U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUER
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
CENTURY CONTROLS INTERNATIONAL, INC.
(Name of Small Business Issuer in its charter)
Utah 41-1294552
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
3140 Neil Armstrong Blvd, Suite 226
Eagan, MN 55121
Issuer's Telephone Number: (651) 454-0323
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $0.001
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TABLE OF CONTENTS
ITEM NUMBER AND CAPTION Page
Part I
1. Description of Business 3
2. Management's Discussion and Analysis or Plan of 6
Operations
3. Description of Properties 8
4. Security Ownership of Certain Beneficial Owners and 9
Management
5. Directors, Executive Officers, Promoters and Control 10
Persons
6. Executive Compensation 11
7. Certain Relationships and Related Transactions 11
8. Description of Securities 11
Part II
1. Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters 12
2. Legal Proceedings 12
3. Changes in and Disagreements with Accountants 12
4. Recent Sales of Unregistered Securities 13
5. Indemnification of Directors and Officers 13
Part F/S Financial Statements 14
Part III
1. Index to Exhibits 15
2. Description of Exhibits 15
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PART I
Item 1. Description of Business
The Company
Century Controls International, Inc., is a publicly held
Utah corporation which, through its subsidiary Century Controls,
Inc., develops and markets a proprietary line of microprocessor
based boiler control products. It has been actively engaged in
this business for over the past eight years.
Excessive energy consumption and pollution control are
recognized as significant problems to be addressed now and in the
future. More than a half a dozen states and Canada have already
mandated installation of "BACT" (Best Available Control
Technology) on tens of thousands of boilers. Governmental
consortia including the Southern California Air Quality District
and NESCAUM (Northeast States for Coordinated Air Use Management)
are also mandating emission standards for boilers. Companies,
like Century, which offer products to address the problem expect
to see expanding markets for their products with increasing
environmental consciousness and government regulation.
Century develops and markets oxygen control, boiler loading
control, multiple boiler control, and air compressor control
systems used in industrial and commercial applications. Excess
air in the boiler's combustion chamber causes excess fuel
consumption, excessive stack exit temperatures, and increased
stack emissions. High firing rates in uncontrolled start up or
increased temperature set points causes excess fuel consumption
and unnecessary wear on boiler systems. Inefficient sequencing
of multiple boiler systems causes excess fuel consumption,
increased stack emissions, and unnecessary wear on boiler
systems. Inefficient sequencing of air compressors, each loading
and unloading uncoordinated, wastes energy. Century's control
systems are designed to resolve these problems so that boiler
systems operate at high efficiency, which results in lower energy
consumption, lower nitrogen oxide emissions, less wear on boiler
systems, and significant savings on fuel costs and system
repairs.
Products
Century offers products suitable for a wide variety of
boiler system configurations. The following is a list of
products and uses.
Product Use
CC-100 Oxygen control system
CC-200 Oxygen control system
CC-150 Firing rate control system
CC-300 Oxygen control system for up to four
boilers
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CC-600 Firing sequence control for of up to
four boilers
CC-700 Oxygen and firing sequence control
for up to four boilers
CC-2000 Process Controller
CC-6000 Compressor sequence control for up
to 12 compressors
The newly designed air compressor Sequencer offers a new
improved method of coordinating multiple air compressors for
significant energy savings as well as protection of the
equipment. The sequence control technology used in Century's
products is covered by a patent issued in 1992 and another issued
in 1995. Century believes this patented technology has
applications in other areas, such as air conditioning and power
generators, which may be developed by Century or licensed to
other companies.
Century believes its products contain features that can not
be found in its competitors products, such as the ability to
control a multiple boiler system with a single control unit.
Accordingly, prices for Century's products represent the added
value inherent in the design and operation of the products.
Prices to end users for single boiler systems range from $5,500
to $15,000, and prices for the higher-end multiple boiler systems
range from $15,000 to $60,000.
Century purchases the components for its products from third
party suppliers, and assembles and tests its finished products at
its UL approved facility. Products are only assembled and
shipped against purchase orders. Century's practice is to
maintain an inventory of component parts necessary to satisfy
three months of projected product purchases. Various extra
components are in stock due to blanket orders for better-pricing.
There is no single supplier from which Century purchases more
then 10% of its product components. There is no component part
that Century can not obtain from sources other than current
suppliers.
Research and development is company-sponsored. Development
projects currently in progress are focusing on varying and
modifying controls to fit other applications such as
refrigeration compressor sequencing and small OEM controls.
Research and development is expected to cost approximately
$10,000 to $15,000 in 1999.
Marketing
Century's marketing effort focuses on the operational
qualities of its products, compliance with applicable
environmental standards imposed by government regulation, and
lower costs of fuel consumption and boiler system repairs that
will pay for the Century product in a relatively short period of
time and then represent real savings to the end user.
Century currently employs one salesperson who markets its
products directly to end users. Century generates product
brochures for distribution to its independent sales
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representatives, boiler system contractors, industrial and
commercial boiler system users, and compressor distributors.
Century also advertises in trade publications and uses its sales
person to respond to prospective customers that respond to the
advertisements.
Century markets its products directly to boiler system
manufacturers, who sell Century's products as an add-on to boiler
systems sold to end users. Century currently has sales
agreements with two boiler manufacturers, who accounted for
approximately 4% of total boiler system sales in the United
States in 1998.
Century has distribution agreements with approximately 18
independent distributors located in the United States. Of the
distributors, 16 purchase products directly from Century for
resale to end users. The remaining distributors forward purchase
orders to Century made by the end user, so that the sale is made
by Century and a commission is paid to the distributor.
Product sales are not seasonal. The months of highest and
lowest sales vary from year to year.
To support and service end users, Century furnishes a
technician for start-up and operator training on each system
sold, which is billed as a separate cost in addition to the cost
of the system. Plant personnel are trained to handle minor
service problems over the phone. Century employs one technician
to perform extensive repair services as required. Century's
independent distributors also employ their own technicians who
perform repair services.
Century's warranty on its products covers all material and
workmanship for a one year period from start-up date.
During the fiscal year ended February 28, 1999, IBP, Inc.,
purchased products accounting for approximately 16 % of Century's
total sales. Century does not expect sales to this customer to
exceed 10% of total sales in fiscal year 2000. One independent
distributor, Energy Products Company, was responsible for 9% of
Century's total sales in fiscal year 1999. Century expects this
distributor to account for more than 10% of total sales in fiscal
year 2000.
Competition
Principal competitors are Rosemount Engineering, Preferred
Instruments, and Heat Timer, all of which offer boiler control
products at prices lower than Century's products. Century
competes with these companies on the basis of the features it
offers in its products. Management believes this approach will
be successful in the future because consulting engineers are
starting to specify Century's products for systems they design
for end users.
Government Regulation
There is no meaningful government regulation of Century's
products or business.
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Employees
As of November 30, 1999, Century had 5 employees, none of
whom are represented by labor unions. Management considers its
relations with its employees to be good.
Item 2. Management's Discussion and Analysis or Plan of
Operations
Overview
Century develops and markets oxygen control, boiler loading
control, multiple boiler control, and air compressor control
systems used in industrial and commercial applications.
Century's control systems are designed to resolve common problems
such as excess fuel consumption, excessive stack exit
temperatures and increased stack emissions. With the
introduction of Century's control systems, boilers operate at
high efficiency, which result in lower energy consumption, lower
nitrogen oxide emissions, less wear on boiler systems and
significant savings on fuel costs and system repairs.
Over the past several years, Century's boiler control
systems have become more widely implemented into various key
markets around the country. As the number of Century's products
has increased, a growing interest has occurred among consulting
engineers. This escalating interest in turn, has resulted in a
growing number of engineering specifications written around
Century's products, which has provided Century with an increase
in sales. Additionally, Century's air compressor sequence
controller has been operating in Sara Lee Hosiery, a Fortune 500
Company plant, with outstanding results and a positive return on
investment. Due to this increased interest and positive feedback
within the industry, Century's is able to claim its product
performance as superior in the industry.
Century's goal is to increase industry acceptance and
increase sales significantly by concentrating more heavily in
sales and marketing. Century's strategy for achieving this goal
is to obtain highly qualified marketing individuals to increase
Century's sales and increase its advertising in various trade
magazines, emphasizing Century's newest product, the air
compressor sequencer. Additionally, Century anticipates further
product development in its communications software, allowing
Century's systems to interface with various energy management
systems and minor hardware design modifications which will allow
Century to produce a slightly lower cost OEM (original equipment
manufacturer) control, that can be marketed as a part of the
initial sale of the various boilers.
Results of Operations
Nine Months Ended November 30, 1999
Century had net sales of $388,171 for the nine months ended
November 30, 1999 as compared to $406,694 for the nine months
ended November 30, 1998. This decrease is primarily a result of
a slight drop in net sales the first nine months of this year
compared with last year because we
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made the decision to hire better representatives who work on a regular
basis with consulting engineers. This change appears to be a
good choice in that the specifications are now surfacing
that require our controls. However, there is a lag between the
specification writing, bid and installation which creates a delay
in receiving the orders, which caused the temporary drop in
sales. It is expected that these specifications will be repeated
over and over and therefore we are continuing this type of
activity, in the long run it will enhance our sales and profit
picture.
In the nine months ended November 30, 1999, Century's cost
of sales was $103,644 compared to $125,341 for the same period
ended November 30, 1998. This decrease is primarily due to the
lower net sales during the period and Century's ability to meet
customer demands through the use of its current inventory. At
the end of November 1999, Century had a decrease of approximately
37% of Century's inventories at the end of November 1998.
Operating expenses for the nine months ended November 30, 1999
and 1998, were $318,806 and $279,625, respectively. This
increase is primarily due to the hiring of the production
individual who previously was an independent contractor, adding
some extra costs, increased wages, insurance, taxes, benefits,
etc. There was also an increase in commissions paid to our
representatives.
As a result of the foregoing factors, Century realized a net
loss of $34,279 in the nine months ended November 30, 1999 and
net income of $1,728 for the nine months ended November 30, 1998.
Fiscal Years Ended February 28, 1999 and 1998.
Century had net sales of $599,842 and $479,392 for the
fiscal years ended February 28, 1999 and 1998, respectively. One
customer accounted for 20.2% of Century's sales in 1999. A
different customer accounted for 11.2% of sales in 1998. This
increase is primarily a result of Century's increased acceptance
within the industry and the addition of better recognized
representatives selling Century's products.
In 1999, Century's Cost of sales was $216,042 compared to
$200,875 for the year ended 1998. This minimal increase is
primarily due to Century's ability to meet customer demands
through the use of its current inventory. In 1999, Century had a
decrease of approximately 19% of Century's inventories.
Operating expenses for the years ended 1999 and 1998, were
$396,851 and $392,938, respectively. Advertising expenses for the
year ended 1999, was $9,362 compared to $910 in 1998. This
increase is primarily due to Century's efforts to gain
recognition in the industry, which in turn has increased its
level of operations.
As a result of the foregoing factors, Century realized a net
loss of $13,051 in the year ended 1999 and $114,421 in the year
ended 1998.
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Liquidity and Capital Resources
At November 30, 1999, Century had a working capital deficit
of $27,710 as compared to a working capital deficit of $21,627 at
February 28, 1999. Century's cash balance at November 30, 1999 was
$0. Century has used cash flow from operations and
occasional bank borrowings to finance its operating activities
during the nine months ended November 30, 1999, and the fiscal
years ended February 28, 1999 and 1998. Century had a $50,000
secured revolving line-of-credit to fund its operations, until
February 1999 when Century refinanced its line-of-credit balance
through a term loan, which bears interest at 2% above the bank's
prime rate.
Century's ability to continue in existence is dependent upon
obtaining adequate financing and profitable operations.
Management is expanding its product line with a new low cost
microprocessor controller for smaller boilers and a sequencer
program for air compressors, which are expected to generate
additional profitable sales. However, the ability of Century to
bring its products to market will be hampered as long as Century
does not have the working capital necessary to pursue more
aggressive marketing. Century has not identified any potential
sources of debt or equity financing and can not predict whether
any such financing will be available to Century on terms
acceptable to Century.
Year 2000 Compliance
Century's internal computer information system is Year 2000
compliant. Any new software purchases will similarly be Year
2000 Compliant, which should eliminate any internal Year 2000
issues. As Century has determined it has no internal Year 2000
issues, it has not developed a contingency plan with respect to
internal issues.
Year 2000 issues and any potential business interruptions,
costs, damages or losses related thereto are primarily dependent
upon the Year 2000 compliance of third parties. Century has not
experienced any such interruptions, costs, or losses as a result
of Year 2000 problems of third parties, and does not expect any
to occur.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1985
provides a safe harbor for forward-looking statements made by
Century. All statements, other than statements of historical
fact, which address activities, actions, goals, prospects, or new
developments that Century expects or anticipates will or may
occur in the future, including such things as expansion and
growth of its operations and other such matters are forward-
looking statements. Any one or a combination of factors could
materially affect Century's operations and financial condition.
These factors include competitive pressures, success or failure
of marketing programs, changes in pricing and availability of
component parts, new technology developments, and conditions in
the capital markets. Forward-looking statements made by Century
are based on knowledge of its business and the environment in
which it operates as of the date of this report. Because of the
factors listed above, as well as other factors beyond its
control, actual results may differ from those in the forward-
looking statements.
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Item 3. Description of Properties
The plant and office facilities of Century consist of
approximately 1,380 square feet of space in a single building
located at 3140 Neil Armstrong Blvd, Suite 226 in Eagan,
Minnesota.
The facilities are leased at a monthly rate of $821.37,
under a lease that expires in August 2002. Management believes
that the office space is adequate for Century's anticipated needs
for at least the next 12 months.
Item 4. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth as of November 30, 1999, the
number and percentage of the outstanding shares of common stock
which, according to the information supplied to Century, were
beneficially owned by (i) each person who is currently a
director, (ii) each executive officer, (iii) all current
directors and executive officers as a group and (iv) each person,
other than an officer or director, who to the knowledge of
Century is the beneficial owner of more than 5% of the
outstanding common stock. Except as otherwise indicated, the
persons named in the table have sole voting and dispositive power
with respect to all shares beneficially owned, subject to
community property laws where applicable.
Common Percent
Shares Options of Class
(1) (2)
Principal Stockholders
Dr. Michael Baghdaian 326,000 0 8.4%
13479 Northline
Southgate, MI 48195
Officers and Directors
Leo Christiansen 821,583 0 21.2%
731 Mohican Court
Mendota Heights, MN 55120
David Brown 131,250 34,000 4.3%
PO Box 197
Goodridge, MN 56725
James W. Sampair 90,000 10,000 2.6%
2067 W. Lakeview Blvd., #D-9
North Fort Meyers, FL 33903
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J. Clinton Shaver 152,450 10,000 4.2%
6601 Beach Road
Eden Prairie, MN 55346
Craig Laughlin 177,129 10,000 4.8%
11900 Wayzata Blvd., Suite 100
Hopkins, MN 55305
All Executive officers and 1,407,312 74,000 38.3%
Directors as a Group (5 persons)
(1) These figures represent options that are vested or will vest
within 60 days from the date as of which information is
presented in the table.
(2) These figures represent the percentage of ownership of the
named individuals assuming each of them alone has exercised
his options, and percentage ownership of all officers and
directors as a group assuming all purchase rights held by
such individuals are exercised.
Item 5. Directors, Executive Officers, Promoters and Control
Persons
Directors and Officers
The following table sets forth the names, ages, and
positions with Century for each of the directors and officers.
Name Age Positions (1) Since
Leo Christiansen 69 Chairman of the Board and 1990
President
David Brown 57 Senior Research & Development 1990
Engineer, and Director
James W. Sampair 68 Director & Secretary 1990
J. Clinton Shaver 68 Director 1990
Craig Laughlin 49 Director & Vice President 1991
All directors hold office until the next annual meeting of
stockholders and until their successors are elected and qualify.
Officers serve at the discretion of the Board of Directors.
The following is information on the business experience of
each director and officer.
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Leo Christiansen, has served as President and Chairman of
the Board of Directors of Century for the past nine years.
David Brown has served as Senior Research & Development
Engineer, Electronic hardware designer and a Director of Century
for the past nine years.
James W. Sampair was the President of Arena Contractors &
Equipment Co., a contracting company of St. Paul, Minnesota, from
1993 until October 1996, when he retired.
J. Clinton Shaver has served for over the past five years as
the Chief Executive Officer of Atlantis, Intl., of Long Lake,
Minnesota, a company engaged in the business of inventory
closeouts for retail and wholesale businesses.
Craig Laughlin is the founder and President of SRC Funding,
Inc., which structures venture capital financing for early stage
companies. Mr. Laughlin has been a consultant in the areas of
mergers, acquisitions, and early stage financing since 1986.
Item 6. Executive Compensation
Annual Compensation
The following table sets forth certain information regarding
the annual and long-term compensation for services in all
capacities to Century for the prior fiscal years ended February
28, 1999, 1998, and 1997, of those persons who were either (i)
the chief executive officer during the last completed fiscal year
or (ii) one of the other four most highly compensated executive
officers of the end of the last completed fiscal year whose
annual salary and bonuses exceeded $100,000 (collectively, the
"Named Executive Officers").
Name and Principal Position Annual Compensation
Year Salary ($)
Leo Christiansen 1999 $59,800
Chairman and President 1998 $59,800
1997 $59,800
Century has no other arrangement for compensating any of its
executive officers.
Item 7. Certain Relationships and Related Transactions
On November 7, 1997, Century issued 10,000 warrants each, at
an exercise price of $0.375 per shares, expiring on November 7,
1999, to directors Craig Laughlin, Clinton Shaver, and James
Sampair as compensation for services rendered to Century in their
positions as directors, as well as to former director Bruce
Senske.
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Item 8. Description of Securities
The authorized capitalization of Century consists of
15,000,000 shares of common stock, par value $0.001, of which
3,863,635 shares are outstanding. Holders of common stock are
entitled to one vote for each share held on all matters submitted
to a vote of shareholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of all
common stock outstanding entitled to vote in any election of
directors may elect all of the directors standing for election.
Holders of common stock are entitled to receive ratably such
dividends, if any, as may be declared by the board of directors
out of funds legally available therefor. Upon the liquidation,
dissolution or winding up of Century, the holders of all shares
of common stock are entitled to receive ratably the net assets of
Century available after the payment of all debts and other
liabilities. Holders of common stock have no preemptive,
subscription, redemption or conversion rights.
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters
The common stock of Century trades sporadically in the over-
the-counter market. The following table sets forth for the
respective periods indicated the prices of the common stock in
the over-the-counter market, as reported and summarized on the
OTC Bulletin Board. Such prices are based on inter-dealer bid
and asked prices, without markup, markdown, commissions, or
adjustments and may not represent actual transactions.
Calendar Quarter Ended High Bid ($) Low Bid ($)
May 31, 1997 $0.75 $0.375
August 31, 1997 $0.625 $0.25
November 30, 1997 $0.625 $0.125
February 28, 1998 $0.50 $0.1875
May 31, 1998 $0.50 $0.1875
August 31, 1998 $0.375 $0.125
November 30, 1998 $0.375 $0.125
February 28, 1999 $0.4375 $0.125
Since its inception, no dividends have been paid on the
common stock. Century intends to retain any earnings for use in
its business activities, so it is not expected that any dividends
on the common stock will be declared and paid in the foreseeable
future. At July 27, 1999, there were approximately 232 holders
of record of the common stock.
Item 2. Legal Proceedings
Century is not a party to any material pending legal
proceedings, and to the best of its knowledge, no such proceedings
by or against Century have been threatened.
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Item 3. Changes in and Disagreements with Accountants
On April 16, 1999, Century's board of directors appointed
the accounting firm of Callahan, Johnston & Associates, LLC as
Century's Independent Accountant. There have been no
disagreements with Century's former or present accountants over
the past three years.
Item 4. Recent Sales of Unregistered Securities
Century has had no recent sales of unregistered securities
within the past three years.
Item 5. Indemnification of Directors and Officers
Section 16-10a-902 of the Utah Code Annotated provides in
relevant part as follows:
(1) Except as provided in Subsection (4), a corporation may
indemnify an individual made a party to a proceeding because he
is or was a director, against liability incurred in the
proceeding if:
(a) his conduct was in good faith; and
(b) he reasonably believed that his conduct was in, or not
opposed to, the corporation's best interests; and
(c) in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
(4) A corporation may not indemnify a director under this
section:
(a) in connection with a proceeding by or in the right of
the corporation in which the director was adjudged liable to the
corporation; or
(b) in connection with any other proceeding charging that
the director derived an improper personal benefit, whether or not
involving action in his official capacity, in which proceeding he
was adjudged liable on the basis that he derived an improper
personal benefit.
(5) Indemnification permitted under this section in
connection with a proceeding by or in the right of the
corporation is limited to reasonable expenses incurred in
connection with the proceeding.
Section 16-10a-903 of the Utah Code Annotated provides in
relevant part as follows:
Unless limited by its articles of incorporation, a corporation
shall indemnify a director who was successful, on the merits or
otherwise, in the defense of any proceeding, or in the defense of
any claim, issue, or matter in the proceeding, to which he was a
party because he is or was a director
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of the corporation, against reasonable expenses incurred by him
in connection with the proceeding or claim with respect to which he
has been successful.
Section 16-10a-907 of the Utah Code Annotated provides in
relevant part as follows:
Unless a corporation's articles of incorporation provide
otherwise:
(1) an officer of the corporation is entitled to mandatory
indemnification under Section 16-10a-903, and is entitled to
apply for court-ordered indemnification under Section 16-10a-905,
in each case to the same extent as a director;
(2) the corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation to the
same extent as to a director; and
(3) a corporation may also indemnify and advance expenses to
an officer, employee, fiduciary, or agent who is not a director
to a greater extent, if not inconsistent with public policy, and
if provided for by its articles of incorporation, bylaws, general
or specific action of its board of directors, or contract.
Century's by-laws provide that it shall indemnify to the
full extent of its power to do so under Utah law, all directors
and officers of Century for any liability including costs of
defense reasonably incurred in connection with any action, suit,
or proceeding to which such person may be a party by reason of
such person's position with Century, if the officer or director
acted in good faith and in a manner the officer or director
reasonably believed to be in, or not opposed to, the best
interests of the corporation. Consequently, Century intends to
indemnify its officers and directors to the full extent permitted
by the statute noted above.
PART F/S
Financial Statements
The financial statements of Century appear at the end of
this registration statement beginning with the Index to Financial
Statements on page F-1.
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PART III
ITEM 1. INDEX TO EXHIBITS
ITEM 2. DESCRIPTION OF EXHIBITS
Copies of the following documents are included as exhibits
to this report.
Exhibit Form 1-A Title of Document
No. Ref. No.
1 (2) Articles of Incorporation, as
amended
2 (2) By-Laws
3 (6) Form of Options granted to Directors
4 (6) Lease for Company Facilities
5 (15) Financial Data Schedules*
* The Financial Data Schedule is presented only in the
electronic filing with the Securities and Exchange Commission.
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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.
CENTURY CONTROLS INTERNATIONAL, INC.
Date: February 10, 2000 By: /S/ Leo Christiansen, President
In accordance with the Exchange Act, this registration
statement has been signed by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Dated: February 10, 2000 /s/ Leo Christiansen,
Chief Executive Officer and Director
Dated: February 10, 2000 /s/ James W. Sampair, Director
Dated: February 10, 2000 /s/ J. Clinton Shaver, Director
Dated: February 10, 2000 /s/ Craig Laughlin, Director
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CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
November 30,
1999 1998
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash $ - $ -
Accounts receivable, trade,
net of allowance for doubtful
accounts of $500 in 1999 and
$2,500 in 1998 77,517 123,620
Inventories 100,903 80,518
Prepaid expenses 6,288 6,453
Total current assets 184,708 210,591
Fixed assets 70,418 66,023
Less accumulated depreciation 58,095 51,831
Net fixed assets 12,323 14,192
Other assets:
Inventories 71,171 81,050
Patents, net of accumulated amortization
of $4,142 in 1999 and $2,773 in 1998 28,641 23,680
Total other assets 99,812 104,730
Total assets
$ 296,843 $ 329,513
F-1
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November 30,
1999 1998
(Unaudited) (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 33,830 $ 4,917
Notes payable - revolving line of credit - 44,593
Notes payable - stockholders 23,000 27,500
Accounts payable 134,788 117,974
Checks written in excess of
cash in bank 2,308 3,698
Accrued expenses:
Payroll and related 7,991 663
Warranty 2,500 -
Interest 4,321 2,417
Other 3,680 2,404
Total current liabilities 212,418 204,166
Long-term debt:
Notes payable, net of current maturities 8,236 -
Total liabilities 220,654 204,166
Stockholders' equity:
Common stock, $.004 par value,
50,000,000 shares authorized; issued
and outstanding 3,863,635 in 1999
and 1998 15,455 15,455
Additional paid-in capital 1,254,399 1,253,399
Accumulated deficit (1,193,665) (1,144,507)
Total stockholders' equity 76,189 125,347
Total liabilities and stockholders equity $ 296,843 $ 329,513
F-2
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CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
ACCUMULATED DEFICIT
Nine Month Period Ended
November 30,
1999 1998
(Unaudited) (Unaudited)
Net sales $ 388,171 $ 406,694
Cost of sales 103,644 125,341
Gross profit 284,527 281,353
Operating expenses 318,806 279,625
Income (loss) before income taxes (34,279) 1,728
Income taxes - -
Net income (loss) (34,279) 1,728
Accumulated deficit:
Beginning of year (1,159,386) (1,146,235)
End of year $(1,193,665) $(1,144,507)
Basic earnings per share $ (.01) $ (.00)
Weighted-average number of
shares outstanding 3,863,635 3,863,635
Diluted earnings per share $ (.01) $ (.00)
Weighted-average number of
shares outstanding 3,983,856 3,916,787
F-3
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Month Period Ended
November 30,
1999 1998
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income (loss) $ (34,279) $ 1,728
Adjustments to reconcile net loss to net cash
flows from operating activities:
Depreciation 4,058 3,206
Amortization 934 609
Decrease (increase) in:
Accounts receivable - trade 5,982 (71,632)
Inventories (24,155) 21,719
Prepaid expense (481) 599
Increase (decrease) in accounts payable,
checks written in excess of bank balance,
and accrued expenses 54,954 49,237
Net cash used by operating activities 7,013 5,466
Cash flows from investing activities:
Purchase of fixed assets (4,395) (877)
Incurrence of patent costs (1,563) (5,562)
Net cash used by investing activities (5,958) (6,439)
Cash flows from financing activities:
Net borrowings on revolving line of credit - (5,407)
Net borrowings on notes payable - stockholders - 6,100
Net borrowings on long-term debt 12,000 -
Payment of long-term debt (16,569) (6,396)
Net cash provided by financing activities (4,569) (5,703)
Increase (decrease) in cash (3,514) (6,676)
Cash, beginning of year 3,514 6,676
Cash, end of year $ - $ -
Supplemental disclosure:
Interest paid $ 5,826 $ 3,823
Income taxes paid $ - $ -
F - 4
<PAGE>
Callahan Johnston & Associates, LLC
Certified Public Accountants
and Consultants
INDEPENDENT AUDITORS' REPORT
To The Board of Directors
Century Controls International, Inc.
St. Paul, Minnesota
We have audited the accompanying consolidated balance sheet of
Century Controls International, Inc. as of February 28, 1999,
and the related statements of operations, and accumulated
deficit and cash flows for the year then ended. These
consolidated 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. The
consolidated financial statements of Century Controls
International, Inc. as of February 28, 1998, were audited by
other auditors whose report dated June 1, 1998, on those
statements included an explanatory paragraph regarding
continuance as a going concern.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Century Controls International, Inc. as of February
28, 1999, and the results of operations and cash flows for the
year then ended in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been
prepared assuming that Century Controls International, Inc. will
continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company's recurring
losses from operations and negative cash flow from operating
activities raise substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these
matters are also described in Note 2. The consolidated financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
CALLAHAN, JOHNSON & ASSOCIATES, LLC
Minneapolis, Minnesota
August 12, 1999
7850 Metro Parkway - Suite 207 Minneapolis, MN 55425
(612) 858-7207 FAX (612) 858-7202
F-5
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
- February 28,
1999 1998
ASSETS
Current assets:
Cash $ 3,514 $ 6,676
Accounts receivable, trade,
net of allowance for doubtful
accounts of $500 in 1999 and
$2,500 in 1998 83,499 51,988
Inventories 76,748 102,237
Prepaid expenses 5,807 7,052
Total current assets 169,568 167,953
Fixed assets 66,023 65,146
Less accumulated depreciation 54,037 48,625
Net fixed assets 11,986 16,521
Other assets:
Inventories 71,171 81,050
Patents, net of accumulated amortization
of $3,208 in 1999 and $2,164 in 1998 28,012 18,727
Total other assets 99,183 99,777
Total assets $ 280,737 $ 284,251
The accompanying notes are an integral part of
these financial statements
F-6
<PAGE>
- February 28,
1999 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 24,307 $ 6,459
Notes payable - revolving line of credit - 50,000
Notes payable - stockholders 23,000 21,400
Accounts payable 88,808 72,017
Accrued expenses:
Payroll and related 4,905 3,385
Warranty 2,500 -
Interest 4,321 2,417
State minimum fee 100 100
Total current liabilities 147,941 155,778
Long-term debt:
Notes payable, net of current maturities 22,328 4,854
Total liabilities 170,269 160,632
Stockholders' equity:
Common Stock, $.004 par value,
50,000,000 shares authorized; issued
and outstanding 3,863,635 in 1999
and 1998 15,455 15,455
Additional paid-in capital 1,254,399 1,254,399
Accumulated deficit (1,159,386) (1,146,235)
Total stockholders' equity 110,468 123,619
Total liabitilites and
Stockholders' equity $ 280,737 $ 284,251
The accompanying notes are an integral part of these financial
statements.
F-7
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
ACCUMULATED DEFICIT
Years Ended February 28,
1999 1998
Net sales $ 599,842 $ 479,392
Cost of sales 216,042 200,875
Gross profit 383,800 278,517
Operating expenses 396,851 392,938
Net loss before income taxes (13,051) (114,421)
Income taxes 100 100
Net loss (13,151) (114,521)
Accumulated deficit:
Beginning of year (1,146,235) (1,031,714)
End of year $(1,159,386) $(1,146,235)
Basic earnings per share $ (.00) $ (.03)
Weighted-average number of
shares outstanding 3,863,635 3,863,635
Diluted earnings per share $ (.00) $ (.03)
Weighted-average number of
shares outstanding 3,983,856 3,916,787
The accompanying notes are an integral part of
these financial statements
F-8
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended February 28
1999 1998
Cash flows from operating activities:
Net loss $ (13,151) $ (114,521)
Adjustments to reconcile net loss to net cash
flows from operating activities:
Depreciation 5,412 5,491
Amortization 1,132 2,588
Decrease (increase) in:
Accounts receivable - trade (31,511) 81,182
Employee advances - 1,055
Inventories 35,368 (11,988)
Prepaid expense 1,245 (1,000)
Increase (decrease) in accounts payable
and accrued expenses 22,714 11,520
Net cash used by operating activities 21,209 (25,673)
Cash flows from investing activities:
Purchase of fixed assets (877) (3,000)
Incurrence of patent costs (10,417) (4,601)
Net cash used by investing activities (11,294) (7,601)
Cash flows from financing activities:
Net borrowings on revolving line of credit (8,218) 35,000
Net borrowings on notes payable - stockholders 1,600 3,000
Payment of long-term debt (6,459) (12,759)
Net cash provided by financing activities (13,077) 25,241
Increase (decrease) in cash (3,162) (8,033)
Cash, beginning of year 6,676 14,709
Cash, end of year 3,514 6,676
Supplemental disclosure:
Interest paid 5,997 6,163
Income taxes paid $ 100 $ 100
The accompanying notes are an integral part of
these financial statements.
F-9
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28,1999 AND 1998
1. Summary of Significant Accounting Policies
Nature of Business
The Company was incorporated March 15, 1984 under the laws
of the State of Utah. In July 1991 the Company changed its
name to Century Controls International, Inc. On July 25,
1991 the Company acquired, as a wholly-owned subsidiary,
Century Controls, Inc. Century Controls, Inc. was
incorporated February 3, 1977 under the laws of the State of
Minnesota.
Century Controls, Inc. develops, manufactures and markets
proprietary lines of microprocessor-based oxygen control,
boiler loading control, multiple boiler control, and
compressor control systems used in industrial and commercial
applications.
Principles of
Consolidation
The accompanying consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary,
Century Controls, Inc. All intercompany transactions and
balances have been eliminated in consolidation.
Fair Value of Financial
Instruments
All of the Company's financial instruments are
nonderivative. A summary of the fair value of the Company's
financial instruments and the methods and significant
assumptions used to estimate those values is as follows:
Short-Term Financial
Instruments
The fair value of short-term financial instruments,
including cash and cash equivalents, trade accounts
receivable and payable and certain accrued liabilities,
approximates their carrying amounts in the financial
statements due to the short maturity of such instruments.
Notes Payable and Long-Term
Debt
The fair value of the variable rate term note payable
approximates their carrying amount since the currently
effective rates reflect market rates. It is not
practicable to estimate the fair value of notes payable -
stockholders.
(Continued)
F-10
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28,1999 AND 1998
Summary of Significant Accounting Policies
(Continued)
Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market,
principally applying the first-in, first-out (FIFO) method.
Fixed Assets
Fixed assets are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the
related assets, ranging from three to seven years. When assets
are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts and the
resulting gain or loss is recognized in income for the period.
The cost of maintenance and repairs is expensed as incurred;
significant renewals and betterments are capitalized. Deduction
is made for retirements resulting from renewals or betterments.
Depreciation expense was $5,412 in 1999 and $5,491 in 1998.
Intangible Assets
Costs incurred obtaining patents on the Company's proprietary
products are recorded at cost and amortized over the life of the
patents, generally 20 years.
(Continued)
F-11
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28,1999 AND 1998
Summary of Significant Accounting Policies
(Continued)
Earnings Per Share
The Company has implemented FASB 128: Earnings Per Share.
Accordingly, earnings per share (EPS) information for prior
periods has been restated to conform with FASB 128. FASB 128
replaces the presentation of primary EPS with basic EPS. Basic
EPS excludes dilution and is computed by dividing net income by
the weighted-average number of common shares outstanding for
the year. Diluted EPS reflects the potential dilution from
stock options and is computed using the treasury stock method.
Under the treasury stock method stock options are assumed to
have been exercised at the beginning of the period if the
average market price exceeds the exercise price during the
period. The computation of diluted EPS does not assume
conversion, exercise or contingent issuance of securities that
would have an antidilutive effect on earnings per share.
1999 1998
Weighted-average shares for basic EPS3,863,635 3,863,635
Incremental shares from assumed
exercise of options and warrants 120,221 53,152
Adjusted weighted-average shares
for diluted EPS 3,983,8S6 3,916,787
Loss available to common stockholders(13,151) $(114,521)
Income Taxes
The Company has implemented FASB 109: Accounting for Income
Taxes. Timing differences relate to the allowance for doubtful
accounts and assumed expenses not currently deductible. The tax
effects of these temporary differences and net operating loss
carry forwards give rise to significant deferred tax assets.
FASB 109 requires that deferred tax assets be reduced by a
valuation allowance if it is more likely than not that some
portion or all of the deferred tax asset will not be realized
(see Note 9).
(Continued)
F-12
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28,1999 AND 1998
1. Summary of Significant Accounting Policies
(Continued)
Concentrations and
Uncertainties
Use of
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Accounts
Receivable
Accounts receivable are unsecured. Orders greater than
$20,000 typically require a twenty-five percent (25%) down
payment. The estimated loss that management believes is
probable is included in the allowance for doubtful
accounts. While the ultimate loss may differ, management
believes that any additional loss will not have a material
impact on the Company's financial position. Due to
uncertainties in the settlement process, however, it is at
least reasonably possible that management's estimate will
change during the next year. That amount cannot be
estimated.
A receivable from the Company's largest customer totaled
46.3% of accounts receivable at February 28, 1999. This
receivable was paid subsequent to year end.
Inventory
As is disclosed in Note 3, $71,171 or 48.1% of inventory
at February 28, 1999 and $81,050 or 44.2% of inventory at
February 28, 1998 is repair inventory. This repair
inventory is not currently used in production. Repair
inventory is utilized as maintenance and service is
performed on older models of the Company I s products.
Management feels the current levels of inventory are
recoverable and believes that no loss will be incurred.
Due to uncertainties in the business cycle, however, it is
at least reasonably possible that management's estimate
will change during the next year. That amount cannot be
estimated.
(Continued)
F-13
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28,1999 AND 1998
Summary of Significant Accounting Policies
(Continued)
Concentrations and Uncertainties
Major Customer
One customer accounted for 20.2% of the Company's sales in
1999. A different customer accounted for 11.2% of sales in
1998.
Continued Existence
The Company's recurring losses and negative cash flows from
operating activities raise concern over the Company's ability
to continue in existence. Management's plans in regards to
continued existence are discussed in Note 2.
Advertising
Advertising expenses are recognized in the period incurred.
Advertising expenses totaled $9,362 in 1999 and $910 in 1998.
Reclassifications
Certain balances in the 1998 financial statements have been
reclassified to conform to the 1999 presentation. These
reclassifications had no effect on net (loss) for either
period.
Continued Existence
The accompanying consolidated financial statements have been
prepared in conformity with generally accepted accounting
principles which contemplates the continuance of the Company as
a going concern. The Company has experienced recurring operating
losses and used cash to finance operating activities since 1993.
Capital raised from common stock offerings has provided the
financial support necessary for the Company to satisfy its
obligations. Internally prepared financial statements report a
small profit through June 1999. The Company's ability to
continue in existence is dependent upon obtaining adequate
financing and obtaining profitable operations. Management is
expanding its product line with a new low cost microprocessor
controller for smaller boilers and a sequencer program for air
compressors which are expected to generate additional profitable
sales. The Company's efforts to attain profitability remains
uncertain; accordingly, it is not known whether the Company can
continue to satisfy its obligations. The consolidated financial
statements do not include any adjustments relating to the
recoverability of recorded asset amounts or the amounts of
liabilities that might be necessary should the Company be unable
to continue as a going concern.
(Continued)
F-14
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28,1999 AND 1998
3.
Inventories
Inventories consisted of the
following:
1999 1998
Raw materials and work in process $ 76,748 $ 102,237
Repair inventory not expected to be
realized within one year (see Note 1) 71,171
81,050
$ 147,919
183,287
4. Notes Payable - Revolvinq Line of
Credit
The Company had a secured $50,000 revolving line-of-credit.
The note carried a variable interest rate and matured June
30, 1998. In February 1999, the remaining balance on this
line of credit was refinanced through a term loan (see Note
5).
5. Long-Term
Debt
1999 1998
Long-term debt consisted of the
following:
Note payable - bank, payable in
monthly installments of $1,900
including interest at bank rate
plus 2% (9.0% at February 28,
1999). Balloon due December 1,
2000. Secured by all corporate
assets and subordination of
Notes payable - stockholders. $ 41,781 $ -
Note payable - payable in monthly
installments of $395 including
interest at 9.75%, secured by
automobile, final payment March 1,
2000. 4,854
8,904
Note Payable - bank, payable in monthly
installments of $829 including
interest at 11.45%, secured by
Company property and personal guaranty. - 2,409
46,635 11,313
Less current portion 24,307 6,459
22,328 4,854
(Continued)
F-15
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28,1999 AND 1998
5. Long-Term Debt
(Continued)
Maturities of long-term debt are as
follows:
Years ending February
28,
2000 $ 24,307
2001 22,328
$__46,635
6. Lease
In June 1999, the company entered into an office lease
agreement which calls for monthly payments of $821 plus
common area expense through August 31, 2002. Minimum
payments due under this lease are
as follows:
Years ended February
28:
2000 $ 5,337
2001 $ 9,852
2002 $ 9,852
2003 $ 4,926
Rent expense charged to operations was $18,900 in 1999 and
$17,897 in 1998.
7.Note Payable -
Stockholders
Activity relating to the notes payable - stockholders is as
follows:
1999 1998
Beginning of year $ 21,400 $ 18,400
Borrowings 6,100 3,000
Repayments (4,5OO) -
End of year $ 23,000. $ 21,400
These loans are unsecured, due on demand and bear interest
at rates from -0-% to 10%. Interest expense relating to
these loans was $1,620 in 1999 and $1,620 in 1998. Accrued
interest was $3,964 and $2,344 at February 28, 1999 and
1998, respectively.
Repayment of $17,000 of these notes payable - stockholders
is subordinated to the note payable - bank (see Note 5).
(Continued)
F-16
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28,1999 AND 1998
B. Stockholders' Equity
In July 1995, an officer and director of the Company was
issued warrants to purchase 50,000 shares of the Company's
common stock at $.50 per share for a period of three years.
The warrants expired July 1, 1998.
Warrants to purchase 362,5000 shares of commons stock for
$1.25 per share were issued in connection with an August
1995 Private Placement. The warrants expired during February
1998.
Warrants to purchase 108,750 shares for $.25 per share were
issued to a business development consultant in connection
with the August 1995 Private Placement. Additionally,
warrants to purchase 64,000 shares for $.25 per share were
issued to the consultant in consideration for other services
rendered. The warrants are due to expire on August 1, 2000.
Warrants to purchase 35,000 common shares for $.10 per share
were issued to a former employee in connection with his
employment agreement. The warrants expired on July 29, 1999.
Warrants to purchase 10,000 common shares at $.37-1/2 per
share for two years were issue to four members of the Board
of Directors are compensation for their services as
directors. The warrants are due to expire November 7, 1999.
Warrants to purchase 34,000 shares of common stock for $.18
per share for five years were issued to an employee. The
warrants are due to expire February 19, 2003.
9. Income Taxes
Income taxes consisted of the following at February 28:
Current: 1999 1998
Federal $ - $ -
State - -
State minimum fee (100) (100)
Deferred: (100) (100)
Federal - -
State
Income tax benefit (expense) (100) (100)
(Continued)
F-17
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28,1999 AND 1998
9. Income Taxes (Continued)
The reconciliation between expected federal income tax rates is
as follows:
1999 1998
Amount Percent Amount Percent
Expected federal tax $ 4,500 34.0% $ 39,000 34.0%
Surtax exemption (2,500) (19.0) (11,000) (9.6)
State income tax, net
of federal tax
benefit 800 6.3 7,200 6.3
Valuation and utilization
of net operating loss
carry forwards (2,800) (21.3) (35,200) (30.7)
State minimum fee (100) (.5) (100) (.1)
$ (100) (.5)% (100) (.1)
Differences between accounting rules and tax laws cause
differences between the bases of certain assets and liabilities
for financial reporting purposes and tax purposes. The tax
effects of these differences, to the extent they are temporary,
are recorded as deferred tax assets and liabilities under SFAS
109, and consisted of the following:
1999 1998
Deferred tax assets:
Allowance for doubtful accounts $ 100 $ 500
Vacation accrual 100 --
Accumulated depreciation 700 700
Intangible assets 31,000 31,000
Warranty accrual 600 --
Carryforwards 227,900 228,400
Gross deferred tax asset 260,400 260,600
Valuation allowance (260,400) (260,600)
Net deferred tax asset -- --
Deferred tax liability -- --
Net deferred tax asset (liability) $ -- $ --
(Continued)
F-18
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28,1999 AND 1998
9. Income Taxes
(continued)
At February 28, 1999, the Company has carryforwards
available to offset future taxable income as follows:
Federal State
Regular NOL Credits NOL
2003 $ 16,000 $ 9,200 $ 48,000
2004 45,000 - 45,000
2005 31,000 - 31,000
2006 22,000 - 11,000
2007 30,000 - 12,000
2008 184,000 - 76,000
2009 95,000 - 45,000
2010 - - -
2011 61,000 - 30,000
2012 125,000 - 66,000
2013 106,000 - 49,000
2014 - - -
$ 715,000 $ 9,600 $ 408,000
F-19
<PAGE>
Exhibit No. 1
Form 10-SB
Century Controls, Inc.
ARTICLES OF INCORPORATION
OF
HAPPY TRAILS, INC.
We, the undersigned natural persons acting as incorporators of the
corporation under the Utah Business Corporations Act adopt the following
Articles of Incorporation for such corporation.
ARTICLE I
Name. The name of the corporation (hereinafter called "Corporation")
is HAPPY TRAILS, INC.
ARTICLE II
Period of Duration. The period of duration of the Corporation is
perpetual.
ARTICLE III
Purposes and Powers. The purpose for which this Corporation is organized
is to engage in the business of investing in investments of all forms and
nature and to engage in any and all other lawful business.
ARTICLE IV
Capitalization. The Corporation shall have the authority to issue
50,000,000 shares of stock having a par value of one mil ($.001).
All stock of the Corporation shall be of the same class and shall have
the same rights and preferences. Fully paid stock of this Corporation
shall not be liable for further call or assessment. The authorized
trading shares shall be issued at the discretion of the Directors.
ARTICLE V
Commencement of Business. The Corporation shall not commence business
until at lease One Thousand Dollars ($1,000) has been received by the
Corporation as consideration for the issuance of its shares.
ARTICLE VI
Initial Registered Office and Initial Registered Agent. The address
of the initial registered office of the Corporation is 8300 South 700 East,
Sandy, Utah 84070, and the initial registered agent of the Corporation at
such address is David C. Sheldon.
ARTICLE VII
Directors. The Corporation shall be governed by a Board of Directors
consisting of no less than three (3) and no more than nine (9) directors.
Directors need not be stockholders in the Corporation but shall be elected
by the stockholders of the Corporation. The number of Directors
constituting the initial Board of directors is three (3) and the
name and post office address of the persons who shall serve as Directors until
their successors are elected and qualified are:
Michael L. Adkins
6742 South 1620 East
Salt Lake City, UT 84121
Daniel R. Mitchell
2850 East 3300 South
Salt Lake City, UT 84109
David C. Sheldon
8662 Piper Lane
Salt Lake City, UT 84092
ARTICLE VIII
Incorporators. The name and post office address of each incorporator is:
Michael L. Adkins
6742 South 1620 East
Salt Lake City, UT 84121
Daniel R. Mitchell
2850 East 3300 South
Salt Lake City, UT 84109
David C. Sheldon
8662 Piper Lane
Salt Lake City, UT 84092
ARTICLE IX
Preemptive Rights. There shall be no preemptive right to acquire unissued
and/or treasury shares of the stock of the Corporation.
ARTICLE X
Voting of Shares. Each outstanding share of common stock of the
Corporation shall be entitled to one vote on each matter submitted to a
vote at the meeting of the stockholders. Each stockholder shall be entitled
to vote his or its shares in person or by proxy, executed in writing by
such stockholder, or by his duly authorized attorney-in-fact. At each
election of Directors, every stockholder entitled to vote in such election
shall have the right to vote in person or by proxy the number of shares owned
as there are directors to be elected and for whose election he or it has
the right to vote, but the shareholder shall have no right accumulate his
or its votes with regard to such election.
/s/ Michael L. Adkins
/s/ Daniel R. Mitchell
/s/ David C. Sheldon
ARTICLES OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
OF
HAPPY TRAILS, INC.
The Articles of Incorporation of Happy Trails, Inc., a Utah corporation,
are amended as follows:
1. Article I is amended so as to change the name of the corporation to
REALife Technology, Inc., thus stating as follows:
ARTICLE I
Name. The name of the corporation (hereinafter called the "Corporation")
is REALife Technology, Inc.
2. The above amendment was duly adopted by the shareholders on March 4, 1987.
3. On March 4, 1987, there were 15,000,678 issued and outstanding shares
of the corporation, all of the same class. All shares were entitled to
vote on the amendment. 11,058,472 shares were voted in favor of the
amendment and -0- shares were voted against it.
/s/ Gerald F. Koch, President
/s/ Joseph T. Foley, Secretary
ARTICLES OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
OF
REALIFE TECHNOLOGY, INC.
The Articles of Incorporation of Happy Trails, Inc., a Utah corporation,
are amended as follows:
1. The first sentence of Article IV is amended so as to change the par
value of the shares of the corporation's common stock to four tenths
of one cent ($.004), thus stating as follows:
ARTICLE IV
Capitalization. The corporation shall have the authority to issue
50,000,000 shares of stock having a par value of four tenths of one
cent ($.004).
2. The above amendment was duly adopted by the shareholders on April 14, 1987.
3. On April 14, 1987, there were 15,000,678 issued and outstanding
shares of the corporation, all of the same class. All shares were
entitled to vote on the amendment. 8,250,888 shares were voted in
favor of the amendment and NO shares were voted against it.
/s/ Gerald F. Koch, President
/s/ Joseph T. Foley, Secretary
AMENDMENT OF ARTICLES OF INCORPORATION
OF CENTURY CONTROLS INTERNATIONAL, INC.
(FORMERLY REALIFE TECHNOLOGY, INC.)
DATE OF SHAREHOLDERS MEETING: June 26, 1991
NUMBER OF SHARES OUTSTANDING
AND ENTITLED TO VOTE: 1,650,000
NUMBER OF SHARES VOTED IN
FAVOR OF THE AMENDMENT: 853,525
NUMBER OF SHARES VOTED
AGAINST THE AMENDMENT: 0
NAME OF CORPORATION: Century Controls (International, Inc. formerly
ReaLife Technology, Inc.)
TEXT OF AMENDMENT:
ARTICLE I
"The name of the corporation shall be Century
Controls International, Inc."
/s/ Dennis Postma, President /s/ Craig Laughlin, Vice President
<PAGE>
Exhibit No. 2
Form 10-SB
Century Controls, Inc.
TABLE OF CONTENTS
BYLAWS
OF
CENTURY CONTROLS, INC.
ARTICLE I - OFFICES Page
1. Registered office 1
2. Other offices 1
ARTICLE II - MEETINGS OF SHAREHOLDERS
1. In general 1
2. Annual meetings 1
3. Notice of annual meeting 1
4. Stock ledger 1
5. Special meetings 2
6. Business at special meetings 2
7. Notice of special meetings 2
8. Record date 2
9. Quorum and adjournments 3
10. Votes required 3
11. Voting power 3
12. Consent action 3
ARTICLE III - DIRECTORS
1. Number and election 3
2. Vacancies and new directorships 4
3 Powers 4
4. Place of meeting 4
5. First meeting 4
6. Regular meetings 5
7. Special meetings 5
8. Quorum and adjournments 5
9. Executive committee 5
10. Committees 5
11. Conference Calls, etc. 5
12. Consent action 5
13. Fees and expenses 6
ARTICLE IV- NOTICES
1. In general 6
2. Waiver 6
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<PAGE>
Table of Contents - continued
ARTICLE V - OFFICERS
Page
1. Election of officers required or permitted 6
2. Salaries 7
3. Tenure, removal or vacancy 7
4. Duties of the Chairman of the Board 7
5. Duties of President 7
6. Duties of Executive Vice President 7
7. Duties of Vice Presidents 8
8. Duties of Secretary 8
9. Duties of Assistant Secretary 8
10. Duties of Treasurer 8
11. Duties of Assistant Treasurer 9
ARTICLE VI - CERTIFICATES OF SHARES
1. Certificates 9
2. Facsimile signatures 9
3. New certificates 9
4. Transfer 10
ARTICLE VII - GENERAL PROVISIONS
1. Manner of amendment 10
2. Dividends 10
3. Reserves 10
4. Registered shareholders 10
5. Annual statement 11
6. Voting of shares of other corporations 11
7. Resolution of Deadlock 11
8. Restrictions on transfer of shares 11
9. Indemnification of directors and officers 13
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<PAGE>
BYLAWS
OF
CENTURY CONTROLS, INC.
ARTICLE I
OFFICES
Section 1. Registered office - The registered office shall be
at 750 South Plaza Drive, Saint Paul (Dakota County), Minnesota
55120.
Section 2. Other offices - The corporation may also have
offices at such other places (both within and without the state of
Minnesota) as the board of directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. In general - All meetings of the shareholders
shall be held at the registered office of the corporation or at
such other place (either within or without the state of Minnesota)
as shall be designated from time to time by the board of directors
and stated in the notice of the meeting.
Section 2. Annual meetings - The shareholders shall hold a
meeting each calendar year, known as the annual meeting, at which
they shall elect a board of directors and transact such other
business as may be properly brought before the meeting., When the
annual meeting-is not held, or the directors are not elected
thereat, directors may be elected at a special meeting held for
that purpose, and it shall be the duty of the president, vice
president or secretary, upon demand of any shareholder entitled to
vote, to call such special meeting.
Section 3. Notice of annual meeting - Written notice of the
annual meeting stating the place, date and hour of the meeting
shall be given to each shareholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date
of the meeting.
Section 4. Stock ledger - The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least
ten days before every meeting of shareholders, a complete list of
the shareholders entitled to vote at the meeting, arranged in
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<PAGE>
alphabetical order, and showing the address of each shareholder
and
the number of shares registered in the name of each shareholder.
Such
list shall be open to the examination of any shareholder, for any
purpose germane to the meeting, during ordinary business hours,
for a period of at least ten days prior to the meeting. The list
shall also be produced and kept at the time and place of the
meeting during the whole time thereof and may be inspected by any
shareholder who is present.
Section 5. Special meetings - Special meetings of the
shareholders may be called for any purpose, at any time, by the
president, by the board of directors, or any two or more members
thereof, or in the manner hereinafter provided, by one or more
shareholders holding not less than one-tenth of the voting power
of the shareholders. Upon request, in writing, by registered mail
or delivered in person to the president, vice president or
secretary, by any person or persons entitled to call a meeting of
shareholders, it shall be the duty of such officer forthwith to
cause notice to be given to the shareholders entitled to vote of a
meeting to be held at such time as such officer may fix, not less
than ten, nor more than sixty days after the receipt of such
request. If such notice shall not be given within seven days after
delivery or the date of mailing of such request, the person or
persons requesting the meeting may fix the time of meeting and
give notice in the manner provided by law or these bylaws.
Section 6. Business at special meetings - Business transacted
at any special meeting-of shareholders shall be limited to the
purposes stated in the notice.
Section 7. Notice of special meetings - Written notice of a
special meeting, stating the placer date and hour of the meeting
and the purpose or purposes for which the meeting is called, shall
be given not less than ten nor more than sixty days before the
date of the meeting to each shareholder entitled to vote at such
meeting.
Section 8. Record date - The board of directors may fix a
time, not exceeding sixty days preceding the date of any meeting
of shareholders, as a record date for the determination of the
shareholders entitled to notice of and to vote at such meeting,
and in such case only shareholders of record on the date so fixed,
or their legal representatives, shall be entitled to notice of and
to vote at such meeting, notwithstanding any transfer of any
shares on the books of the corporation after any
record date so fixed. The board of directors may close the books
of the corporation against transfers of shares during the whole or
any part of such period.
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<PAGE>
Section 9. Quorum and adjournments - The presence, in person
or by proxy, of the holders of a majority of the shares entitled
to vote at the meeting shall constitute a quorum for the
transaction of business. In the absence of a quorum, any meeting
may be adjourned from time to time. The shareholders present at a
duly called or held meeting at which a quorum is present may
continue to transact business until adjournment, notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
If any meeting of the shareholders be adjourned to another time or
place, no notice as to such adjourned meeting need be given other
than by announcement at the meeting at which such adjournment is
taken.
Section 10. Votes required - When a quorum is present at any
meeting, the vote of the holders of a majority of the shares
having
voting power present in person or represented by proxy shall
decide any question brought before such meeting, unless the
question is one upon which, by express provision of the statutes
or the
articles of incorporation or these bylaws, a different vote is
required, in which case such express provision shall govern and
control the decision of such question.
Section 11. Voting power - Each shareholder of record shall,
at the date fixed for the determination of the persons entitled to
vote at a meeting of shareholders, or, if no date has been fixed,
then at the date of the meeting of the shareholders, be entitled
to one vote, in person or by proxy, for each share having voting
power standing in his name on the books of the corporation, but no
proxy shall be voted on after eleven months from its date unless
the proxy provides for a longer period.
Section 12. Consent Action - Any action which may be taken at
a meeting of the shareholders may be taken without a meeting if
authorized by a writing or writings signed by all of the holders
of shares who would be entitled to a notice of a meeting for such
purpose. Such action shall be effective on the date on which the
last signature is placed on such writing or writings, or such
earlier effective date as is set forth therein.
ARTICLE III
DIRECTORS
Section 1. Number and election - The number of directors
which shall constitute the whole board shall be not less than
three nor more than nine provided however, that during such time
as all of the shares of the corporation are owned beneficially and
of record by either one or two shareholders, the number of
directors may be less than three but not less than the number of
shareholders. Within the
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<PAGE>
limits above specified, the number of directors shall be
determined by the shareholders, who shall, at each annual meeting,
fix the number of directors. The directors shall be elected at the
annual meeting of the shareholders by a majority vote, except as
provided in Section 2 of this ARTICLE III, and each director
elected shall hold office until his successor is elected and
qualified, or until his earlier resignation or removal. Directors
need not be shareholders.
Section 2. Vacancies and new directorships - Vacancies in the
board of directors shall be filled b the remaining members of the
board, though less than a quorum. Newly created directorships
resulting from an increase in the authorized number of directors
by action of the board of directors may be filled by a two-thirds
vote of the directors serving at the time of such increase and
each person so elected shall serve until his successor is elected
by the shareholders and has qualified, or until his earlier
resignation or removal.
Section 3. Powers - The business of the corporation shall be
managed by its 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 the articles of incorporation or by these
bylaws directed or required to be exercised or done by the
shareholders.
Section 4. Place of meeting - Meetings of the board of
directors may be held at such place, whether in the state of
Minnesota or elsewhere, as the board of directors may from time to
time designate or, in the absence of such designation, at the
registered office of the corporation, except in the case of the
first Meeting of each newly elected board of directors which shall
be held as hereinafter provided.
Section 5. First meeting - The first meeting of each newly
elected board of directors shall be held on the day of the annual
meeting of the shareholders immediately after the adjournment
thereof at the place where said shareholders' meeting is held, or
at such time and place as shall be fixed by the shareholders at
the annual meeting, and no notice of such meeting shall be
necessary to the directors in order to legally constitute the
meeting, provided a quorum shall be present. In the event such
meeting is not held, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter
provided for special meetings of the board of directors or as
shall be specified in a written waiver signed by all of the
directors.
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<PAGE>
Section 6. Regular meetings - Regular meetings of the board
of directors may be held at such -times as shall from time to time
be
determined by the board.
Section 7. Special meetings- Special meetings of the board
may be called by the chairman of the board or by the president on
three days' notice to each director, either personally or by mail
or by telegram. Special meetings shall be called by the president
or secretary in like manner and on like notice on the written
request of two directors.
Section 8. Quorum and adjournments - At all meetings of the
board of directors a majority of the directors then in office
shall be necessary to constitute a quorum for the transaction of
business. The acts of a majority of the directors present at a
meeting at which a quorum is present shall be the acts of the
board of directors, except as may otherwise specifically provided
by law or by the articles of incorporation or these bylaws. If a
quorum shall not be present at any meeting of the board of
directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than by announcement at
the meeting at which such adjournment is taken, until a quorum
shall be present.
Section 9. Executive committee - The board of directors may
by unanimous affirmative action of the entire board, designate two
or more of their number to constitute an executive committee,
which, to the extent determined by unanimous affirmative action of
the entire board, shall have and exercise the authority of the
board in the management of the business of the corporation. Any
such executive committee shall act only in the interval between
meetings of the board, and shall be subject at all time's to the
control and direction of the board. The executive committee shall
keep regular minutes of its meetings which shall be reported to,
and made a part-of, the minutes of the board of directors.
Section 10. Committees - Meetings of committees of the
Board,
including meetings of the Executive Committee, may be called
by
any member thereof on two (2) days' notice.
Section 11. Conference calls, etc. - The Board of Directors
.or any committee designated by such Board may participate in a
meeting of such Board or committee by means, of conference
telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other; and
participation in such a meeting shall constitute presence in
person in such meeting.
Section 12. Consent action - Any action which might be taken
at
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<PAGE>
a meeting of the board of directors or of a lawfully constituted
executive committee thereof may be taken without a meeting if
authorized by a writing or writings signed by all of the directors
or by all of the members of such committee, as the case may be;
and such action shall be effective on the date on which the last
signature is placed on such writing or writings or such earlier
effective date as is set forth therein.
Section 13. Fees and expenses - 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. Members of the executive committee may be allowed like
compensation for attending committee meetings.
ARTICLE IV
NOTICES
Section 1. In general - Whenever notice is required to be
given to any director or shareholder under the provisions of law
or of the articles of incorporation or these bylaws, it shall not
be construed to require personal notice, but such notice may be
given in writing, by mail, addressed to such director or
shareholder at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited
in the United States mail. Notice to directors may also be given
personally or by telegram.
Section 2. Waiver - Whenever any notice is required to be
given under the provisions of law or of the articles of
incorporation or of these bylaws, a waiver thereof in writing
signed by any person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed
equivalent thereto. Any director, by his attendance at and
participation in the action taken at any meeting of which he
received no notice shall be deemed to have waived notice.
ARTICLE V
OFFICERS
Section 1. Election of officers required or permitted - The
officers of the corporation shall be elected by the board of
directors at its first meeting after each annual meeting of
shareholders and shall consist of a president, a secretary and a
treasurer. The board of directors may also elect a chairman of the
board, one or more executive vice presidents, one or more vice
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<PAGE>
presidents otherwise designated, one or more assistant secretaries
and assistant treasurers and it may appoint such other officers
and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform
such duties as shall be prescribed by these bylaws. None of the
officers need be a director. Any two of the offices, except those
of president and vice president, may be held by the same person.
Section 2. Salaries - The salaries of all officers of the
corporation shall I be determined by the board of directors.
Section 3. Tenure, removal or vacancy - Each officer of the
corporation shall hold office until his successor is chosen and
has qualified or until his earlier resignation or removal. Any
officer may be removed at any time by the board of directors with
or without excuse. Such removal, however, shall be without
prejudice to the contract rights of the person so removed. Any
vacancy occurring in any office of the corporation shall be filled
by the board of directors. Any officer may resign at any time upon
written notice to the corporation.
Section 4. The chairman of the board - The chairman of the
board, if there be one, shall preside at all meetings of the board
of directors and shall perform such other duties and have such
other powers as the board of directors may from time to time
prescribe.
Section 5. Duties of president - The president shall be the
chief executive officer of the corporation and shall have general
and active management of the business. He shall, when present,
preside at all meetings of the shareholders and, in the absence of
the chairman of the board (or if there be none), at meetings of
the board of directors; execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation,
except where required or permitted by law to be otherwise signed
and executed, and except where the signing and execution thereof
shall be expressly delegated by the board of directors to some
other officer or agent of the corporation; from time to time
report to the board of directors concerning the business and
affairs of the corporation; see that all orders of the board of
directors and of the executive committee are carried into effect;
and perform such other duties as the board of directors may from
time to time prescribe. He shall consult with the chairman of the
board on matters of policy and with respect to major financial
transactions and keep him advised with respect to the affairs of
the corporation.
Section 6. Duties of executive vice president - The executive
vice president, if designated, shall manage the business of the
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<PAGE>
corporation under the advice and general control of the president.
At the request of the president or in the absence or disability of
the president, he shall perform the duties and exercise the powers
of the president and shall perform such other duties and have such
other powers as the board of directors may from time to time
prescribe.
Section 7. Duties of vice presidents - Each of the vice
presidents shall have such powers and perform such duties as may
from time to time be assigned to them respectively by the board of
directors or the president. In the absence of the president (and
the executive vice president if one be designated) or in the event
of his inability or refusal to act, the vice president (or in the
event there be more than one vice president, the vice presidents
in the order designated, or in the absence of any designation,
then in the order of their election) shall perform the duties of
the president, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the president.
Section 8. Duties of secretary - The secretary shall attend
all meetings of the board of directors and of the shareholders and
record all the proceedings of the meetings of the corporation and
of the board of directors in a book to be kept for that purpose
and shall perform like duties for the executive committee when
required. He shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the board of
directors. The secretary shall perform such other duties and have
such other powers as the board of directors or the president shall
from time to time prescribe.
Section 9. Duties of assistant secretary - The assistant
secretary, or if there be more than one, the assistant secretaries
in the order determined by the president (or if there be no such
determination, then in the order of their election) shall, in the
absence of the secretary or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other
powers as the board of directors or the president may from time to
time prescribe.
Section 10, Duties of treasurer - The treasurer shall have
the custody of the 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 monies and
other valuable effects in the name and to the credit of the
corporation in such depositories as may be authorized by the board
of directors. He shall disburse the funds of the corporation as
may be ordered by the board of directors and shall render to the
president and the board of
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<PAGE>
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 and have such other powers as the board
of directors or the president may from time to time prescribe.
Section 11. Duties of assistant treasurer - The assistant
treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the president (or if there
be no such determination, then in the order of their election)
shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the
powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors or the president
may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF SHARES
Section 1. Certificates - Each shareholder of the corporation
shall be entitled to have a certificate of shares signed by or in
the name of the corporation by the chairman of the board or the
president or a vice president and the treasurer or an assistant
treasurer or the secretary or an assistant secretary of the
corporation, or such other officer as the Board of Directors may
from time to time determine, certifying the number of shares in
the corporation owned by him.
Section 2. Facsimile signatures - Where a certificate is
countersigned (i) by a transfer agent other than the corporation
or its employee, or (ii) by a registrar other than the corporation
or its employee, the signature of such corporate officer 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 a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the
date of issue.
Section 3. New 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, stolen or destroyed upon
the making of an affidavit of that fact by the person claiming the
certificate to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors
may, in its own discretion and as a condition precedent to the
issuance thereof,
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<PAGE>
require the owner of such lost, stolen 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, stolen or destroyed.
Section 4. Transfer - 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. Transfers of fractional shares shall not be
made nor shall certificates for fractional shares be issued.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Manner of amendment - These bylaws may be altered,
amended or repealed or new bylaws may be adopted by the
shareholders or by the board of directors at any regular meeting
of the shareholders or of the board of directors or at any special
meeting of the shareholders or of the board of directors if notice
of such alteration, amendment, repeal or adoption of new bylaws be
contained in the notice of such meeting.
Section 2. Dividends - Dividends upon the shares of the
corporation may be declared by the board of directors at any
regular or special meeting, pursuant to law. Dividends may be paid
in cash, in property or in shares of the corporation subject to
the provisions of the articles of incorporation.
Section 3. Reserves - Before payment of any dividend, there
may be set aside out of any funds of the corporation available for
dividends such sum or sums as the directors from time to time in
their absolute discretion think proper as a reserve or reserves to
meet contingencies or for equalizing dividends or for repairing or
maintaining any property of the corporation or for such other
purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
Section 4. Registered shareholders - The corporation shall be
entitled to recognize the exclusive right of a person registered
on its books as the owner of shares to receive dividends and to
vote as such owner and to hold liable for calls and assessments a
person
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<PAGE>
registered on its books as the owner of shares, 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, Minnesota.
Section 5. Annual statement - The president shall present at
each annual meeting, and at any special meeting of the
shareholders when called for by the shareholders pursuant to the
provisions of Section 5 of ARTICLE II, a full and clear statement
of the business and condition of the corporation.
Section 6. Voting of shares of other corporations - The
shares of any other corporation owned by this corporation may be
voted at any meeting of the shareholders of such other corporation
by such proxy as the board of directors of this corporation may
appoint, or if no such appointment be made, by the president, or
in his absence a vice president, or in the absence of the
president and vice presidents, the secretary, or in the absence of
the president, vice presidents and secretary, the treasurer.
Section 7. Resolution of Deadlock - If the holder(s) of a
fifty (50%) per cent stock interest in the corporation are unable
to agree with the holder(s) of the other fifty (50%) per cent
interest in the corporation and such inability to agree interferes
in any material respect with the business of the ' corporation and
continues for a period of sixty (60) days from the date written
notice of such disagreement (stating the substance thereof) is
sent by the shareholder(s) who are in disagreement with the other
shareholders, then upon the expiration of the said sixty (60) day
period, if such disagreement is still continuing, the shareholder
who first gave notice of such disagreement ("offeror(s)") shall
give to the holder(s) of the other 50% interest ("offeree(s)")
with whom the disagreement continues an offer of price, terms and
conditions upon which the offeror(s) will either purchase the
interest of the offeree(s), or sell to the offeree(s) holding the
remaining 50% interest. The offeree(s) shall have fifteen (15)
days thereafter within which to notify the offeror(s) as to
whether offeree(s) will be a seller or purchaser. In the absence
of a definitive response from the offeree(s), the offeree(s) shall
be deemed to have accepted the offer to sell all of his shares in
the corporation to the offeror(s). The closing of the transaction
shall take place within fifteen (15) days following the
determination made by the offeree(s), and the terms and conditions
set forth in the offer shall apply to the sale.
Section 8. Restrictions on transfer of shares - None of the
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shares of stock of this corporation shall or may be sold,
assigned,
pledged, encumbered or transferred, unless or until the holder or
holders thereof shall first give sixty (60) days notice in writing
to this corporation and to all other shareholders owning stock.
which notice shall state such holder or holders' desire with
reference thereto, and which notice shall be sent by certified
or registered mail to this corporation at its place of business,
and to the last known place of residence of each shareholder
entitled to receive such notice. This corporation shall have the
option, during the period of thirty (30) days from and after the
receipt of said notice to purchase said shares of stock referred
to in said notice from the holder or holders thereof, at a
purchase price equal to the value of the stock, computed at the
book value as shown by the books of account of said corporation as
of the end of the last annual accounting period. The purchase
price of said shares of stock, being the value thereof determined
as hereinbefore provided, shall be paid as follows: One-third
thereof in cash on the date of purchase, and, at the election of
the purchaser, one-third or more thereof ninety (90) days
thereafter, and the remaining one-third or more thereof, one
hundred eighty (180) days after the purchase date. A promissory
note for any unpaid balance shall be executed by the purchaser,
which note shall bear interest at the rate of six per cent per
annum, and the seller may retain shares of the stock as collateral
security for the payment of said note. All dividends accruing on
such stock while held as collateral security shall accrue to the
benefit of the purchaser. In the event that said corporation does
not exercise said option of purchase within said period of thirty
(30) days, then for and during the next thirty (30) days of said
period the remaining stockholders shall have a similar right and
option of purchase upon the same terms and conditions. Each of the
remaining shareholders shall have the right to participate in such
purchase pro rata, and in the event that any such shareholders do
not desire to participate in such purchase, the remaining
shareholders or any of them shall have the right to pro rata
exercise the option of such non-participating shareholders. In the
event of the death of any shareholder, the shares of stock owned
or held by such decedent shall be deemed to be offered to the
corporation by the representative of said estate, as above set
forth, for a period of six (6) months from and after the date of
such death, or for ninety (90) days after such representative is
in a position to deliver title, whichever is later, and price to
be paid for such shares shall be the value determined as
hereinbefore provided, and payable as hereinbefore provided in the
case of exercise of option by the corporation. In the event, at
the date of death, the corporation is unable to purchase its own
stock, then the remaining shareholders shall have the same option
to purchase said stock upon the same basis and said stock shall be
sold to them. By purchase of the shares of stock of this
corporation all
E-21
<PAGE>
of the shareholders agree to these conditions and obligations. No
assignment or transfer of any shares of stock shall be made upon
the books of this corporation or shall be valid or recognized for
any purpose unless and until the provisions of this paragraph are
carried out and performed. All certificates for shares outstanding
or that may hereafter be issued, shall have stamped across the
face thereof the following: "Not transferable or assignable except
in accordance with the Bylaws of this corporation, a copy of which
may be viewed at the corporation's registered office."
Section 9. Indemnification of directors and officers - The
corporation shall indemnify and may, in the discretion of the
board of directors, insure directors, officers, agents and
employees of the corporation in the manner and to the full extent
permitted by law.
E-22
<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary of
Century Controls, Inc., a corporation; and
2. That the foregoing Bylaws, consisting of thirteen pages,
constitute the original Bylaws of said corporation as duly adopted
at the first meeting of the board of directors.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of said corporation this day 15th day of
March, 1977.
Secretary
(Corporate Seal)
E-23
<PAGE>
Exhibit No. 3
Form 10-SB
Century Controls, Inc.
CENTURY CONTROLS INTERNATIONAL, INC.
750 SOUTH PLAZA DRIVE, SUITE 324
ST. PAUL, MN 55121
CERTIFICATE OF WARRANT SHARES
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED
FOR SALE, SOLD OR OTHERWISE THRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRTION STATEMENT MADE UNDER THE SECURITIES ACT OF
1993 (THE "ACT"), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE SATISFACTION OF
THE COMPANY.
WARRANT TO PURCHASE
10,000
(Number)
SHARES OF COMMON STOCK
VOID AFTER 3:30 P.M, MINNEAPOLIS TIME, ON A DATE TWO YEARS FROM
11-07-97
(Date)
1. This certifies that, for value received, Craig Laughlin
is entitled to purchase, subject to the terms and conditions
hereof, from CENTURY CONTROLS INTERNATIONAL, INC. ("Company") at
any time from two years from November 7. 1997, 10,000 shares at a
price of $.375 per share. The number of shares of Common Stock to
be received upon exercise of this Warrant and the price to be
paid for a share of Common Stock may be adjusted from time to
time as hereinafter set forth. The shares of Common Stock
deliverable upon exercise of this Warrant are hereinafter
sometimes referred to as "Warrant Shares".
2. This Warrant may be exercised in whole or in part by
written notice delivered to the Company stating the number of
shares of Common Stock with respect to which the Warrant is being
exercised, together with cash or check in the amount of the
purchase price for such share The Company shall deliver to such
exercise promptly upon receipt of the items described in this
Paragraph 2.
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<PAGE>
3. The Company agrees that there shall be reserved such
number of shares of Common Stock as shall be required for
issuance and/or delivery upon exercise of this Warrant.
4. The Holder shall have no rights as a shareholder of the
Company with respect to Warrant Shares unless and until the date
of issuance of a share certificate or certificates with respect
thereto.
5. The number of Warrant Shares and the purchase price per
share shall be proportionately adjusted for any Increase or
decrease in the number issued and outstanding shares of Common
Stock of the Company resulting from a merger, consolidation,
reorganization. stock split or stock dividend, or any other
issuance of shares effected without receipt of consideration
thereof by the company equal to the exercise price under the
Warrant in effect immediately prior to such transaction.
If the Company shall be the surviving entity in any merger
or consolidation, the Warrant (to the extent that is still
outstanding) shall pertain to and apply to the securities to
which a holder of the same number of share of Common Stock that
are subject to the Warrant would have been entitled. A
dissolution or liquidation of the Company or merger or
consolidation in which the Company is not the surviving entity
shall cause this Warranty to terminate, unless the agreement or
merger or consideration shall otherwise provide, provided in such
event the Holder shall have the right immediately prior to such
dissolution or liquidation, or merger or consolidation in which
the Company is not the surviving entity, to exercise the Warrant
in whole or in part.
6. (a) This Warrant or the Warrant Shares or any other
security issued or issuable upon exercise of the Warrant may not
be offered or sold except in conformity with the Securities Act
of 1933, as amended, and then only against receipt of an
agreement of such person to whom such offer sale is made to
comply with the provisions of this Paragraph 6 with respect to
any resale or any other disposition of such securities.
(b) The Company may cause the following legend to be set
forth on each warrant and certificate representing Warrant Shares
or any other security issued or issuable upon exercise of the
Warrant not theretofore distributed to the public or sold to
underwriters for distribution to the public, unless counsel for
the Company is of the opinion as to any such certificate that
such legend is unnecessary:
"The securities represented by this certificate may
not be offered for sale, sold or otherwise be
transferred except pursuant to an effective
Registration Statement made under the Securities
Act of 1933 (the "Act"), or pursuant to an
exemption from registration under the Act, the
availability of which is to be established to the
satisfaction of the Company".
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<PAGE>
7. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Utah.
CENTURY CONTROLS INTERNATIONAL, INC.
By: /s/
Leo Christiansen, CEO/President
Date:
Attest:
Secretary
E-26
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
750 SOUTH PLAZA DRIVE, SUITE 324
ST. PAUL, MN 55121
CERTIFICATE OF WARRANT SHARES
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED
FOR SALE. SOLD OR OTHERWISE THRAINSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRTION STATEMENT MADE UNDER THE SECURITIES ACT OF
1993 (THE "ACT"). OR PURSUANT TO AN EXEMPTION FROM REGISTR.ATION
UNDER THE ACT. THE AVAILABILITY OF WHICH IS TO BE SATISFACTION OF
THE COMPANY.
WARRANT TO PURCHASE
10,000
(Number)
SELARES OF COMMON STOCK
VOID AFTER 3:30 P.M., MINNEAPOLIS TIME, ON A DATE TWO YEARS FROM
11-07-97
(Date)
1. This certifies that, for value received, James Sampair is
entitled to purchase, subject to the terms and conditions hereof,
from CENTURY CONTROLS INTERNATIONAL, INC. ("Company") at any time
from two years from November 7. 1997, 10,000 shares at a price of
$.375 per share. The number of shares of Common Stock to be
received upon exercise of this Warrant and the price to be paid
for a share of Common Stock may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable
upon exercise of this Warrant are hereinafter sometimes referred
to as "Warrant Shares".
2. This Warrant may be exercised in whole or in part by
written notice delivered to the Company stating the number of
shares of Common Stock with respect to which the Warrant is being
exercised, together with cash or check in the amount of the
purchase price for such shares. The Company shall deliver to such
exercise promptly upon receipt of the items described in this
Paragraph 2.
3. The Company agrees that there shall be reserved such
number of shares of Common Stock as shall be required for
issuance and/or delivery upon exercise of this Warrant.
E-27
<PAGE>
4. The Holder shall have no rights as a shareholder of the
Company with respect to Warrant Shares unless and until the date
of issuance of a share certificate or certificates with respect
thereto.
5. The number of Warrant Shares and the purchase price per
share shall be proportionately adjusted for any increase or
decrease in the number issued and outstanding shares of Common
Stock of the Company resulting from a merger, consolidation,
reorganization. stock split or stock dividend, or any other
issuance of shares effected without receipt of consideration
thereof by the company equal to the exercise price under the
Warrant in effect immediately prior to such transaction.
If the Company shall be the surviving entity in any merger
or consolidation, the Warrant (to the extent that is still
outstanding) shall pertain to and apply to the securities to
which a holder of the same number of share of Common Stock that
are subject to the Warrant would have been entitled. A
dissolution or liquidation of the Company or merger or
consolidation in which the Company is not the surviving entity
shall cause this Warranty to terminate, unless the agreement or
merger or consideration shall otherwise provide, provided in such
event the Holder shall have the right immediately prior to such
dissolution or liquidation, or merger or consolidation in which
the Company is not the surviving entity, to exercise the Warrant
in whole or in part.
6. (a) This Warrant or the Warrant Shares or any other
security issued or issuable upon exercise of the Warrant may not
be offered or sold except in conformity with the Securities Act
of 1933, as amended, and then only against receipt of an
agreement of such person to whom such offer sale is made to
comply with the provisions of this Paragraph 6 with respect to
any resale or any other disposition of such securities.
(b) The Company may cause the following legend to be set
forth on each warrant and certificate representing Warrant Shares
or any other security issued or issuable upon exercise of the
Warrant not theretofore distributed to the public or sold to
underwriters for distribution to the public, unless counsel for
the Company is of the opinion as to any such certificate that
such legend is unnecessary:
"The securities represented by this certificate may
not be offered for sale, sold or otherwise be
transferred except pursuant to an effective
Registration Statement made under the Securities
Act of 1933 (the "Act"), or pursuant to an
exemption from registration under the Act, the
availability of which is to be established to the
satisfaction of the Company".
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<PAGE>
7. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Utah.
CENTURY CONTROLS INTERNATIONAL, INC.
By: /s/
Leo Christiansen, CEO/President
Date:
Attest:
Secretary
E-29
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
750 SOUTH PLAZA DRIVE, SUITE 324
ST. PAUL, MN 55121
CERTIFICATE OF WARRANT SHARES
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED
FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRTION STATEMENT MADE UNDER THE SECURITIES ACT OF
1993 (THE "ACT"), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE SATISFACTION OF
THE COMPANY.
WARRANT TO PURCHASE
10,000
(Number)
SHARES OF COMMON STOCK
VOID AFTER 3:30 P.M. MINNEAPOLIS TIME, ON A DATE TWO YEARS FROM
11-07-97
(Date)
1. This certifies that, for value received, J. Clinton
Shaver - is entitled to purchase, subject to the terms and
conditions hereof, from CENTURY CONTROLS INTERNATIONAL, INC.
("Company") at any time from two years from November 7. 1997
10,000 shares at a price of $.375 per share. The number of shares
of Common Stock to be received upon exercise of this Warrant and
the price to be paid for a share of Common Stock may be adjusted
from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon exercise of this Warrant are hereinafter
sometimes referred to as "Warrant Shares".
2. This Warrant may be exercised in whole or in part by
written notice delivered to the Company stating the number of
shares of Common Stock with respect to which the Warrant is being
exercised, together with cash or check in the amount of the
purchase price for such shares. The Company shall deliver to such
exercise promptly upon receipt of the items described in this
Paragraph 2.
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<PAGE>
3. The Company agrees that there shall be reserved such
number of shares of Common Stock as shall be required for
issuance and/or delivery upon exercise of this Warrant.
4. The Holder shall have no rights as a shareholder of the
Company with respect to Warrant Shares unless and until the date
of issuance of a share certificate or certificates with respect
thereto.
5. The number of Warrant Shares and the purchase price per
share shall be proportionately adjusted for any increase or
decrease in the number issued and outstanding shares of Common
Stock of the Company resulting from a merger, consolidation.
reorganization, stock split or stock dividend, or any other
issuance of shares effected without receipt of consideration
thereof by the company equal to the exercise price under the
Warrant in effect immediately prior to such transaction.
If the Company shall be the surviving entity in any merger
or consolidation, the Warrant (to the extent that is still
outstanding) shall pertain to and apply to the securities to
which a holder of the same number of share of Common Stock that
are subject to the Wan-ant would have been entitled. A
dissolution or liquidation of the Company or merger or
consolidation in which the Company is not the surviving entity
shall cause this Warranty to terminate, unless the agreement or
merger or consideration shall otherwise provide, provided in such
event the Holder shall have the right immediately prior to such
dissolution or liquidation, or merger or consolidation in which
the Company is not the surviving entity, to exercise the Warrant
in whole or in part.
6. (a) This Warrant or the Warrant Shares or any other
security issued or issuable upon exercise of the Warrant may not
be offered or sold except in conformity with the Securities Act
of 1933, as amended, and then only against receipt of an
agreement of such person to whom such offer sale is made to
comply with the provisions of this Paragraph 6 with respect to
any resale or any other disposition of such securities.
(b) The Company may cause the Mowing legend to be set
forth on each warrant and certificate representing Warrant Shares
or any other security issued or issuable upon exercise of the
Warrant not theretofore distributed to the public or sold to
underwriters for distribution to the public, unless counsel for
the Company is of the opinion as to any such certificate that
such legend is unnecessary:
"The securities represented by this certificate may
not be offered for sale, sold or otherwise be
transferred except pursuant to an effective
Registration Statement made under the Securities
Act of 1933 (the "Act"), or pursuant to an
exemption from registration under the Act, the
availability of which is to be established to the
satisfaction of the Company".
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<PAGE>
7. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Utah.
CENTURY CONTROLS INTERNATIONAL, INC.
By: /s/
Leo Christiansen, CEO/President
Date:
Attest:
Secretary
E-32
<PAGE>
CENTURY CONTROLS INTERNATIONAL, INC.
750 SOUTH PLAZA DRIVE, SUITE 324
ST. PAUL, MN 55121
CERTIFICATE OF WARRANT SHARES
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED
FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRTION STATEMENT MADE UNDER THE SECURITIES ACT OF
1993 (THE "ACT"), OR PURSUAN'T TO AN EXEMPTION FROM REGISTRATION
UNDER THE ACT. THE AVAILABILTY OF WHICH IS TO BE SATISFACTION OF
THE COMPANY.
WARRANT TO PURCHASE
10,000
(Number)
SHARES OF COMMON STOCK
VOID AFTER 3:30 P.M., MINNEAPOLIS TIME, ON A DATE TWO YEARS FROM
11-07-97
(Date)
1. This certifies that- for value received, Bruce Senske is
entitled to purchase, subject to the terms and conditions hereof,
from CENTURY CONTROLS INTERNATIONAL, INC. ("Company") at any time
from two years from November 7. 1997, 10,000 shares at a price of
$.375 per share. The number of shares of Common Stock to be
received upon exercise of this Warrant and the price to be paid
for a share of Common Stock may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable
upon exercise of this Warrant are hereinafter sometimes referred
to as "Warrant Shares".
2. This Warrant may be exercised in whole or in part by
written notice delivered to the Company stating the number of
shares of Common Stock with respect to which the Warrant is being
exercised, together with cash or check in the amount of the
purchase price for such shares. The Company shall deliver to such
exercise promptly upon receipt of the items described in this
Paragraph 2.
3. The Company agrees that there shall be reserved such
number of shares of Common Stock as shall be required for
issuance and/or delivery upon exercise of this Warrant.
E-33
<PAGE>
4. The Holder shall have no rights as a shareholder of the
Company with respect to Warrant Shares unless and until the date
of issuance of a share certificate or certificates with respect
thereto.
5. The number of Warrant Shares and the purchase price per
share shall be proportionately adjusted for any increase or
decrease in the number issued and outstanding shares of Common
Stock of the Company resulting from a merger, consolidation,
reorganization, stock split or stock dividend, or any other
issuance of shares effected without receipt of consideration
thereof by the company equal to the exercise price under the
Warrant in effect immediately prior to such transaction.
If the Company shall be the surviving entity in any merger
or consolidation, the Warrant (to the extent that is still
outstanding) shall pertain to and apply to the securities to
which a holder of the same number of share of Common Stock that
are subject to the Warrant would have been entitled. A
dissolution or liquidation of the Company or merger or
consolidation in which the Company is not the surviving entity
shall cause this Warranty to terminate, unless the agreement or
merger or consideration shall otherwise provide, provided in such
event the Holder shall have the right immediately prior to such
dissolution or liquidation, or merger or consolidation in which
the Company is not the surviving entity, to exercise the Warrant
in whole or in part.
6. (a) This Warrant or the Warrant Shares or any other
security issued or issuable upon exercise of the Warrant may not
be offered or sold except in conformity with the Securities Act
of 1933, as amended, and then only against receipt of an
agreement of such person to whom such offer sale is made to
comply with the provisions of this Paragraph 6 with respect to
any resale or any other disposition of such securities.
(b) The Company may cause the Mowing legend to be set
forth on each warrant and certificate representing Warrant Shares
or any other security issued or issuable upon exercise of the
Warrant not theretofore distributed to the public or sold to
underwriters for distribution to the public, unless counsel for
the Company is of the opinion as to any such certificate that
such legend is unnecessary:
"The securities represented by this certificate may
not be offered for sale, sold or otherwise be
transferred except pursuant to an effective
Registration Statement made under the Securities
Act of 1933 (the "Act"), or pursuant to an
exemption from registration under the Act, the
availability of which is to be established to the
satisfaction of the Company."
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<PAGE>
7. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Utah.
CENTURY CONTROLS INTERNATIONAL, INC.
By: /s/
Leo Christiansen, CEO/President
Date:
Attest:
Secretary
E-35
<PAGE>
Exhibit No. 4
Form 10-SB
Century Controls, Inc.
THIS LEASE made this by and between
DDBD, Inc. ("Landlord"), and Century Controls, Inc. ("Tenant").
WITNESSETH:
For and in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto do hereby
agree as follows:
SECTION I - LEASED PREMISES
1.1 Leased Premises. Landlord hereby leases to Tenant, and
Tenant hereby leases from Landlord, those certain premises
located in Suite 226 (the "leased premises") with an area of
approximately 1,380 rentable square feet (1,200 usable square
feet) as defined below. The leased premises are more particularly
described and located on Exhibit A (Legal Description) and
Exhibit B (Demised Premises), respectively, attached hereto and
by this reference incorporated herein. The building located on
the real property described in Exhibit A is referred to herein as
the "building." "Rentable square feet" shall mean the product of
the usable square feet within a tenant's leased premises (as
measured from the inside face of the corridor wall and the inside
face of the exterior wall or glass wall and from the centerline
of each demising wall without deductions for any pillars or
vertical penetrations of a tenant's leased premises) multiplied
by the building common area factor or Rentable/Usable factor
("R/U factor") of 1.15. "Building rentable area" shall be
computed from the inside surface of the dominant portion of the
permanent outer building walls, without deductions for any
pillars or vertical penetrations within the building. The RIU
factor is subject to change from time to time to reflect changes
in common areas, and is the quotient of the building rentable
area divided by the sum of all usable areas in the building
whether occupied or vacant.
1.2 Reserved to Landlord. Landlord reserves all air rights over
the leased premises, the use of the exterior walls, the roof, and
the right to install, maintain, use, repair and replace pipes,
ducts, conduits and wires leading through the leased premises in
locations which will not materially interfere with Tenant's use
thereof to serve other parts of the building, and the right to
use the land below the leased premises in any manner not
interfering with the Tenant's use of the leased premises.
1.3 Changes to the Building. Landlord reserves the right at any
time to make alterations or additions to the building in which
the leased premises are contained and to build adjoining the
same. Landlord also reserves the right from
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<PAGE>
time to time to construct other structures or improvements in the
building, to make alterations thereof or additions thereto and to relocate
the various structures, parking and other common areas comprising
the buildings. Provided, however, Landlord shall at all times maintain
the general quality and character of the Building, and provided, further
that none of the rights fin this section reserved to the Landlord may be
exercised in such a manner or fashion as will or does unreasonably
interfere with the Tenant's use and possession of the leased premises
for the purposes herein contemplated.
SECTION II - TERM/OCCUPANCY
2.1 Lease Term. The term of this Lease shall commence upon the
"Commencement Date," which shall be the anticipated date of
occupancy of August 15, 1999; provided that if Tenant commences
conducting business in any portion of the leased premises prior
thereto, the Commencement Date shall be the date Tenant so
commences conducting business. Following the
Commencement Date, the term of this Lease shall, continue for a
term of three (3) years plus, if the Commencement Date is not the
first day of a calendar month, the partial calendar month in
which the Commencement Date occurs. The leased premises shall be
"substantially completed" on or before the Commencement, which
means complete in all respects as provided in the approved plans
and specifications for Landlord's work, save and except for such
defects and omissions therein which do not materially interfere
with or prevent the use and enjoyment of the leased premises. The
term "lease year" shall mean a fiscal year commencing January 1st
and ending December 31st of any given year, and (unless the
context in which used otherwise requires) the-term "year" shall
mean the 365 or 366 days (as the case may be) from one date in
one calendar year through the date immediately prior to it in the
following calendar year.
SECTION III - RENT
3.1 Minimum Rent. Tenant shall pay to Landlord, without any off
set or deduction whatsoever, as fixed minimum rental ("Base"),
Eight Hundred Twenty One and 37/100 dollars ($821.37) which rent
shall be paid in advance on or before the first day of each
calendar month of the lease term. The first months rental shall
be made before possession of the leased premises is given to the
Tenant and shall be prorated if the first month of rental is a
partial month pursuant to Section 3.4.
3.2 Additional Rent. In addition to minimum rent, all other
sums to be paid are reimbursed by Tenant to the Landlord, whether
or not so designated, shall be "additional rent" for the purposes
of this lease. If Tenant defaults in the performance of any of
its obligations hereunder, Landlord may, but shall not be
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<PAGE>
obligated to, perform under such obligations, and the cost
thereof to Landlord shall also be additional rent. Unless
otherwise specifically provided herein, Tenant shall pay Landlord
all additional rent upon demand and in no event later than the
date on which the next rent payment hereunder in due and payable.
3.3 Tenant's Contribution. In December of each calendar year,
Landlord will notify Tenant in writing of the Landlord's
reasonable or good faith estimate of the amount of the
contributions due for the following twelve months pursuant to
Sections 5.1, 5.3, 9.3 and 10.4, which amounts Tenant shall pay
in advance in twelve (12) equal, monthly installments on the
first day of each month of such lease year. At the end of each
lease year, or at the expiration or sooner termination of the
lease term, Landlord will compute Tenant's contributions for such
year and, if total amount of contributions paid for such year is
less than the amounts of the contributions due for such lease
year, the Tenant shall immediately pay Landlord any deficiency.
If the total amount of contributions paid for. such year exceeds
the amount which Tenant is required to contribute pursuant to
said Sections, then Landlord shall credit or refund such excess
to Tenant as requested by Tenant; provided, however, upon
expiration or sooner termination of the lease term, if Tenant has
otherwise complied with all other terms of this Lease, Landlord
shall refund such excess to Tenant. If this Lease commences on a
date other than the first day of January, Landlord shall estimate
Tenant's contributions for that portion of the lease year, and
Tenant shall pay such charge in equal monthly installments on the
first day of the remaining months of the lease year. If at any
time Landlord obtains additional information regarding the actual
amounts of the contributions, Landlord shall adjust the amount of
monthly installments due during the balance of the year to
reflect such additional information by giving Tenant written
notice thereof, which notice shall also state the amount of the
excess or deficiency, it any, in the prior monthly payments for
the lease year. Landlord shall immediately refund any excess
Tenant, and Tenant shall pay deficiency within twenty (20) days
of its receipt of the notice and shall make the adjusted monthly
payments for the remainder of the lease year. Tenant, at its
expense, shall have the right during and within one year after
the end of the Term, to annually inspect, copy and audit
Landlord's books and records relating to the costs payable
pursuant to Sections 5.1, 5.3, 9.3 and 10.4 and other matters
arising under this lease during the Term. Landlord shall keep and
maintain true, correct and complete books and records with
respect to the operation of the building or otherwise related to
any building operating costs and shall retain at Landlord's
office all books and records relating to such costs for a period
of three years after the calendar year of which they accrue.
Notwithstanding anything contained in this Lease to the contrary,
Tenant shall pay a minimum of Three Dollars ($3.00) per square
foot of leased premises per year, throughout the lease term
(including any extensions thereof), as Tenant's Contribution
pursuant to Sections 5.1, 5.3, 9.3 and 10.4 hereof.
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<PAGE>
3.4 Pro-rata Share. Notwithstanding anything contained in this
Lease to the contrary, if the lease term commences on a day other
than the first day of a calendar month, the minimum rental, all
additional rental, all Tenants Contributions, and all other
charges with respect to the leased premises and the use thereof
for such month or months shall be the full monthly amount thereof
multiplied by a fraction the numerator of which is the number of
days within the particular month contained within the lease term
and the denominator of which is the number of days within said
month.
3.5 Default Charge. if Tenant fails to pay within ten days
(twenty days for the first occurrence in any lease year) of the
appropriate due date, a late charge equal to five percent (5%) of
the unpaid amount shall be imposed and immediately due and
payable. Thereafter, interest shall accrue on past rent due plus
late charge at an annual rate of twelve percent (12%) from the
due date until paid.
SECTION IV - CONDUCT OF BUSINESS
4.1 Use of Leased Premises. Tenant shall have use of the leased
premises for the following purposes and for no other purposes,
to-wit General Office Use.
4.2 Appearance of leased premises. Tenant shall maintain the
premises in a clean, orderly and neat fashion to conform with the
high standards of appearance of the building, permitting no odors
to be emitted from the lease premises and/or permit any
accumulation of trash. Tenant shall store all trash, refuse and
waste material so as not to constitute a health or environmental
or fire hazard or nuisance problem, in adequately covered and
labeled containers which are located within the leased premises
so as not to be visible to the general public or which are
located in areas designated by Landlord. No sale, storage or
display of merchandise, by vending machine or otherwise, shall be
permitted outside or in front of the leased premises. Any
loudspeakers used shall not be audible from outside the leased
premises.
4.3 Unlawful Use. Tenant shall not use or permit the leased
premises or any part thereof to be used for any purpose in
violation of any municipal, county, state or federal law,
ordinance or regulation, or for any purpose offensive to the
standards of the community of which the building is a part.
Tenant shall promptly comply, at its sole cost and expense, with
all laws, ordinances, and regulations now in force or hereafter
adopted and with the requirements of any board of fire
underwriters or similar body relating to or affecting the
condition, use or occupancy of the leased premises.
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4.4 Liens and Encumbrances. Tenant shall keep the leased
premises free and clear of all liens and encumbrances arising out
of any labor performed at or materials furnished to the leased
premises or the Building at Tenant's request.
4.5 Signs. Tenant shall not erect or place, or permit to be
erected or placed, or maintain any signs of any nature or kind,
including but not limited to decorations, lettering or
advertisement, either on the exterior walls of the leased
premises or elsewhere in the building (including signs placed in
the interior of the premises for exterior view) without
Landlord's prior written consent.
SECTION V - UTILITIES AND OTHER CHARGES
5.1 Utility Charges. Tenant shall be solely responsible for and
shall promptly pay all charges for heat, water, light, gas,
electricity, sewer, garbage, fire/security protection and any
other utility used or consumed on the ' leased premises for which
there is a separate meter monitoring the consumption of said
utility within the leased premises alone. If Landlord shall elect
to supply the service or services used, or if said services are
invoiced to Tenant through Landlord, Tenants shall accept and use
the same as tendered by Landlord and pay Landlord as additional
rent its proportionate share of said utilities in the manner
provided in Section 3.3 hereof. Tenant's share of utilities shall
be determined by multiplying such utility costs by a fraction,
the numerator of which is the rentable square feet of the leased
premises and the denominator of which is the building rentable
area on the first day of such prior lease month. In no event
shall Landlord be liable for an interruption of the supply of any
such utilities to the leased premises due to causes beyond the
Landlord's control. Tenant agrees to keep the temperature of the
leased premises at such level as may be reasonably required by
Landlord to protect the building and prevent the dissipation of
heat or air conditioning on the areas adjacent to such premises.
5.2 Licenses and Taxes. Tenant shall be liable for, and shall
pay throughout the lease term all license, excise fees, permits,
occupation taxes and any other taxes or business expenses
covering the business conducted on the leased premises and all
personal property taxes levied with respect to all personal
property located at the leased premises.
5.3 Tenant's Participation in Real Estate Taxes and special
assessments. Tenant shall pay Landlord as additional rent its
proportionate share of taxes and special assessments on the
building in the same manner provided in Section 3.3 hereof.
Tenant's share of taxes shall be an amount equal to the real
estate taxes, including installments of special assessments,
actually paid by Landlord during each lease year of the lease
term (excluding penalties and interest on penalties thereon),
with respect to the lands
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and improvements comprising the
building, multiplied by a fraction, the numerator of which is the
rentable square feet of the leased premises and the denominator
of which is the building rentable area on the first day of such
lease year. If, at any time after the date hereof, the methods
of taxation shall be altered so that in lieu of or a substitute
for the whole or any part of the real estate taxes or assessments
levied, assessed or imposed on or with respect to the leased
premises or building, there should be levied, assessed or imposed
an income or franchise tax as a capital levy on the rents
received, or the rate thereof shall be increased, then such new
tax or the amount attributable to the increase shall be included
for purposes of computing Tenant's share of real estate taxes
hereunder. Landlord shall use best efforts to exercise any
election available to it to pay any special assessments over the
longest period available to it.
SECTION VI - DEPOSIT
6.1 Deposit. Tenant has deposited with Landlord the sum of one
months net rent ($821.37 dollars). Landlord shall pay Tenant the
balance thereof less any damages caused by the Tenant's breach of
any of its obligations hereunder, within thirty (30) days after
the twelfth full month of rental or prior termination of the
lease term. Landlord shall be entitled to withdraw from the
deposit the amount of any unpaid rent or additional rent or other
charges not paid to Landlord when due, and Tenant shall
immediately redeposit an amount equal to that so withdrawn
SECTION VII - COMPLETION AND ALTERATIONS
7.1 Completion of leased premises. Landlord shall construct the
leased premises in accordance with the outline, descriptions and
specifications set forth in Paragraph 22.1 hereto. Upon delivery
of the leased premises, Tenant shall inspect the improvements and
shall be determined to have accepted them in their present
condition unless it notifies Landlord within thirty (30) days
thereafter of any defects.
7.2 Alterations by Tenant. Tenant shall not make any
alterations, additions, or improvements, greater than $1,000 in
value, in or to the leased premises, without prior written
consent of Landlord, which consent shall not be unreasonably
withheld, all such alterations, additions, or improvements being
made at Tenants sole expense. Tenant shall secure any and all
governmental permits required in connection with any such work
and perform such work in accordance with all applicable
governmental requirements and restrictions. Tenant shall hold
Landlord harmless from and indemnity Landlord against any and all
losses, liabilities (including without limitation the expenses
described in Section 10. 1), costs, and expenses and any and all
liens resulting from such work. Upon expiration or sooner
termination of this lease, and recovery of
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possession by Landlord, all alterations, additions and improvements
(except Tenant Fixtures) shall immediately become the property of
Landlord without any obligation to pay there for.
SECTION VIII - MAINTENANCE OF LEASED PREMISES
8.1 Maintenance and Repair by Tenant. Tenant at Tenant's expense
shall at all times throughout the lease term keep the [eased
premises clean and in good condition. Those fixtures,
appurtenances, mechanical and other building systems serving the
leased premises and also serving other portions of the building
(such as electrical, heating, ventilating, air conditioning and
plumbing systems) shall be maintained pursuant to paragraph 9.3.
Landlord shall be responsible for the repair of the foundation
and structural aspects of the buildings exterior and load bearing
walls, roofs and floors, so long as any repairs or maintenance
thereto is not necessitated by any action or omission or
negligence of Tenant, in which event Tenant shall be solely
responsible for such repairs.
8.2 Failure to Maintain. It Tenant fails to keep and maintain
the leased premises in the condition set forth in Section 8.1 and
such failure continues for a period of ten (10) days following
the receipt of written notice thereof from Landlord, Landlord
may, at its option, put or cause the same to be put in the
condition agreed upon, and in such case, upon receipt of written
statements from Landlord, Tenant shall promptly pay the entire
cost thereof as additional rent. Landlord shall have the right to
enter the leased premises for the purpose of making such repairs
upon the failure of Tenant to do so.
8.3 Surrender of leased premises. At the expiration or sooner
termination of this Lease, Tenant shall return the leased
premises to Landlord in the same condition in which received (or,
if altered by Landlord or by Tenant with Landlord's consent, then
the leased premises shall be returned in such altered condition)
reasonable wear and tear and insured loss excepted. Prior to such
return Tenant may remove all its personal property and trade
fixtures from the leased premises, and shall restore the leased
premises to the condition they were in prior to the installation
of said items, reasonable wear and tear and insured loss
excepted. Tenant's obligation to perform this covenant shall
survive the expiration or termination of this lease.
SECTION IX - COMMON AREAS
9.1 Control of Common Areas by Landlord. Landlord shall at all
times have the exclusive control and management of all parking
areas, access roads, driveways, entrances, retaining walls and
exits thereto, truck ways, loading docks, package pickup
stations, pedestrian malls, courts, sidewalks and ramps,
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expense incurred in operating, lighting, policing, cleaning, managing,
maintaining the common areas and facilities actually used or
available for use by Tenant, but specifically including, without
limitation, the cost of gardening; re-carpeting, re-tiling or any
other floor resurfacing; the cost of public liability and
property damage insurance and vandalism insurance: the cost of
fire and extended coverage insurance and plate glass insurance in
common areas; utility expenses for lighting; personal property
taxes, maintenance cost for equipment and building systems
including replacement when necessary; minor roof repair and
patching; subsidies and other payments which the building may be
required to pay public bodies, including those for traffic
signals and controls for fire protection; repairs; the cost of
resurfacing, painting and sanitary control; the cost of snow,
trash, rubbish, garbage refuse removal; and the cost of personnel
to implement all such services, including policing and
maintaining traffic control on the common areas and facilities
and resurfacing of common areas. Also included are any future
improvement costs to common areas which may be required under the
Americans with Disabilities Act. Tenant is not responsible for
any initial upgrades or betterments to common areas that Landlord
elects to make to bring the existing common areas, at the time of
Landlords purchase of the building, up to Landlords desired level
of appearance and performance. Notwithstanding anything to the
contrary in the lease and only to the extent that the operating
cost of the common area and facilities, common fixtures and
building systems exceeds the minimum charge of $3.00 per square
foot of leased premises pursuant to Section 3.3 hereof, Tenant's
Contributions shall not include (i) payments of principal and
interest on any mortgages, -deeds of trust or other encumbrances
upon the building: (ii) depreciation of the capital costs related
to the building except when made (a) to reduce operating costs or
limit increases therein, (b) as required by landlord's insurance
carrier, or (c) as required by any law, rule, regulation or order
of any governmental authority; (iii) costs and disbursements and
any other cost or expense incurred in connection with
negotiations or disputes with tenants, other occupants or
prospective tenants or other occupants of the building, including
any leasing commissions or brokerage fees; (iv) costs incurred in
renovation or otherwise improvements or decorating or
redecorating space for tenants or other occupants in the building
or vacant space leased or held or designated for lease in the
building or costs related thereto, including but not limited to
any alterations to the building in connection with, or which are
required by reason of, any lease or agreement with any tenant or
other occupant; (v) costs of any removal or abatement of
hazardous substances or asbestos other than those placed or
released by Tenant; (vi) Landlord's executive salaries and other
overhead costs; and (vii) management fees in excess of market
rates (viii) cost of correcting defects in, or inadequacy of, the
building shelf or the materials used in the construction of the
building shell.
9.2 License. All common, areas and facilities which Tenant maybe
permitted to use and occupy are to be used and occupied under an
irrevocable non-exclusive license. However, if the amount of such
areas of facilities be diminished due to causes beyond the
Landlord's control, such diminution shall not , be deemed
constructive or actual eviction, and Landlord shall not be
subject to any liability, nor shall Tenant be entitled to any
compensation or diminution or abatement of rent.
9.3 Maintenance Charge. Tenant shall pay to Landlord, as
additional rent in the manner provided in Section 3.3, a monthly
maintenance charge to defray the operating cost of the common
areas and facilities. The amount of the monthly maintenance
charge shall be equal to Tenant's pro-rata share of the operating
costs for the prior calendar month, which share shall be
determined by multiplying such costs by a fraction, the numerator
of which is the rentable square feet of the leased premises and
the denominator of which is the total occupied building rentable
area on the first day of such prior lease month. For purposes of
this paragraph, the term "operating cost of the common area and
facilities, common fixtures and building systems" means the total
cost and
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expense incurred in operating, lighting, policing, cleaning, managing,
maintaining the common areas and facilities actually used or available
for use by Tenant, but specifically including, without limitation, the
cost of gardening; re-carpeting, retiling or any other floor resurfacing;
the cost of public liability and property damage insurance and vandalism
insurance; the cost of fire and extended coverage insurance and
plate glass insurance in common areas; utility expenses for
lighting; personal property taxes; maintenance cost for equipment
and building systems including replacement when necessary; minor
roof repair and patching; subsidies and other payments which the
building may be required to pay public bodies, including those
for traffic signals and controls for fire protection; repairs;
the cost of resurfacing, painting and sanitary control; the cost
of snow, trash, rubbish, garbage refuse removal; and the cost of
personnel to implement all such services, including policing and
maintaining traffic control on the common areas and facilities
and resurfacing of common areas, Also included are any future
improvement costs to common areas which may be required under the
Americans with Disabilities Act. Tenant is not responsible for
any initial upgrades or.betterments to common areas that Landlord
elects to make to bring the existing common areas, at the time of
Landlords purchase of the building, up to Landlords desited level
of appearance and performance. Notwithstanding anything to the
contrary in the lease and only to the extent that the operating
cost of the common area and facilities, common fixtures and
building systems exceeds the minimum charge of $3.00 per square
toot of leased premises pursuant to Section 3.3 hereof, Tenant's
Contributions shall not include (i) payments of principal and
interest on any mortgages, deeds of trust or other encumbrances
upon the building; (H) depreciation of the capital costs related
to the building except when made (a) to reduce operating'costs or
limit increases therein, (b) as required by landlord's insurance
carrier, or (c) as required by any law, rule, regulation or order
of any governmental authority: (iii) costs and disbursements and
any other cost or expense incurred in connection with
negotiations or disputes with tenants, other occupants or
prospective tenants or other occupants of the building, including
any leasing commissions or brokerage fees; (iv) costs incurred in
renovation or otherwise improvements or decorating or
redecorating space for tenants or other occupants in the building
or vacant space leased or held or designated for lease in the
building or costs related thereto, including but not limited to
any alterations to the building in connection with, or which are
required by reason of, any lease or agreement with any tenant or
other occupant; (v) costs of any removal or abatement of
hazardous substances or asbestos other than those placed or
released by Tenant; (vi) Landlord's executive salaries and other
overhead costs; and (vii) management fees in excess of market
rates (viii) cost of correcting defects in, or inadequacy of, the
building shell or the materials used in the construction of the
building shell.
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<PAGE>
9.4 Solicitation of Business. Tenant and its employees and
agents shall not solicit business, nor distribute handbills or
other advertising matter in the parking or other common areas.
SECTION X - INSURANCE AND INDEMNITY
10.1 Indemnification. Landlord shall not be liable for any injury
to any person, or for any loss of or damage to any property
(including property of Tenant) occurring in or about the leased
premises from any cause whatsoever, except when caused by the
Landlord's own negligent or intentional acts or omissions. Tenant
shall indemnify and save Landlord, its officers, agents,
employees and contractors and other tenants and occupants of the
building harmless from all loss, damage, liability, or expense
including but not limited- to legal and other fees, resulting
from any actual or alleged injury to any person or from any
actual or alleged loss, or damage to any property arising out of
Tenant's operation or occupation of the leased premises, or from
Tenant's breach of its other obligations hereunder. Landlord
shall indemnify and save Tenant, its officers, agents, employees
and contractors harmless from all laws, damage, liability or
expense including but not limited to legal and other fees,
resulting from any actual or alleged injury to any person or from
any actual or alleged loss, or damage to any property arising out
of the operation or occupation of the building (except for
Tenant's operation or occupation of the leased premises), or from
Landlord' breach of its other obligations hereunder. The
indemnification provided for in this section with respect to any
acts or omissions during the term of this Lease shall survive any
termination or expiration of this Lease. Tenant shall promptly
notify Landlord of casualties or accidents occurring in or about
the leased premises
10.2 Insurance. Tenant shall, at its own expense, maintain
adequate liability insurance with a reputable insurance company
or companies, in minimum amounts of $200,000 for property damage
and minimum amounts of $1,000,000 (per individual) and $2,000,000
(per accident) for personal injuries, to indemnify both Landlord
and Tenant against any such claims, demands, losses, damages,
liabilities and expenses. Landlord shall be named as one of the
insured and shall be furnished a copy of such policy or policies
of insurance which shall be an endorsement that the same shall
not be canceled without ten (10) days prior written notice to
Landlord. Landlord agrees to purchase in advance, and to carry in
full force and effect, (a) "all risk" property insurance coverage
on the building, exclusive of Tenant's leasehold improvements, in
such amount as Landlord deems prudent, and (b) comprehensive
general public liability insurance covering the building, in a
combined single limit amount of not less than $1,000,000 and
written on an "occurrence" basis.
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<PAGE>
10.3 Increase in Insurance Premium. Tenant shall not keep,
use, sell or offer for sale in or upon the leased premises any
article which may be prohibited by the standard form of fire
insurance policy. Tenant shall pay immediately any increase in
Landlord's premiums for casualty and fire (including extended
coverage) and rent loss insurance during the term of this Lease
which directly result from Tenant's occupancy of the leased
premises, or from the type of merchandise which the Tenant stores
or sells on the leased premises whether or not Landlord has
consented thereto. In determining whether increased premiums are
the result of Tenant's use of leased premises, a schedule issued
by the organization selling the insurance rate on the leased
premises, showing the various components of such rate, shall be
conclusive evidence of the several items and charges which make
up the insurance rates on the leased premises.
10.4 Tenant's Participation in Cost of Insurance. Tenant
shall pay Landlord as additional rent its proportionate share of
insurance for the building in the manner provided in Section 3.3
hereof. Tenant's share of insurance shall be an amount equal to
all insurance premiums paid by Landlord with respect to the
building (but excluding all premiums paid by Tenant under terms
of Section 10.3 and by other tenants of the building under
similar provisions in their leases) during each lease year of the
lease term, multiplied by a fraction, the numerator of which is
the rentable square feet of the leased premises and the
denominator of which is the building rentable area on the first
day of such lease year,
10.5 Waiver of Subrogation. Landlord and Tenant hereby waive any
rights each may have against the other, and Tenant hereby waives
any rights it may have against Landlord's lender(s), on account
of any loss or damage occasioned to the Landlord or Tenant, as
the case may be, or their respective property, the leased
premises, its contents or to other portions of the building,
arising from any risk generally covered by fire and extended
coverage insurance-, and the parties each, on behalf of their
respective insurance companies insuring the property of either
Landlord or Tenant against any such loss, waive any right of
subrogation that it may have against Landlord or Tenant, as the
case may be. The Tenant, on behalf of its insurance companies
insuring the premises, its contents, Tenant's other property or
other portions of the building, waives any right of subrogation
which such insurer or insurers may have against any of Landlord's
lenders. The foregoing waivers of subrogation shall be operative
only so long as available in the State where the building is
situated and provided further that no such policy is invalidated
thereby.
SECTION XI - ASSIGNMENT AND SUBLEASING
11. 1 Assignment or Sublease. Tenant shall not assign the
whole or any part of the leased premises, nor shall this Lease or
any interest thereunder be assignable or transferable by
operation of law or any process or proceeding of
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<PAGE>
any court, or otherwise, without prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed by
Landlord. Any assignment or sublease without Landlord's prior
written consent shall, at Landlord's option, be void.
Notwithstanding anything to the contrary in this Section 11. 1,
Tenant shall have the right to assign this lease (upon written
notice to Landlord, but without Landlord's consent) to an entity
controlled by, controlling or under common control with Tenant,
or to an entity which acquires all or substantially all of the
assets of Tenant.
Each assignment to which there has been consent shall be by an
instrument in writing in a form satisfactory to Landlord, and
shall be executed by the transferor, assignor, sublessor,
licensor, concessionaire, hypothecator or mortgagor and the
transferee, assignee, sublessee, licensee, concessionaire or
mortgagee in such instance, as the case may be and each such
transferee, assignee, sublessee, licensee, concessionaire or
mortgagee shall agree in writing for the benefit of the Landlord
herein to assume, to be bound by, and to perform the terms,
covenants, and conditions of this Lease to be done, kept and
performed by Tenant, including the payment of all amounts due or
to become due under this Lease directly to Landlord. One (1)
executed copy of such written instrument shall be delivered to
Landlord. Failure to first obtain in writing Landlord's consent
or failure to comply with the provisions of this Section shall
operate to prevent any such Assignment from becoming effective.
If Tenant assigns its interest in this Lease, or sublets the
leased premises, then the rent due hereunder shall be increased,
effective as of the date of such assignment or subletting, to the
rental payable by the assignee or sublessee pursuant to such
assignment or sublease, if greater than the rent otherwise due
hereunder. In no event shall the monthly rental after such
assignment or subletting be less than the monthly rental
specified in Article III hereof. Tenant shall also pay all legal
fees and other costs incurred by Landlord in connection with
Landlord's consideration of Tenant's request for approval of
assignments or subleases.
11.2 Corporate Ownership. If Tenant is a corporation, then any
transfer of this Lease by merger, consolidation or liquidation,
or any change or ownership of, or power to vote the majority of
Tenant's outstanding stock, shall not constitute an assignment
for the purposes of this section as long as the transferee is the
Tenant's shareholder or another corporation or entity in which at
least 50% of the equity securities or ownership is owned or
possessed, by the Tenant's shareholders or its subsidiaries.
11.3 Assignment by Landlord. If Landlord sells the building (s)
or a portion thereof containing the leased premises, or if
Landlord assigns its interest in this Lease, and to the extent
that such purchaser, tenant or an assignee
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thereof assumes Landlord's obligations hereunder and is reasonably
responsible therefor, the Landlord shall thereupon be relieved of
all liabilities hereunder, and this Lease shall remain in full force
and effect.
SECTION XII - DESTRUCTION OF PREMISES
12.1 Casualty. In the event of total or partial destruction of
the Building or the Leased premises by fire or other casualty,
Landlord agrees to promptly restore and repair the Leased
Premises at Landlord's expense; provided, however, that
Landlord's obligation hereunder shall be limited to the
reconstruction of such of the tenant finish improvements as were
originally required to be made by Landlord, if any. Any insurance
proceeds riot used by Landlord in restoring or repairing the
Leased Premises shall be the sole property of Landlord. Rent
shall proportionately abate during the time that the Leased
Premises or part thereof are unusable because of any such damage
thereto. The usable portion of the Leased Premises shall be
determined as that part of the Leased Premises that remain
weather tight or that are actually used by Tenant.
Notwithstanding the foregoing, if the Leased Premises are (1) so
destroyed that they cannot be repaired or rebuilt within 180 days
from the date on which the insurance claim is adjusted; or (ii)
destroyed by a casualty which is not covered by the insurance
required hereunder or, if covered, such insurance proceeds are
not released by any mortgagee entitled thereto or are
insufficient to rebuild the Building and the Leased Premises;
then is case of a clause (1) casualty, either Landlord or Tenant
may, or, in the case of a clause (ii) casualty, then Landlord
may, upon 30 days written notice to the other party, terminate
and cancel this Lease; and all further obligations hereunder
shall thereupon cease and terminate.
SECTION XIII - EMINENT DOMAIN
13.1 Total Taking. If all of the leased premises are taken by
eminent domain, this Lease shall terminate as of the date Tenant
is required to vacate the leased premises and all rentals shall
be paid to that date. The term "Eminent domain" shall include the
taking or damaging of property by, through or under any
governmental authority, and by purchase or acquisition in lieu
thereof.
13.2 Partial Taking. If in the event of a taking of all or any
part of the leased premises by eminent domain or a taking of a
portion of the building which adversely and materially affects
Tenant's use of the leased premises, renders the remainder
thereof unusable for the business of Tenant, this Lease may, at
the option of either party, be terminated by written notice given
to the other party not more than thirty (30) days after Landlord
received notice of the taking, and such termination shall be
effective as of the date when Tenant is required to vacate the
portion of the leased premises so taken. If this Lease is so
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<PAGE>
thereof assumes Landlord's obligations hereunder and is
reasonably responsible therefor, the Landlord shall thereupon be
relieved of all liabilities hereunder, and this Lease shall
remain in full force and effect, terminated, all rent shall be
paid to the date of termination. Whenever any portion of the
leased premises is taken by eminent domain and this Lease is not
terminated, Landlord shall at its expense proceed with all
reasonable dispatch to restore the remainder or the leased
premises to the condition it was in immediately prior to such
taking, and Tenant shall at its expense proceed with all
reasonable dispatch to restore its fixtures, furniture
furnishings, floor coverage, and equipment to the same condition
they were in immediately prior to such taking. The rent payable
hereunder shall be equitably adjusted in accordance with the
effect of such taking on the leased premises.
13.3 Damages. Landlord reserves all right to the entire
damage award or payment for any taking by eminent domain or a
transfer in lieu thereof, and Tenant waives all claim whatsoever
against Landlord for damages for termination of its leasehold
interest in the remises or for interference with its business.
Tenant hereby grants and assigns to Landlord any right Tenant may
now have or hereafter acquire to such damages and agrees to
execute and deliver such further instruments of assignment as
Landlord may from time to time request. Tenant shall, however,
have the right to claim from the condemning authority all
compensation that may be recoverable by Tenant on account of any
loss incurred by Tenant in removing Tenant's merchandise,
furniture, trade fixtures and equipment or for damage to Tenant's
business; provided however, that Tenant may claim such damages
only if they are awarded separately in the eminent domain
proceeding and not as part of Landlord's damages.
SECTION XIV - DEFAULT OF TENANT
14.1 Defaults. Time is of the essence hereof, and if Tenant
violates or breaches or fails to keep or perform any covenant,
term or condition of this Lease, and if such default or violation
continues for or is not remedied within thirty (30) days (or, if
default in the rent is involved, within ten (10) days after
receipt of notice in writing thereof given by Landlord to Tenant
specifying the matter claimed to be in default, or for a default
or violation that cannot be remedied within said thirty (30) days
if Tenant has not commenced to remedy the same within thirty (30)
days following receipt of said notice, Landlord, at its option,
may immediately declare Tenant's rights under this Lease
terminated, or re-enter and attempt to relet without terminating
this Lease, and remove all persons and property from the leased
premises, and such property may be removed and stored in a public
warehouse or elsewhere at the cost of and for the account of
Tenant, all without service of notice or resort to legal process
and without being deemed guilty of any trespass, or becoming
liable for any loss or damage caused thereby. If Landlord,
without terminating this Lease, either (a) elects to re-enter and
attempts to relet as herein before provided, or (b) takes
possession pursuant to legal proceedings, or (c) takes possession
pursuant to any notice provided by law, then it may re-let the
leased premises or any part
E-49
thereof for such term or terms (which may be for a term extending
beyond the term of this lease) and at such rental or rentals and
upon such other terms and conditions as Landlord in is sole
discretion deems advisable. Upon each such re-letting, all rentals
received by Landlord from such re-letting
shall be applied, first, to the payment of any indebtedness other
than rent due hereunder from Tenant to Landlord; second, to the
payment of any costs and expenses of such re-letting, including
brokerage fees and attorneys' fee; third, to the payment of rent
due and unpaid hereunder; and the residue, if any, shall be held
by Landlord and applied to payment of future rent as the same may
become due and payable hereunder. If rentals received from such
re-letting, during any month are less than that to be paid during
that month by Tenant hereunder, Tenant shall pay any such
deficiency to Landlord.
No such re-entry or taking possession of the leased premises by
Landlord shall be construed as an election on its part to
terminate this Lease unless Landlord so notified Tenant in
writing or unless the termination thereof is found by a court of
competent jurisdiction. Notwithstanding any such reletting
without termination, Landlord may at any time thereafter elect to
terminate this Lease for such previous breach. If Landlord at any
time terminates this Lease, in addition to any other remedies
which it may have, it shall have the right to recover from Tenant
(a) an amount equal to the excess, if any, of the aggregate
amount of rent and additional rent reserved in this Lease for the
remainder of the stated term over the aggregate of the then
reasonable rental value of the leased premises under a lease
substantially similar to this Lease for the remainder of the
stated term both reduced to the then present worth, and (b) all
other damages and expenses, including reasonable attorneys'fees
and the cost of recovering the lease premises, that Landlord has
sustained because of Tenant's default. In determining the
aggregate amount of such rent and additional rent, the annual
rent for each year of the unexpired term of this Lease shall be
equal to the average annual minimum rent paid by Tenant from the
commencement of the term of this Lease to the time of default, or
during the preceding three (3) full calendar years, whichever
period is shorter.
14.2 Remedies Cumulative; Waiver. Landlord's remedies hereunder
are cumulative, and Landlord's exercise of any right or remedy
due to a default or breach by Tenant shall not be deemed a waiver
of, or alter, affect or prejudice any other fight or remedy which
Landlord may have under this Lease or by law. Neither the
acceptance of rent nor any other acts or omissions of Landlord at
any time or times after the happening of any event authorizing
the cancellation or forfeiture of this Lease shall operate as a
waiver of any past or future violation, breach or failure to keep
or perform any covenant, agreement, term or condition hereof or
to deprive Landlord of its right to cancel or forfeit this Lease
upon the written notice provided for herein at any time that
cause for cancellation or forfeiture may exist, or be construed
so as at any future time to stop Landlord
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from promptly exercising any other option, right or remedy that
it may have under any term or provision of this Lease.
SECTION XV - ACCESS BY LANDLORD
15.1 Right of Entry. Landlord and its agents shall have the right
to enter the leased premises at any time to examine the same, and
to show them to prospective purchasers or tenants, and to make
such repairs, alterations, improvements or additions as may be
necessary. In non emergency situations Landlord shall give 24
hours notice of intent to enter and be accompanied by a
representative of Tenant (if Tenant so requests), If Tenant is
not personally present to permit entry and an entry is necessary
or permissible, Landlord may enter the same by master key,
without rendering Landlord liable therefor. Nothing contained
herein shall be construed. to impose upon Landlord any duty of
repair of the building except as specifically provided for
herein. Landlord shall at all times in connection with any such
entry use reasonable efforts not to unreasonably interfere with
the conduct of Tenant's business and to give utmost attention and
consideration to the security of the leased premises and the
protection of Tenant's trade secrets.
15.2 Default of Landlord. If Landlord defaults in the performance
of any covenant required to be performed by Landlord, Tenant may
serve upon Landlord a written notice specifying the default. If
Landlord does not remedy the default within sixty (60) days
following receipt thereof or, in the case of a default which
takes more than sixty (60) days to cure if Landlord has not
commenced to remedy the same within sixty (60) days following
receipt thereof, Tenant may, following the giving of the notice
required under terms of Section 1 S. 1 hereof, give Landlord
notice of termination of this Lease, with unearned rent being
prorated to the date of termination. If Landlord fails to timely
cure the default after ' notice has been given, in lieu of
termination of this Lease, Tenant, at its sole option, may cure
Landlord's default and offset the reasonable expense thereof
against rent thereafter accruing.
SECTION XVI - SURRENDER OF LEASED PREMISES
16.1 Surrender of Possession. Tenant shall promptly yield and
deliver to Landlord possession of the leased premises upon the
expiration or earlier termination of this Lease. Landlord may
place and maintain a "For Rent" sign in conspicuous places on the
leased premises for sixty (60) days prior to the expiration or
earlier termination of this Lease.
16.2 Holding Over. In the event of a holding over by Tenant after
expiration or termination of this Lease without the consent in
writing of Landlord, Tenant shall be deemed a Tenant at
sufferance and shall pay rent for such
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occupancy at the rate of
twice the last-current aggregate Base and Additional Rent,
prorated for the entire holdover period, plus all attorney's fees
and expenses incurred by Landlord in enforcing its rights
hereunder, plus any other damages occasioned by such holding
over. Except as otherwise agreed, any holding over with the
written consent of Landlord shall constitute Tenant a
month-to-month Tenant.
SECTION XVII - QUIET ENJOYMENT
17.1 Landlord's Covenant. Tenant, upon fully complying with and
promptly performing all of the terms, covenants and conditions of
this Lease on its part to be performed, shall have and quietly
enjoy the leased premises for the term set forth herein, if its
performance of such terms, covenants and conditions continues for
such period.
SECTION XVIII - MISCELLANEOUS
18.1 Notices. Any notices required in accordance with any of the
provisions herein shall be delivered or mailed by registered or
certified mail to the Landlord at P.O. Box 64110, St. Paul, MN
55164-0-110, or to such other place as Landlord may from time to
time direct in writing, and to Tenant at 3140 Neil Armstrong
Blvd., Suite 226, Eagan, MN 55121, or to such place as the Tenant
may from time to time direct in writing. If Tenant is a
partnership or joint enterprise, any notice required or permitted
hereunder may be given by or to any one partner thereof P with
the same force and effect as if given by or to all thereof. A
notice shall be deemed received two (2) days after the postmark
affixed on the envelope by the United States Post Office.
18.2 Successors or Assigns. All the terms, conditions, covenants,
and agreements of this Lease shall extend to and be binding upon
Landlord, Tenant, and their respective heirs, administrators,
executors, successors, and permitted assigns, and upon any person
or persons coming into ownership or possession of any interest in
the leased premises by operation of law or otherwise, and shall
be construed as covenants running with the land.
18.3 Insolvency. If a petition is filed under the United States
Bankruptcy Act or other law to have Tenant dissolved or
liquidated, or if a trustee or receiver is appointed for Tenant's
assets under said Bankruptcy Act or other law or if a proceeding
is commenced to foreclose any mortgage or any other lien on
Tenant's interest in the leased premises or on personal property
kept or maintained thereon, or if Tenant makes an assignment for
the benefit of creditors, the Tenant shall be deemed in default
hereunder.
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18.4 Tenant Defined. The word "Tenant" as used herein shall mean
each and every person, partnership or corporation who is
mentioned as a Tenant herein or who executes this Lease as
Tenant- If there shall be more than one Tenant, they shall be
bound jointly and severally by the terms, covenants and
agreements herein.
18.5 Brokers' Commission. Tenant agrees to indemnify and hold
Landlord harmless from all damages, liability and expense
(including reasonable attorneys' fees) arising from any claims or
demands of any broker(s) or finders, for any commission alleged
to be due in connection with its having introduced Tenant to the
premises or participating in the negotiations with the Tenant of
this lease.
18.6 Partial Invalidity. If any term, covenant or condition of
this Lease or the application thereof to any person or
circumstances is, to any extent, invalid or unenforceable, the
remainder of this Lease, or the application of such term,
covenant or condition to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not
be affected thereby and each term, covenant or condition of this
Lease shall be valid and be enforceable to the fullest extent
permitted by law. Furthermore, in lieu of invalid or
unenforceable provisions, there shall be automatically added as
part of this Lease a provision as similar in intent and effect to
the stricken provision as may be possible while still being valid
and enforceable.
18.7 Recording. Tenant shall not record this Lease without the
prior written consent of Landlord. However, upon the request of
either party hereto, both parties shall execute a memorandum of
this Lease, in a form customarily used for the purpose of
recordation. Said memorandum of this Lease shall describe the
parties, the leased premises and the term of this Lease and shall
incorporate this lease by reference.
18.8 Subordination. Notice to Mortgagee; Attornment. This Lease
shall be subordinate to any existing or future mortgages or deeds
of trust on the building or on the leasehold interest held by the
Landlord, and to any extensions, renewals, or replacements
thereof; provided, however, that the Tenant's possession of the
leased premises, use of common areas and facilities, and all the
Tenant's other rights and benefits hereunder shall not be
disturbed or in any way interfered with so long as the Landlord
has no right to terminate this Lease or re-enter the leased
premises pursuant to Section XIV of this Lease during the
original lease term or any extension thereof. Tenant shall,
within ten (10) days of Landlord's request, execute and deliver
to or as directed by the Landlord instrument or certificates
stating the terms of the foregoing subordination and estoppel
certificates reciting facts regarding the existence and status of
this Lease, prepared by or at the request of the Landlord or any
mortgagee or
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secured party. The Tenant shall mail duplicate copies of all notices
of default it is giving to the Landlord to the first five (5)
mortgagees or secured parties who request in writing that the Tenant
do so, which writing shall be actually received by the Tenant prior
to the Tenant giving its notice of default to the Landlord and which
writing shall designate the address to which the Mortgagee's or secured
party's duplicate copy is to be mailed- Tenant agrees to attorn to
Landlord's successor following any foreclosure, sale or transfer in lieu
thereof.
18.9 Force Majeure. Neither Landlord nor Tenant shall be in
default hereof nor liable for damages from their failure to
perform their duties or obligations hereunder if due to causes
beyond their reasonable control, including, but not limited to,
acts of God, acts of civil or military authorities, fire, floods,
windstorm, earthquake, strikes or other labor disturbances, civil
commotion, or war; provided, however, that the foregoing shall
not excuse Tenant from its failure to pay amounts due under terms
of sections 3.1, 3.2, 3.3, 5.1, 5.2, 5.3, 9.3, or 10.4, 19-1
hereof or its failure to perform its obligations under terms of
sections 8.1 or 10.2 hereof, which failure shall constitute
default by Tenant.
18.10 Smoking. Smoking is prohibited in the building common areas
and in the leased premises.
SECTION XIX - ENVIRONMENTAL
19.1 Tenant agrees to indemnify and hold landlord harmless from
all claims which may be asserted against landlord resulting from
the release of any hazardous or toxic substance placed or caused
to be placed on the premises by tenant. In the event that any
cleanup or other response is required on the premises as a result
of any such substance release, tenant shall be responsible for
performing and paying for such cleanup. If the tenant does not
perform the necessary cleanup in a timely manner the lessor can
perform the cleanup at the tenants expense. Tenant is also agrees
to notify Landlord of any spill or environmental problem. Tenant
will allow Landlord reasonable environmental inspection. Tenant
will not be responsible for any environmental problem preexisting
its tenancy. Landlord agrees to indemnify and hold Tenant
harmless from all claims which may be asserted against Tenant
resulting form the release of any hazardous or toxic substance
located at the building, unless such hazardous or toxic
substances are present solely as a result of the actions of
Tenant, its officers, agents, employees, invitees and
contractors.
SECTION XX - EXECUTION OF LEASE
20.1 Execution by Landlord and Tenant- Approval of Lender.
Landlord shall not be deemed to have made an offer to Tenant by
furnishing Tenant with a
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copy of the Lease with particulars inserted. Notwithstanding that
Landlord has received a deposit and a copy of the Lease which Tenant
has executed, no contractual or other rights shall exist or be created
between Landlord and Tenant until all parties hereto have executed this
Lease and, if so indicated by Landlord, until it has been approved in
writing by Landlord's lender(s) and fully executed copies have been
delivered to Landlord and Tenant. Tenant agrees to make such
changes herein as may be requested by Landlord's lender(s) so
long as such do not increase amounts due from Tenant hereunder or
otherwise substantially alter its rights hereunder.
SECTION XXI - ENTIRE AGREEMENT-APPLICABLE LAW
21.1 Entire Agreement-Applicable Law. This Lease, and the
Exhibits attached hereto this reference incorporated herein, set
forth the entire agreement, of Landlord and Tenant concerning the
leased premises, and there are no other agreements or
understanding, oral or written, between Landlord and Tenant
concerning the leased premises. Any subsequent modification or
amendment of this Lease shall be binding upon Landlord and Tenant
only if reduced to writing and signed by them. This Lease shall
be governed by, and construed in accordance with the laws of the
State where the premises are located.
SECTION XXII - IMPROVEMENTS
22.1 Improvements. Landlord, at its cost, will complete the
tenant improvements as outlined in Exhibit C attached hereto and
made a part hereof. The tenant improvements shall include all
work necessary to provide Tenant with finished space ready for
occupancy, except for telephone outlets and wiring. The finished
space shall include the following: basic electrical wiring,
outlets (does not include dedicated circuits), non-parabolic
standard florescent lighting, sprinkler relocation, all dernising
walls finished and painted as shown on Exhibit C (uninsulated 9
interior walls and insulated to deck common walls), heating and
cooling ventilation, W look ceiling tiles, upgraded carpet (solid
color chosen from Landlord's samples) and base, metal framed
solid core doors (with one side light on the entry door), and one
lock set for the main entrance door.
SECTION XXIII - RELOCATION
23.1 Relocation. Tenant agrees that Landlord may relocate Tenant
to other space in the building containing substantially the same
amount of rentable square feet as is contained in the premises,
provided that the actual cost of physically relocating Tenant
(excluding any and all consequential or other costs to Tenant)
and the cost of altering the new space to make it comparable to
the premises is borne by the Landlord; provided, however, that
Landlord may not
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exercise said right to relocate Tenant if the premises consist of
more than ten percent of the rentable square feet in the building.
In addition, Landlord shall pay costs incurred by Tenant as a result
of the relocation, including without limitation costs incurred in
changing addresses on stationary, business cards, directories,
advertising and other such items, but in no event shall Landlord's
obligation to pay costs imposed in this sentence exceed the sum of
$500. In the event that the new premises in which the Tenant is
relocated does not consist of the identical number of rentable square
feet as specified in this Lease, the parties shall execute an instrument
specifying the new number of square feet in the premises and the
change in the number of square feet contained in the premises
shall be effective as of the date on which the Tenant occupies
the new premises in which it is relocated.
TENANT: LANDLORD:
_____________________________ DDBD, Inc.
By:__________________________ By:
ITS:__________________________ ITS:
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<PAGE>
EXHIBIT A
(LEGAL DESCRIPTION)
Lot 4, Block 1, Eagandale Corporate Square, according to the
recorded plat thereof in Dakota County, Minnesota.
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Exhibit B
Demised Premises
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<PAGE>
Exhibit C
Unnsulated 9 interior walls and insulated to deck common walls
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<PAGE>
[ARTICLE] 5
<TABLE>
<S> <C> <C> <C> <C>
[PERIOD-TYPE] 9-MOS 9-MOS 12-MOS 12-MOS
[FISCAL-YEAR-END] FEB-29-2000 FEB-28-1999 FEB-28-1999 FEB-28-1998
[PERIOD-END] NOV-30-1999 NOV-30-1998 FEB-28-1999 FEB-28-1998
[CASH] 0 0 3,514 6,676
[SECURITIES] 0 0 0 0
[RECEIVABLES] 78,017 226,120 83,999 54,488
[ALLOWANCES] 500 2,500 500 2,500
[INVENTORY] 100,903 80,518 76,748 102,237
[CURRENT-ASSETS] 184,708 210,591 169,568 167,953
[PP&E] 70,418 66,023 66,023 65,146
[DEPRECIATION] 58,095 51,831 54,037 48,625
[TOTAL-ASSETS] 296,843 329,513 280,737 284,251
[CURRENT-LIABILITIES] 212,418 204,166 147,941 155,778
[BONDS] 0 0 0 0
[PREFERRED-MANDATORY] 0 0 0 0
[PREFERRED] 0 0 0 0
[COMMON] 15,455 15,455 15,455 15,455
[OTHER-SE] 1,254,399 1,254,399 1,254,399 1,254,399
[TOTAL-LIABILITY-AND-EQUITY] 296,843 329,513 280,737 284,251
[SALES] 388,171 406,694 599,842 479,392
[TOTAL-REVENUES] 388,171 406,694 599,842 479,392
[CGS] 103,644 125,341 216,042 200,875
[TOTAL-COSTS] 318,806 279,625 396,851 392,938
[OTHER-EXPENSES] 0 0 0 0
[LOSS-PROVISION] 0 0 0 0
[INTEREST-EXPENSE] 0 0 0 0
[INCOME-PRETAX] (34,279) 1,728 (13,151) (114,521)
[INCOME-TAX] 0 0 0 0
[INCOME-CONTINUING] (34,279) 1,728 (13,151) (114,521)
[DISCONTINUED] 0 0 0 0
[EXTRAORDINARY] 0 0 0 0
[CHANGES] 0 0 0 0
[NET-INCOME] (34,279) 1,728 (13,151) (114,521)
[EPS-BASIC] (0.01) 0.00 (0.00) (0.03)
[EPS-DILUTED] (0.01) 0.00 (0.00) (0.03)
</TABLE>
