any representations
and/or warranty to the Company as may, in the
judgment of counsel to the Company, be required
under any applicable law or regulation, including,
but not limited to, a representation and warranty
that the Option and/or shares issuable or issued
upon exercise of such Option are being acquired only
for investment, for such person's own account and
without any present intention to sell or distribute
such Option or shares, as the case may be, if, in
the opinion of counsel for the Company, such
representation is required under the Securities Act
of 1933, the California Corporate Securities Law of
1968 or any other applicable law, regulation or rule
of any governmental agency.
<PAGE>
26. No Enlargement of Employee Rights.
This Plan is purely voluntary on the part of the
Company, and the continuance of the Plan shall not
be deemed to constitute a contract between the
Company and any employee, or to be consideration for
or a condition of the employment of any employee.
Nothing contained in the Plan shall be deemed to
give any employee the right to be retained in the
employ of the Company or its Affiliated Companies,
or to interfere with the right of the Company or an
Affiliated Company to discharge any employee thereof
at any time. No employee shall have any right to or
interest in Options authorized hereunder prior to
the grant of such an Option to such employee, and
upon such grant he or she shall have only such
rights and interests as are expressly provided
herein, subject, however, to all applicable
provisions of the Company's Certificate of
Incorporation, as the same may be amended from time
to time.
27. Information to Option Holders.
During the period any options granted to employees
of the Company remain outstanding, such
employee-option holders shall be entitled to
receive, on an annual or other periodic basis,
financial and other information regarding the
Company. The Board shall exercise its discretion
with regard to the nature and extent of the
financial information so provided, giving due regard
to the size and circumstances of the Company and, if
the Company provides annual reports to its
shareholders, the Company's practice in connection
with such annual reports. Notwithstanding the
above, if the issuance of options under either Plan
A or Plan B is limited to key employees whose duties
in connection with the company assure their access
to equivalent information, this section 27 shall not
apply to such employees and plan. A copy of this
Plan shall be delivered to the Secretary of the
Company and shall be shown by him or her to each
eligible person making reasonable inquiry concerning
it. A copy of this Plan also shall be delivered to
each Optionee at the time his or her Options are
granted.
28. Legends on Stock Certificates. Each
certificate representing Common Stock issued under
this Plan shall bear whatever legends are required
by federal or state law or by any governmental
agency. In particular, unless an appropriate
registration statement is filed pursuant to the
Federal Securities Act of 1933, as amended, with
respect to the shares of Common Stock issuable under
this Plan, each certificate representing such Common
Stock shall be endorsed on its face with the
following legend or its equivalent:
Neither the Option pursuant to which
the shares represented by this
certificate are issued nor said
shares have been registered under the
Securities Act of 1933, as amended
(the "Act"). Transfer or sale of
such securities or any interest
therein is unlawful except after
registration, or pursuant to an
exemption from the registration
requirements, as provided in the Act
and the regulations thereunder.
<PAGE>
29. Specific Performance. The Options
granted under this Plan and the Optioned Stock
issued pursuant to the exercise of such Options
cannot be readily purchased or sold in the open
market, and, for that reason among others, the
Company and its shareholders will be irreparably
damaged in the event that this Plan is not
specifically enforced. In the event of any
controversy concerning the right or obligation to
purchase or sell any such Option or Optioned Stock,
such right or obligation shall be enforceable in a
court of equity by a decree of specific performance.
Such remedy shall, however, be cumulative and not
exclusive, and shall be in addition to any other
remedy which the parties may have.
30. Invalid Provision. In the event that
any provision of this Plan is found to be invalid or
otherwise unenforceable under any applicable law,
such invalidity or enforceability shall not be
construed as rendering any other provisions
contained herein invalid or unenforceable, and all
such other provisions shall be given full force and
effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
31. Applicable Law. This Plan shall be
governed by and construed in accordance with the
laws of the State of California.
32. Successors and Assigns. This Plan
shall be binding on and inure to the benefit of the
Company and the employees to whom an Option is
granted hereunder, and such employees' heirs,
executors, administrators, legatees, personal
representatives, assignees and transferees.
IN WITNESS WHEREOF, pursuant to the due
authorization and adoption of this Plan by the Board
on June 3, 1999, the Company has caused this Plan to
be duly executed by its duly authorized officers.
INDUSTRIAL RUBBER INNOVATIONS, INC.
/s/ John Proulx
By: John Proulx
Its: President
CONSENT OF
INDEPENDENT CHARTERED ACCOUNTANTS
We consent to the inclusion of our report on the financial statements of
EPL Ventures Corp. (a Development Stage Company) as of March 31, 1999 and
for the five month period ended then ended and to the reference to it as
experts in accounting and auditing relating to said financial statements
and under the heading Part II, Item 3 - Changes in and Disagreements with
Accountants in the Registration Statement, Form 10-SB for EPL Ventures
Corp. dated July 26, 1999.
/s/ Davidson & Company
Vancouver, Canada
Chartered Accountants
July 27, 1999
<PAGE>
CONSENT OF
INDEPENDENT CHARTERED ACCOUNTANTS
We consent to the inclusion of our report on the financial statements of
Industrial Rubber Innovations, Inc. (a Development Stage Company) as of
March 31, 1999 and for the period from incorporation on November 19, 1998
to March 31, 1999 and to the reference to it as experts in accounting and
auditing relating to said financial statements and under the heading
Part II, Item 3 - Changes in and Disagreements with Accountants in the
Registration Statement, Form 10-SB for Industrial Rubber Innovations, Inc.
dated July 26, 1999.
/s/ Davidson & Company
Vancouver, Canada
Chartered Accountants
July 27, 1999
