UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12 (b) OR 12 (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OCEAN POWER CORPORATION
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(Name of Small Business Issuer in its charter)
Delaware 94-3350291
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(State or Other Jurisdiction (IRS Employer Identification No)
Of Incorporation or Organization)
5000 Robert J. Mathews Parkway, El Dorado Hills, California 95672
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(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (916) 933-8100
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
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(Title of Class)
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FORWARD-LOOKING STATEMENTS
IN ADDITION TO HISTORICAL INFORMATION, THIS FORM 10-SB CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS UNDER THE CAPTIONS "DESCRIPTION OF BUSINESS
OPERATIONS," AND "MANAGEMENT'S DISCUSSION AND ANALYSIS," INCLUDING STATEMENTS
CONCERNING (I) THE COMPANY'S STRATEGY; (II) THE COMPANY'S EXPANSION PLANS, (III)
THE MARKET FOR THE COMPANY'S PRODUCTS; (IV) THE EFFECTS OF GOVERNMENT REGULATION
OF THE COMPANY'S PRODUCTS; AND (V) THE EFFECTS ON THE COMPANY OF CERTAIN LEGAL
PROCEEDINGS. BECAUSE SUCH STATEMENTS INVOLVE RISKS OF UNCERTAINTIES, ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED TO CONSIDER SPECIFIC RISK
FACTORS DESCRIBED HEREIN (SEE ITEM 2 "MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATIONS," UNDER SECTION (a) "PLAN OF OPERATION"). THE COMPANY
UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE HEREOF.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
HISTORY:
Ocean Power Corporation (the "Company") was first incorporated in Idaho on
April 24, 1969 as Kaniksu American Mining Company, Inc.; name changed to Kaniksu
Ventures, Inc., on August 28 1995, and Intryst, Inc., on April 2, 1997.
On March 14, 1996, the Company acquired Tessier Resources Ltd.,
("Tessier"), from Venture Tech, Inc. ("Venture Tech") in exchange for a
$3,000,000 debenture convertible into 2,000,000 shares of the Company's common
stock. The debenture matures in four (4) years from the date of issuance,
carries no interest, and may be converted at the conversion price of $1.50 per
share to an aggregate of 2,000,000 shares of authorized but previously unissued
shares of the Company's common stock at any time prior to repayment of the
debenture. As additional consideration for the acquisition of Tessier, the
Company agreed to issue to eligible stockholders of Venture Tech, shares of the
Company's common stock and rights to purchase additional shares. Under the terms
of the agreement, each individual Venture Tech stockholder as of the date of
record April 5, 1996, is entitled to five (5) shares of authorized but
previously unissued common stock of the Company for each 100 shares of Venture
Tech common stock owned. Further, each five shares of the Company's common stock
issued to Venture Tech stockholders shall include ten (10) rights, each right
entitling the holder thereof to purchase one additional share of the Company's
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common stock for $2.25 per share for a period of sixty (60) days following
receipt of the Company's shares and rights. The Company intends to deliver these
shares and rights pursuant to a registration statement to be filed at a future
date. Tessier is in the business of developing and supplying snow and ice
removal technology to the commercial market.
In September, 1997, the Company initiated negotiations to acquire PTC
Holdings, Inc., a Delaware corporation with its principal offices in Fair Oaks,
California ("PTC Holdings"). In October, 1997, in connection with the proposed
acquisition of PTC Holdings, the Company assigned its interest in Tessier back
to the original shareholders of Tessier. On December 24, 1997, the Company
changed its name from Intryst, Inc. to PTC Group, Inc., an Idaho corporation
("PTC Group").
On June 22, 1999, PTC Group merged with PTC Holdings, with PTC Group being
the surviving entity, whereby PTC Group issued 25,044,146 shares of its common
stock in exchange for all of the outstanding common stock of PTC Holdings.
On July 12, 1999, PTC Group changed its name to Ocean Power Corporation
(Idaho).
On July 21, 1999, Ocean Power Corporation (Delaware) was formed for the
purpose of changing the domicile of Ocean Power Corporation (Idaho).
On July 28, 1999, Ocean Power Corporation (Idaho) merged with Ocean Power
(Delaware) and Ocean Power Corporation (Delaware) was the surviving entity, and
is traded on the OTC Bulletin Board under the symbol PWRE.
BUSINESS OF THE COMPANY
The Company is engaged in water desalination and renewable power generation
systems that are modular and mass-produced.
The Company's business plan is to accomplish the sale of water and power
through regional joint ventures, located in water and power challenged markets.
These locally controlled joint ventures will ideally take 15-25 year contracts
to build, own and operate water and power facilities. Although the Company will
most likely have a minority ownership position in these joint ventures, their
share of the ongoing royalty income will be negotiated on a case-by-case basis.
The joint venture partners will be selected for their capabilities in the areas
of market development, finance, civil engineering, project management and
experience with local political structures.
The Company is currently in the early stages of development of its first
three joint ventures in: (1) Greece; (2) Turkey; and (3)the Caribbean. Apollo
Water and Power International has signed a Heads of Agreement which will lead to
a set of definitive agreements based on a mutually acceptable business plan
currently under development for their territory concerning Greece and the Greek
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section of Cyprus. Cameron Water of San Diego, California has signed a
Memorandum of Understanding for the development of a regional joint venture
covering the Caribbean, Central and South America. Bridge Ventures, Inc., of
Istanbul Turkey has signed a Letter of Intent to develop a joint venture for
Turkey and the Turkish part of Cyprus. These three parties should be the first
to develop 1 million gallons per day (1mgd) pilot plants in their territories.
Additional preliminary discussions are underway with potential partners in
Central and South America, North Africa, Egypt, Spain, Taiwan, India and the
Arabian Gulf. These have not yet reached the stage of written commitments.
To the best knowledge of the Company, the Company is the first company to
attempt to reduce the end cost of desalinated seawater and power by applying
high-rate manufacturing processes to the various components and subsystems
making up its H20kW System. This is proposed to be accomplished through the
application of ISO 9000 manufacturing standards to every facet of its systems.
From basic technology through site preparation and assembly, the final output of
water and power cost is the factor determining all design decisions.
Mass-produced standardized distillation and power modules will be configured to
meet the customers specific needs and timetables. In all cases, the preference
will be to use the lowest-cost preferably indigenous energy source and in
keeping with its symbol (Power-Water-Renewable-Energy)renewables will be a
priority as long as they make economic sense.
1. PRINCIPAL PRODUCTS AND SERVICES AND THEIR MARKETS
a. THE MARKETS
The Company recognizes that the world markets for seawater desalination and
cleaner power systems of any significance are driven by highly conservative
selection criteria.
The Company believes the path of least resistance to market entry is by
placing a priority upon privately owned water and power systems. By focusing on
privately owned systems, the set of decision-makers is reduced to a few
individuals with authority and the motivation to make a profit. This opens
several specific and clear paths to favorable project finance. Ocean Power
intends to enter the selected regional markets through joint ventures with
regionally based companies or groups of individuals. Through careful selection,
education and equity participation, management believes these regional entities
will be better able to find, finance, and implement multiyear build, own,
operate and transfer contracts for water and power plants that employ Ocean
Power systems. The Company will participate in the joint ventures so as to
assure optimum ongoing operations and to participate in system expansions,
upgrades and profits.
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b. PRINCIPAL PRODUCTS AND SERVICES
The Company will focus on the strategic corporate goal of distributing
water and power produced from renewable energy sources. Key proprietary products
will be manufactured within the company or through subcontracts that accomplish
compartmentalization of know-how. The Company's initial products are:
TURN-KEY WATER & POWER FACTORIES: The primary product of The Company will
be turn-key water and power factories using the Company's H20kW systems. These
systems will use mass-produced modular, distillation modules powered initially
with conventional power technologies, such as gas turbines and later with
external combustion engines and fuel cells. In all cases the choice of power
technology and energy source will be determined as a result of a comprehensive
study of the local conditions regarding energy and environmental issues.
The initial factories will use Mechanical Vapor Compression Distillation
systems based on the technology developed under the Aquamax name and owned by
Keeran BV of The Netherlands ("Keeran"). A preliminary memorandum has been
signed outlining the steps necessary for The Company to acquire 100% of the
stock of Keeran. The next phase of discussions will take place after the
completion of an appraisal of all relevant Intellectual Property (IP) by the
Company's IP firm of Darby and Darby.
As external combustion engines are phased in to take advantage of their
lower-cost and higher efficiency, an additional Thermal Vapor Compression (TVC)
stage will be added to the H20kW systems. This will operate on the waste heat
from the STM engine. These TVC modules can be purchased from a variety of
commercial suppliers and although they may have a high initial cost, because the
power is waste heat, they can provide a significant improvement in overall
system economics.
SYSTEM DESIGN: The Company systems are designed for the growing private
coastal power and water market which requires multi-year demand contracts for
power and water. Modular design accommodates unpredicted regional growth
patterns while easing initial project finance demands. The Company plans to
offer the system design, enabling technology, high quality manufacturing, and
project finance to accomplish efficient modular power and water factories.
Design has been standardized to allow rapid equipment delivery. Environmentally
sensitive design addresses the projected demands of the next century. Financial
engineering will be offered to regional joint venture partners.
HIGH PURITY WATER FROM THERMAL DISTILLATION: Highest quality product water
will be achieved through thermal distillation and multi-effect ultra-violet
pretreatment. Results will be achieved through several proprietary technologies,
including state of the art hypercritical ejectors in place of conventional
compressors. Lower equipment cost will be achieved by employing low cost,
engineered materials and world-class manufacturing.
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WATER HARDWARE: The Company sought specific configurations of equipment
such that reliability and capital cost could be significantly improved by
insertion of certain contemporary technologies. Further the equipment sought was
to be susceptible to improvements that would greatly reduce manufactured cost.
The technology selected accomplishes separation of pure water from seawater
through a process known as Mechanical Vapor Compression Distillation (MVCD).
This is a mature technology perfected over the past fifty years by various
companies around the world. Several thousand seawater desalination plants of
this type are in operation around the world. The current MVCD hardware, although
producing the best quality water, suffers from several deficiencies including
high production costs, low reliability of compressor seals, and less than
optimum power efficiency.
POWER HARDWARE: Initial Company installations will be powered using
conventional technologies, i.e. grid power, gas turbines, and Stirling Engines.
However, in parallel, a small percentage of the necessary generating capacity
will be served by more advanced technologies such as fuel cell. The drive in
this direction is toward even-lower cost and cleaner power.
The basic building block of all of the Company's products will be a 30 kW
(net electrical output) module. The initial primary power source will be
an external combustion engine.
These modules will vary according to the local fuel requirements and AC or
DC output depending on whether or not they will interface with a local
electrical grid. In all cases, these subsystems will also be standardized,
mass-produced units.
In order to serve the primary stationary market, the Company will use a
modular system architecture. Initially, the Company will use conventional
technology such as gas turbines, which have a proven track record and worldwide
availability. The next phase of development, starting late 2000, will use
modular system based on the existing 25 kW generators using external combustion
engines. These units will be integrated in racks housed in standard, 20' ISO
shipping containers to create modules with capacities up to 900 kW. The external
combustion engines have shown efficiency and air quality characteristics
substantially better than conventional technologies and hold the promise of
substantially lower capital and operating costs.
STM Corporation has signed a License Agreement dated April 10, 2000 with
The Company granting exclusive, worldwide rights for the modular, seawater
desalination and power market.
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The Company has also signed a Teaming Memorandum with STM Corporation and
Singapore Technologies Automotive, the purpose of this Memorandum is to develop
the programs to take the existing STM systems and develop a plan to bring them
to commercial production up to ISO 9000 standards. The first three projects will
address systems operating on Natural Gas, Diesel and Solar Thermal energy
sources.
This family of products will deliver power at efficiencies of 35-40%.
Planned improvements should bring that efficiency level up to 50% or more over
the next several years. Although these efficiencies are extremely attractive,
alkaline fuel cells (AFC) hold the promise of even higher efficiencies and lower
costs. Since no currently available fuel cell technologies can match the cost
and performance of external combustion engines, the Company has decided to
refocus its fuel cell program to not compete at the current time. It will
develop its proprietary hydrogen generation and alkaline technology alongside
the commercial deployment of external combustion engines. The Company believes
that over the next three years it will be able to demonstrate alkaline systems
with efficiencies 55% or above.
This approach allows for near-term commercial sales with the long-term
promise of extremely competitive power cost. The ability of both the external
combustion engines and the Company's AFC systems to operate a wide range of
conventional and renewable fuel cells will help create significant competitive
advantage.
Within the next two years, the 25 kW module will be replaced by a larger 50
kW unit. This will slightly reduce capital cost but still provide for the
redundancy, reliability and ease of maintenance that set this system
architecture apart from conventional approaches. The common elements of these
modules are as follows:
1. 25 kW liquid fueled external combustion engine
2. 25 kW Gaseous fueled external combustion engine
3. 20 kW Solar Module
4. 200 kW to 2.0 mW external combustion engine Racks
5. 50 kW low temperature hydrogen generator
6. 50 kW Alkaline fuel cell subsystem
7. 10 kW Liquid fueled external combustion engine
8. 50 kW Liquid fueled AFC skid
As the installations grow in size, larger energy source modules will be
developed where sufficient cost benefits will be yielded.
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CONTROL SOFTWARE: Ocean Power intends to employ the latest proven process
control and enterprise integration architectures with software employing Java or
Juni, and predictive diagnostics technology. This will allow fully autonomous
systems with self-diagnostics, highly efficient regional logistics support, and
worldwide monitor and control of the Company's systems.
2. DISTRIBUTION METHODS
Ocean Power intends to form Affiliate Regional Enterprises, Joint Ventures
(JVs), and Strategic Alliances (SA) to which H20kW Systems will be transferred
for a price. Engineering, training, and financial services may also be
transferred to the affiliates.
The Company intends to participate in, and is in negotiation with several
candidates for regional JVs and SAs that will build, own, and operate the water
and power plants. The JVs will enter into 15 to 25 year contracts to provide
demand levels of water and power. The appropriate system will then be integrated
on-site using both Company furnished key components and standard commercial
components. Site construction will be done by local contractors under the
supervision of the JVs in accordance with Company engineering standards and
drawings.
3. COMPETITION:
At the present time the Company is not aware of any entity seeking to
manufacture, integrate, install and operate (through joint ventures or directly)
seawater desalination systems powered by sustainable energy sources. A large and
complex array of technical, manufacturing, financial, and business development
barriers exist for others to enter this business.
Several significant companies have expanded rapidly into the private water
business over the past several years, and all are capable of locating and
subcontracting equipment manufactures to supply desalination and green power
generation equipment. Among these are:
o Suez Lyonnaise des Eaux, France
o (a merger of Compagnie de Suez and Lyonnaise des Eaux)
o Compaigne General des Eau (Vivendi), France
o Thames International, UK
o United Utilities (NWW), UK (Bechtel of US is part owner)
o Azurix
Entities predicted to enter this market in the near term include:
o US Filter, US (Recently acquired by Vivendi of France)
o Edison Capital, US
o CH2M Hill International, US
o Black and Veach International, US
o United Infrastructure, US (a joint venture of Bechtel and Peter Kiewitt
Sons)
o Enron (In conjunction with Azurix for integrated power and water)
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All of the above entities are likely direct competitors to the Company in
the area of integrated, modular seawater and power systems. Only Vivendi through
its acquisition of SIDEM now has its own seawater desalination technology. The
Company's competing technology is less costly to manufacture and power
efficient.
Other entities currently very active in the privatization of water systems
could develop an interest in the Company 's market are:
o United Water Resources, US (a joint venture of Suez Lyonnaise of France)
o Aqua Alliance, US (83% owned by Vivendi of France)
o American Water Works, US
o California Water, US
a. DESALINATION:
General competition will be intense from a wide variety of suppliers of
reverse osmosis technologies (RO). The barrier to entry to this system
technology is very low, with key component technology available from three key
suppliers throughout the world. However, this generic form of seawater
desalination is prone to very poor water quality after a few months of
operation, and operation and maintenance costs over the life of a system have
proven to be much higher than advertised. The Company believes that seawater
desalination through distillation offers a future of superior water quality,
vastly superior reliability, and much reduced maintenance. Distillation offers
far superior product water quality than other desalination technologies and
Vacuum Vapor Compression Distillation, the cycle being employed by Ocean Power's
H20KW(TM), is both theoretically and in practice the most efficient distillation
cycle. Other key suppliers of distillation equipment are therefore the only
competitors listed here. For even closer comparison, only manufactures of
systems that do not depend upon waste steam from co-located power generation
plants are considered here.
o IDE Israel Desalination Technologies is the world's leading manufacturer
of low-temperature distillation systems. Over 300 desalination plants
fielded in 26 countries. Wholly owned by Israel Chemical LTD. Annual
sales of about $40M per year.
o SIDEM Originally part of the French Government's Nuclear Power
organization, SIDEM is now owned by Vivendi. SIDEM has built and fielded
many high quality vapor compression systems. Through Vivendi's
acquisition of US Filter, SIDEM equipment may become more available
throughout the world.
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o Alpha Laval: The parent is the world's leading manufacturer of heat
exchangers. Over the past several years, Alpha Laval has attempted to
enter the seawater desalination industry with a significant vapor
compression system in Saudi Arabia. Recently, they attempted to license
the technology of Advanced Distillation Technology.
o MECCO: The only US manufacturer of Vapor Compression Distillation
equipment. The company has a reputation of equipment failure. The
largest installation is in northern Chile. The company is privately
held.
o Mitsubishi Heavy Industries, Ltd.: Builder of turn-key seawater
desalination plants typically employing co-generation schemes, but also
directly powered distillation of the MSE or MED type. Known for pursuit
of very large plants awarded under conventional tenders.
b. POWER
The current status of competitors is fragmented. Although the worldwide
trend is moving inexorably to distributed power systems, the bulk of the
competitors are still utilities or IPPs. These companies generally tend to be
large and burdened with enormous overhead, an inflexible corporate culture and
generally no proprietary technological advantage.
With the trend toward the use of natural gas and smaller distributed
systems, the primary competitors in this market are using aero-derivitive gas
turbines from companies such as:
o Rolls-Royce
o Solar Turbines, a Caterpillar Company
o Allison
o Allied-Signal
o GE
o Pratt and Whitney
o Siemens
o DaimlerChrysler AG
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Since the per kilowatt installed cost of these systems ranges around
$1,000, they are starting to see potential competition from smaller capacity,
lower cost generators such as micro-turbines, fuel cells, external combustion
engines and solar which project system costs ranging from $300 to less than $50.
Although none of these technologies are yet in commercial production, there is a
great deal of interest and some of the key players are:
o DaimlerChrysler AG/Ballard
o Allied-Signal
o Plug Power/GE
o US Wind Power
o BP Solar
o Siemens
o Toyota
c. THE INDUSTRY
The seawater desalination industry has installed a total water production
capacity of about 22,000,000 cubic meters per day over the past 30 years. Over
the past 10 years, new plant installation has averaged about 1,000,000 cubic
meters per day each year. This represents about $1.5 billion in equipment sales
per year, or about $3 billion in total capital cost for installed plants per
year.
In terms of capacity, the vast majority of installed systems continue to be
distillation technology as opposed to reverse osmosis or other technologies.
However, the number of worldwide suppliers of seawater distillation systems has
diminished from perhaps 20 in 1989 to less than 10 in 1999 through industry
consolidation (e.g. Vivendi).
The Company is not aware of any company that is producing integrated
seawater distillation and power source systems at this time. Several historic
participants in the industry have reduced capacity to supply equipment and few
have accomplished any significant product improvements in decades. Most
technical innovation and government sponsored research and development has been
applied to seawater reverse osmosis technology. At the present time, reverse
osmosis technology produces water of a lesser quality than distillation for the
same specific power consumption. Only in the past 5 to 8 years has the industry
again invested in significant technical improvements in the area of
distillation.
The best overall analysis of the industry has been produced by Klaus
Wagnick, Principle, Wagnick Consulting, GMBH, of Gnarrenburg, Germany. Since
1983, Mr. Wagnick has produced an annual analysis of the industry. His overall
view of the industry was delivered to the World Congress of the International
Desalination Association in 1997 and included the following important
observations:
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1. Growth of the industry will be modest for the next few years.
2. No desalination capacity is installed in countries with a GNP of less
than $1,000 per capita per year.
3. The majority of industrial focus will continue to be on the Middle East.
4. Substantial growth of the industry will occur only after a dramatic
reduction in both capital and operation costs.
The overall drivers of growth for this industry are population growth,
improved standard of living, reduced energy costs, industrialization, and
diminishing water quality. All of these drivers are currently pointing to a
much-expanded market, yet only a few new players have entered the industry in
the past 5 years.
Currently underway throughout the world is a wave of privatization of both
water and power systems. Add to this the growing demand for environmentally
benign power sources and little or no excess power generation at each
desalination site, and the result is a vastly new set of demands for the
industry over the next two decades.
Lastly, the industry is often driven by hydropolitics. Currently, the "Red
Dead" project in Jordan, the formation of the Middle East Desalination Research
Center, and the European Union's massive plans for the Mediterranean are
examples of such political influence upon the industry. Add to this increasingly
stringent drinking water standards and the Kyoto Accords and the resultant
effect on water quality, fuels, and power systems, and the industry is clearly
subject to a revolution.
4. SOURCES AND AVAILABILITY OF RAW MATERIALS
The Company will use a wide range of materials in its various components
and subsystems. Since its primary function is as a system integrator, it is
generally purchasing subassemblies or complete subsystems such as pumps,
blowers, valves, etc. All of these are designed to have multiple vendors
worldwide.
In regard to the proprietary components such as plastic heat exchangers and
catalyst formations, the materials are commonplace and there are multiple
sources worldwide.
As part of the Company's Seawater Desalination Systems Product Development
Program,, these materials will constantly be reduced in quantity, and where
possible, changed for lower cost, i.e. replacing coated stainless steel pressure
vessels with lower cost materials such as concrete.
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5. DEPENDENCE ON ONE OR MORE MAJOR CUSTOMERS
Not applicable
6. PATENTS, TRADEMARKS, LICENSES, FRANCHISES, ROYALTY AGREEMENTS OR LABOR
CONTRACTS, INCLUDING DURATION
To protect its rights to its intellectual property, the Company will rely
on a combination of trademark and copyright law, patent, trade secret
protection, confidentiality agreements, and other contractual arrangements with
its employees, affiliates, clients, strategic partners, and others. The
protective steps it has taken may be inadequate to deter misappropriation of the
Company's proprietary information. The Company may be unable to detect the
unauthorized use of, or take appropriate steps to enforce its intellectual
property rights. The Company has registered certain of its trademarks in the
United States and is in the process of filing U.S. applications for patents.
Effective trademark, copyright, patent, and trade secret protection may not be
available in every country in which it offers or intends to offer its products.
In addition, although the Company believes that its proprietary rights do not
infringe on the intellectual property rights of others, other parties may assert
infringement claims against the Company or claims that it has violated a patent
or infringed a copyright, trademark, or other proprietary right belonging to
them, i.e. Trademark - H20kW Systems.
These claims, even if not meritorious, could result in the expenditure of
significant financial and managerial resources on its part, which could
materially adversely affect the Company's business, results of operations, and
financial condition. The Company incorporates certain licensed third-party
technology in some of its services. In these license agreements, the licensors
have generally agreed to defend, indemnify, and hold the Company harmless with
respect to any claim by a third party that the licensed software infringes any
patent or other proprietary right.
The Company cannot assure that these provisions will be adequate to protect
from infringement claims. The loss or inability to obtain or maintain any of
these technology licenses could result in delays in introduction of new services
7. GOVERNMENT APPROVAL
Government approval for the Company's systems will vary from country to
country. Regarding the water quality, certification to World Health Organization
standards was completed in Malta in January 2000. This will qualify the
desalination technology worldwide, with the exception of the U.S. Since all
initial plants will be overseas, this certification will be adequate.
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8. EFFECT OF ANY EXISTING OR PROPOSED GOVERNMENT REGULATIONS
Other than normal government regulations that any business encounters, the
Company's business is not effected by any government regulations. As with any
business, other governmental regulations and requirements may have a substantial
effect on the Company's business operations.
<TABLE>
<CAPTION>
Water Quality
(Values in milligrams per litre)
Constituents WHO EC EPA Ocean Power
- ------------ --- -- --- -----------
<S> <C> <C> <C> <C>
Total Dissolved
Solids (TDS) less than less than less than less than
or equal to or equal to or equal to or equal to
100 200 500 50
pH (units) - - 6.5-8.5 5.5-8.5
Sodium less than 200 less than 20 NS less than 20
Chloride less than 250 less than 25 less than 250 less than 25
Bromide - - - less than 25
Heavy Metals - less than 30 less than 1 less than or equal to EPA
Turbidity 0.5-1.0 NTU's
Odor 3 Threshold
Taste - - - B1 or B2 (Note 1)
Coliform NS NS less than
1 colony/100ml 0
Giardia Lambila NS NS 0 0
Le Gionella 0 0 0
</TABLE>
Note 1: International Association on Water Pollution Research and Control,
Flavor Wheel for Drinking Water, Water Quality Bulletin, Vol. 13, No 2-3, 1988
9. RESEARCH AND DEVELOPMENT COSTS
During fiscal years 1997, 1998 and 1999, the Company has expended
approximately $632,000.00, $360,000.00, and $258,000.00 respectively, on
research and development of its products. The costs were expenses as in the
Company's financial statements to reflect expenditures and salaries, equipment
and related to research and development primarily in the areas of hydrogen
generation and alkaline fuel cells. The bulk of the technology to be integrated
into the H20kW systems will be acquired from outside through acquisition, joint
ventures, licenses or purchase. The Company anticipates expenditure of
approximately $500,000 on research and development for 2000.
Fees generated, while paying directly for research and technology costs
accrued to date, will fund the operations of the Company, which includes funding
on-going technological development.
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The Company bases the sales prices for its products on the nature of the
product, market conditions and market norms, and competition, therefore, it is
not possible for the Company to estimate the extent to which the Company's
research and development expenses will be borne directly by the customer.
10. COST AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS
The Company is not involved in a business which involves the use of
materials in a manufacturing stage where such materials are likely to result in
the violation of any existing environmental rules and/or regulations. Further,
the Company does not own any real property which would lead to liability as a
land owner. Therefore, the Company does not anticipate that there will be any
costs associated with the compliance of environmental laws and regulations.
Both the product water and power must comply with various government
regulations regarding quality. This compliance reflects in the cost of equipment
and operations of the Company's desalination and power generation equipment.
11. EMPLOYEES
As of the date hereof, the Company employed 9 full-time employees. The
President, Vice President, Secretary Treasurer, 2 Executive Assistants to the
President and Vice President, 2 Chemists, Manufacturing Manager and an
Administrative Assistant. The Company hires independent contractors on an "as
needed" basis only. The Company has no collective bargaining agreements with its
employees. The Company believes that its employee relationships are
satisfactory. In the long term, the Company will attempt to hire additional
employees as needed based on its growth rate.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
These financial projections contain figures relating to plans,
expectations, future results, performance, events or other matters that are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, When used in the Plan of Operations, words such as
"estimate", project, "intend" "expect", "anticipate" and similar expressions are
intended to identify forward-looking statements.
Such forward looking statements involve numerous risks and uncertainties,
pertaining to technology, development of the Company's products and markets for
such products, timing and level of customers orders, competitive products and
pricing, changes in economic conditions and markets for the Company's products
and other risks and uncertainties.
15
<PAGE>
Actual results, performance and events are likely to differ and may differ
materially and adversely. Investors are cautioned not to place undue reliance on
these forward-looking statements which speak only as to the date of the Plan of
Operations.
The Company undertakes no obligation to release or deliver to investors
revisions to these forward-looking statements to reflect events or circumstances
after the date of the Plan of Operations, the occurrence of unanticipated events
or other matters.
a. PLAN OF OPERATION
The Company began its current operations in January, 1997 as Manufacturing
Technologies Corporation (MTC). This was a Delaware Corporation set up to
develop a business manufacturing modular seawater desalination and power plants.
In March of 1998, MTC became a wholly owned subsidiary of PTC Holdings, Inc.,
which subsequently merged with the Company in June 1999. (See Item 1 part "c"
above.) The Company is developing modular seawater desalination systems
integrated with environmentally friendly power sources and ultimately fueled
with renewable energy sources. These systems will be sold to a series of
regional joint ventures that will ideally take 15-25 year contracts to sell
water and power. This will provide the Company dual income streams from both
equipment sales and royalties from the sale of water and power.
The Company has a limited operating history on which to evaluate its
prospects. The risks, expenses and difficulties encountered by start-up
companies must be considered when evaluating the Company's prospects.
The Company's plan of operation for the next twelve months is as follows:
(i) Since completion of its water quality certification on 9 December 1999,
the Company has raised over $6.5 million pursuant to a private
placement financing which has allowed the Company to implement its
Product Development Program, as well as further business development,
strategic partnering and acquisition activities. Based on an analysis
of its sales and development costs, the Company intends to raise an
additional $5-10 million pursuant to a private placement financing in
the second quarter of 2000, and, depending on the pace of actual sales
and the acquisition activities of the Company, an additional round of
financing (for a minimum of $40 million dollars) in the third quarter
of 2000. The exact method by which this additional round of financing
will be raised will be based on the maximization of shareholder value.
The additional equity raised by the Company will allow the Company to
execute its business plan and should provide the Company with
sufficient capital to bring the Company to profitability in 2001.
(ii) The Company will be doing technology and product development in a number
of areas. They are:
a) low-temperature hydrogen generation
b) ejectors
c) chemical-free water pretreatment
d) enhanced heat transfer in plastic heat exchangers
e) high-performance alkaline fuel cells
16
<PAGE>
This work is all aimed at improving the performance and reducing the
capital cost of the Company's products.
(iii) The Company intends to make a number of acquisitions and purchases in
the next year. They are:
a) laboratory and test facilities
b) system integration facilities
c) Keeran
(iv) Although the Company plans to subcontract out as much work as possible,
it still anticipates increasing the number of employees from the
current nine full time and four consultants to approximately 24 full
time and eight to ten consultants.
ITEM 3. DESCRIPTION OF PROPERTY
(a) The main office of the Company is located at 5000 Robert J. Mathews
Parkway, El Dorado Hills, California 95762. It leases a 30,000 square feet
building which is currently configured as office, engineering and warehouse
space. The term of the Lease is for 5 years commencing April, 1997 and ending
April 30, 2002. The company has two, three year options to extend the lease. The
company also has an option to purchase the subject property during the period
January 1, 1999 and until September 1, 2000, and only between these dates,
Lessee shall have the option to purchase. As adequate financing becomes
available to the Company, laboratory and test facilities, and system integration
facilities will be installed.
(b) Investment Property: It is and will be the Company's policy to
generally avoid investments in illiquid assets such as real estate and
manufacturing equipment. With regards to excess funds and retained earnings, the
Company generally will invest such funds in money market funds or treasury
funds. The Company typically funds ongoing operations from cash flow, and
generally should not have significant funds available for long-term investment.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
1. The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of May 19, 2000 by (i) each
stockholder known by the Company to be the beneficial owner of more than five
percent (5%) of the outstanding Common Stock, (ii) each director of the Company,
(iii) each executive officer of the Company, and (iv) all directors and
executive officers as a group.
17
<PAGE>
Name and Address Percentage
Of Beneficial Number of Beneficially
Title of Class Owner Shares Owned (1)
- -------------- ----- ------ ---------
Common Joseph P.Maceda* 10,641,579 30.08%
5019 Susan Oaks Drive
Fair Oaks, CA 95628
Common Robert L. Campbell* 6,980,341 19.73%
15009 Rio Circle
Rancho Murieta,
CA 95683
Common Gloria Rose Ott* 2,620,000 7.40%
20250 Edgewood Farm Lane
Purcellville, VA 20132
Common J. Michael Hopper* 901,320 2.55%
135 Alder Avenue
Davis, CA 95616
* Indicates directors and/or executive officers.
Unless otherwise indicated in the footnote below, the Company has been advised
that each person above has sole voting power over the shares indicated above.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
(a) DIRECTORS AND EXECUTIVE OFFICERS:
NAME AGE OFFICE
---- --- ------
Gloria Rose Ott 45 Chairman of the Board and
Director
Joseph P. Maceda 47 President and Director
Robert L. Campbell 55 Vice President and Director
J. Michael Hopper 52 Secretary/Treasurer
1. Based upon 35,382,871 shares of common stock outstanding on May 19, 2000.
18
<PAGE>
b) BACKGROUND INFORMATION:
MS. GLORIA ROSE OTT - CHAIRMAN OF THE BOARD. Ms. Ott joined the Company as
Chairman of the Board in October, 1998 Ms. Ott was founder and Chairman of
RapidTech, Inc., from 1995 through 1999. RapidTech, a privately held
corporation, managed a Defense Advanced Research project that employed agile
manufacturing standards to the eventual mass-production of hybrid vehicles,
teaming with Detroit Center Tools and the Taylor Dunn Company.
In 1994, Ms. Ott received a Presidential Appointment and served on the Board of
Directors of the Overseas Private Investment Corporation (OPIC) until 1999. OPIC
sells investment services to assist U.S. companies in some 140 emerging
economies around the world with an active portfolio of $18.3 billion. In
addition, from 1992-1998 Ms, Ott served as the President of Miraido Corporation,
building a $24 million mixed-used real estate project on a city block in San
Jose, California. Ms. Ott earned her Bachelor of Arts Degree at San Francisco
State University and completed her graduate studies at Sonoma State University.
JOSEPH P. MACEDA - PRESIDENT. In January of 1997, Mr. Maceda founded
Manufacturing Technologies Corporation to pursue the modular seawater
desalination and power markets. This company became a wholly owned subsidiary of
PTC Holdings, Inc, in March of 1998. Mr. Maceda also served as President. In
June, 1997, PTC Holdings merged into PTC Group, Inc. (OTCBB Symbol: PWRE), and
Mr. Maceda became President of the merged company.
Mr. Maceda has 22 years of experience in business development, management,
finance, technology acquisition, and development in support of product
commercialization.
In March of 1987, Mr. Maceda founded Teledata International, Inc., which was
developing wireless, wide-area networks for remote monitoring and control
systems. Fuel cells were a subsidiary technology development as power supplies
but in June 1988, because of the overwhelming potential of fuel cells, all other
technologies were shelved and a new corporation was formed call H Power
Corporation, to develop fuel cell, hydrogen generation, and storage technologies
for use in the battery replacement, stationary power, and transportation
markets.
From June 19998 until he left H Power in December, 1996, Mr. Maceda raised
money, found technologies and developed strategic partnerships for marketing and
manufacturing with companies such as Singapore Technologies, Rolls-Royce; Neste
Oy; IBM; Duquesne; Sumitomo; British Nuclear Fuels; the U.S. Department of
Defense; the U.K. Ministry of Defense, and others
19
<PAGE>
ROBERT L. CAMPBELL - VICE PRESIDENT. Mr. Campbell has 24 years experience in the
high technology sectors of the defense electronics industry, is a pioneer in the
conversion of defense technologies to peaceful applications, and has 10 years
experience in the seawater desalination industry. Prior to founding Integrated
Water & Power,(IW&P) during 1997, Mr. Campbell was founding President and Chief
Executive Officer of Advanced Distillation Technology (ADTech, founded 1991). He
was responsible for the identification and negotiation of Kaiser Aerospace &
Electronics, Saudi Industries for Desalination Membranes and Systems, and
Singapore Technologies Automotive as key investors and partners. He was
responsible for ADTech's system design and the location and selection of all key
technologies and personnel.
In 1983, Mr. Campbell founded, operated and grew Advanced Counter Measure
Systems (ACMS) a privately held corporation which supplied advanced technology
electronic systems to all U.S. military services and several federal agencies.
During 1987 and 1988 Mr. Campbell arranged and concluded the significant sale of
equity in ACMS to TRW, Inc., of Delaware and EDO Corporation of New York.
While at Watkins-Johnson Co. from 1966 to 1983 Mr. Campbell progressed from
Member to the Technical Staff in Device R&D to Staff Scientist in Electronics
Warfare Systems, to Founding Department Manager of the Electronics Warfare
Systems group.
1967 to 1970 whilst in military service ((U.S. Army Security Agency and
Strategic Communications Command) he designed and deployed extensive test
network used to explore Electromagnetic Pulse effects in support of the
Safeguard Anti-Ballistic Missile System development.
Mr. Campbell is a graduate of St. Mary's College of California (B.S. Physics,
1966), did graduate studies at the University of Arizona (Systems Engineering
1968), participated in the Honors Program at Stanford University (Microwave
Engineering, 1975) and holds a California State Teaching Credential (lifetime).
J. MICHAEL HOPPER - SECRETARY/TREASURER. Mr. Hopper joined the Company in
January of 1997. Prior to his current position, from 1986 to 1996 Mr. Hopper was
President, Founder and Partner of Rainbow Video Duplicating, Inc., of New York,
a video duplicating service company with clients in corporate, medicine,
entertainment, and instructional fields. Mr. Hopper worked closely with clients
through all stages of package, design, printing, duplication, fulfillment and
final production of an annual distribution exceeding 3 million units. Mr. Hopper
has a Bachelor of Arts degree in communications from the University of Florida.
20
<PAGE>
SIGNIFICANT EMPLOYEES:
ROBERT ZHAO, Ph.D., DIRECTOR OF FUEL CELL TECHNOLOGY
Dr. Robert Zhao has 17 years of research and development experience in the field
of electrochemical energy generation and storage, ranging from primary and
secondary batteries to fuel cells. He holds a Ph.D. in Electrochemistry from
Case Western Reserve University, Cleveland, Ohio. As the director of the
Company's fuel cell technology, he oversees the development of fuel cell
components and low temperature fuel processors.
Before he joined the Company, Dr. Zhao was the program manager of high power PEM
fuel cells and a member of the company's strategic planning committee at H Power
Corporation. He was with H Power for two months before accepting his present
position with the Company in May 1997.
While Dr. Zhao was working on Defense Advance Research Projects Agency (DARPA)
projects at CCES (Case Center for Electrochemical Sciences), he accumulated five
years of experience on the electrochemical properties of small organic molecular
fuels. He has designed and expanded a variety of technology tools to enhance the
development of direct organic fuel cell technologies, such as direct methanol
fuel cells (DMFC).
Dr. Zhao's experience also covers the development of maintenance-free lead-acid
and lithium batteries.
ITEM 6. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and
Principle Other Annual
Position Year Salary Bonus Compensation
- -------- ---- ------ ----- ------------
Joseph P. Maceda 1998 $182,000 N/A N/A
President 1999 $186,368 N/A N/A
Robert L. Campbell 1998 $182,000 N/A N/A
V. President 1999 $186,368 N/A N/A
J. Michael Hopper 1998 $130,000 N/A N/A
Secretary/Treasurer 1999 $133,120 N/A N/A
Long Term Compensation i.e. Awards and Payouts not applicable
No other compensation was given to any of the above-listed employees during
the relevant time periods. Except for providing standard-form health insurance
to it's employees, during such time period, the Company did not pay any bonuses,
or grant any stock awards, options or stock appreciation rights, or pay any
other form of compensation of perquisite.
21
<PAGE>
Management Incentive Option Plan: The Company's Board of Directors has
directed the creation and implementation of a stock incentive option plan for
all employees. Details of this plan are in development, however, a block of 7
million shares of common stock has been authorized for use by such a plan. A
plan will be developed and a proposal will be presented to the Board of
Directors within the next 180 days.
There are no standard arrangements pursuant to which the Company directors
are compensated for services provided as a director. No additional amounts are
payable to the Company's directors for committee participation or special
assignments.
Employment Contracts: The Company has executed contracts with Joseph P.
Maceda, Robert L. Campbell, J. Michael Hopper and Lori O'Brien. Terms of these
contracts are in effect for three additional years and include basic
compensation. Other terms unique to each individual address issues of travel
restitution, transportation compensation, executive health benefits, and
professional association dues. These contracts are attached as part of the
exhibits.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1998, the Company issued 1,149,774 shares of its common stock in
consideration of money owed to a related party. During 1998, $2,026,132 was owed
and converted into common stock.
During 1998, the Company granted 55,000 warrants to certain officers,
directors and other shareholders of the Company. The warrants were issued with
an exercise price of $0.30 ($3.00 post-split) which represented the fair market
value of the stock at the time of grant, and the warrants expire on November 15,
2002.
22
<PAGE>
ITEM 8. DESCRIPTION OF REGISTRANT'S SECURITIES.
COMMON STOCK
The Company's Articles of Incorporation authorize the issuance of
500,000,000 shares of Common Stock, with a par value of $.01 per share, of which
35,382,371 shares are issued and outstanding.
Holders of shares of common stock are entitled to (one) vote for each share
on all matters to be voted on by the shareholders. Holders of common stock have
no cumulative voting rights.
The Company does not currently anticipate paying any dividends on its
Common Stock. In the event of a liquidation, dissolution or winding up of the
Company, the holders of shares of common stock are entitled to share pro-rata
all assets remaining after payment in full of all liabilities, subject however,
to any rights of the shareholders of preferred shares issued and outstanding at
the time of such liquidation, dissolution or winding up of the Company (see
Preferred Stock below). Holders of common stock have no preemptive rights to
purchase the Company's common stock. There are no conversion rights or
redemption or sinking fund provisions with respect to the common stock. All of
the outstanding shares of common stock are fully paid and non-assessable.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of
20,000,000 shares of Preferred Stock, with a par value of $.001 per share.
The Preferred Stock may be issued in various series and shall have
preference as to dividends and to liquidation of the Corporation. The Board of
Directors of the Company shall establish the specific rights, preferences,
voting privileges and restrictions of such preferred stock, or any series
thereof. Holders of preferred stock have no cumulative voting rights
WARRANTS
Pursuant to the private placement financing undertaken in January 2000, the
Company has issued 1,959,410 warrants, each to purchase one additional share of
common stock. The exercise price of the warrants ranges from $1.991 to $5.144,
and the warrants are exercisable at various dates through March 2003.
DEBENTURES
The Company has issued four convertible debentures, three for $100,000 and
one for $350,000. The debentures carry a rate of interest of 12% per annum, and
are due in 2004 (three of the debentures are due on August 1, 2004 and one
debenture is due on November 1, 20004). At the option of the holder, the
debentures can be converted into shares of common stock at a price of $1.50 per
share. Any shares issued pursuant to such conversion shall carry two purchase
warrants allowing the holder to purchase from the Company, at a price of $.75,
one additional restricted share for each purchase warrant held. The share
purchase warrants are valid for a period of 5 years after the date of issuance.
The Company's transfer agent is Interstate Transfer Company, 874 East 5900
South, Suite 101, Salt Lake City, Utah 84107.
23
<PAGE>
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
A. MARKET INFORMATION
The Company's common stock is traded on the over-the-counter bulletin
board (OTC/BB) under the symbol PWRE.
The following table sets for the high and low bid prices for the
Company's common stock for the past two years. The prices below also reflect
inter-dealer quotations, without retail mark-up, mark-down or commissions and
may not represent actual transactions.
High Low
Quarter Ended Ask $ Bid $ Close $
- ------------- ----- ----- -------
March 1998 19.20 11.875 17.50
June, 1998 39.30 29.30 30.00
September, 1998 35.00 23.70 24.00
December, 1998 5.30 4.60 4.80
March, 1999 8.10 6.20 6.80
June, 1999 5.40 5.10 5.30
All prices, above and below, reflect reverse 1-10 Stock
Split on August 20, 1999.
September, 1999 2.25 1.50 2.12
December, 1999 1.37 1.25 1.37
March, 2000 13.37 1.37 7.50
Source: Commodity Systems, Inc. Historical Data
As of May 18, 2000, the bid price of the Company's Common Shares was
$5.10 per share.
B. HOLDERS
As of May 18, 2000, there were approximately 177 holders of the
Company's common stock, as reported by the Company's transfer agent. This number
does not reflect those shareholders whose shares are held by a broker-dealer or
other institutional nominee.
24
<PAGE>
C. DIVIDENDS
The Company has not paid any dividends on its Common Stock. The Company
currently intends to retain any earnings for use in its business, and therefore
does not anticipate paying cash dividends in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
The Company is not subject to any legal proceedings or claims.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On June 23, 1999 the company entered into an Agreement with D.
Weckstein & Co., as financial consultants and investment bankers. As
compensation for its services under this agreement, D. Weckstein & Co., shall
receive 30,000 options to purchase shares of the Company's common stock,
exercisable at $5.00 per share for aperiod of three years from the date of the
Agreement.
On July 12, 1999, the Company entered into a Business Agreement with
Xcel Associates, Inc. for Xcel Associates to perform business consulting for the
Company in exchange for 500,000 shares of the Company's Common Stock.
On December 7, 1999 the Agreement with D. Weckstein & Co., Inc. was
amended whereby D. Weckstein & Co. Inc., will receive 125,000 options to
purchase 125,000 shares of common stock exercisable at $1.00 per share until
December 31, 2003.
In December, 1999, the Company offered a total of 755,085 shares of its
common stock to accredited U.S. residents of Colorado only. This offering was
made in reliance on the exemption available from registration provided by Rule
504 of Regulation D of the Securities Act of 1933. The Company raised a total of
$600,000.00 in this offering, which funds were used for Transfer Fees, Legal
Fees, Finder's Fees, Selling Expenses, Salaries & Fees, Rental/Leasing,
Repayment of Indebtedness, Working Capital, Research and Development and
Marketing.
In January 2000, pursuant to a private placement financing, the Company
offered units comprised of one common share and one warrant, with the right to
purchase one additional share of common stock. The offering was made in reliance
upon the exemption from registration under Section 4(6) of the Securities Act of
1933, as amended, and comparable provisions of state law. Each of the investors
that participated in the offering was an accredited investor as that term is
defined in Regulation D of the Securities Act. Pursuant to the offering, the
Company issued a total of 1,809,967 units to 55 investors and raised a total of
$6,646,486. The proceeds of the offering are being used for Transfer Fees, Legal
Fees, Finders Fees, Selling Expenses, Acquisition of other Businesses, Repayment
of Indebtedness, Installation of Machinery and Equipment, Working Capital,
Research and Development and Marketing.
During January 2000, the Company entered into a three year consulting
contract agreement with Clement J. Wohlreich. The agreement calls for the
Company to issue 100,000 units at $3.00 per unit, consisting of one share of the
Company's common stock and one warrant. The warrants have a life of three years
and a purchase price of $1.50 per warrant.
During January 2000, the Company entered into a three year consulting
contract agreement with EBM, Inc. The agreement calls for the Company to pay
$4,000 per month until the company secures a total of $5,000,000 in financing,
then the Company will pay $6,000 per month for 12 months and grant 100,000
options to purchase the Company's common stock. The options will have a four
year life and will be priced at $1.50 per share.
During January 2000, the Company entered into a consulting agreement
with Donner Corp. International. The agreement calls for the Company to pay a
retainer of $2,500, $10,000 for services in connection with assisting the
Company to implement its business objectives and issue 10,000 warrants to
purchase the Company's common stock at a strike price equal to 80% of the lowest
five-day average stock closing price from January 2-31,2000. The warrants are
exercisable for three years beginning February 1, 2000.
During February 2000, the Company signed an amendment to its agreement
for consulting services with D. Weckstein & Co. The amendment calls for the
Company to issue 75,000 options to purchase the Company's common stock
exercisable at $6.00 per share for three years.
25
<PAGE>
<TABLE>
<CAPTION>
NO. OF
NAME SHARES DATE: CONSIDERATION
- ---- ------ ----- -------------
<S> <C> <C> <C>
11 persons 441,000 1997 Conversion of Debentures valued at $.30 per share
16 persons 1,379,000 1998 Conversion of Debentures valued at $.30 per share
3 shareholders of 371,000 6/19/98 Acquisition of Tessier Resources valued at $40 per share
Tessier Resources
Barry Worshoufsky 21,734 7/28/98 Conversion of debt valued at $1.50 per share
Jacques DeGroote 10,000 5/14/98 Services rendered valued at $1.59 per share
Gloria Rose Ott 10,000 5/18/98 Services rendered valued at $1.59 per share
Liberty Capital Ltd. 10,000 5/21/98 Services rendered valued at $1.59 per share
Bensonal Limited 226,661 6/19/98 Conversion of debt valued at $1.80 per share
Brighton Financial Ltd 250,000 6/29/98 Conversion of debt valued at $1.80 per share
Paradon Limited 250,000 6/29/98 Conversion of debt valued at $1.80 per share
Freedom Financial 533,333 11/4/98 Conversion of debt valued at $1.80 per share
Bensonal Limited 13,502 11/4/98 Conversion of debt valued at $1.80 per share
Texco Investments Ltd. 182,750 12/31/98 Conversion of debt valued at $1.80 per share
Bensonal Limited 182,750 12/31/98 Conversion of debt valued at $1.80 per share
7 persons 260,000 1998 Conversion of Debentures valued at $3.00 per share
Venture Tech, Inc. 50,000 1/27/99 Conversion of debenture at $15.00 per share
Keeran Corp. NV 400,000 6/8/99 Purchase of equipment valued at $.74 per share
Venture Tech, Inc. 150,000 6/8/99 Conversion of debenture at $15.00 per share
Freedom Financial 300,000 5/17/99 Conversion of debt valued at $1.50 per share
Paradon Limited 200,000 5/17/99 Conversion of debt valued at $1.50 per share
Enterprise Capital 220,738 5/17/99 Conversion of debt valued at $1.50 per share
International, Inc.
Shareholders of 25,044,146 6/22/99 Merger Agreement with PTC Holdings, Inc.
PTC Holdings, Inc.
XCEL Associates 15,000 7/15/99 Terms of Business Consulting Agreement Valued at
$8.40
XCEL Associates 10,000 7/15/99 Exercise partial option per contract - 10,000
options at $5.00, or $50,000
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
NO. OF
NAME SHARES DATE: CONSIDERATION
- ---- ------ ----- -------------
<S> <C> <C> <C>
XCEL Associates 10,000 7/26/99 Second option - 10,000 options at $5.00, or $50,000
Edward Meyer 50,000 8/12/99 Loan Agreement 8/9/99 Between Xcel & Ocean Power
Edward T. Whelan 50,000 8/12/99 Loan Agreement 8/9/99 Between Xcel & Ocean Power
XCEL Associates 20,000 9/2/99 Terms of Business Consulting Agreement valued at
$8.40
XCEL Associates 50,000 9/10/99 Stock Options at $1.00 per share, or $50,000
Carl Tortora 50,000 9/10/99 Stock Options at $1.00 per share, or $50,000
Frankie Fu 20,000 11/29/99 Finder's Fee in connection with Merger valued at
$1.34
Freedom Funding, Inc. 100,000 11/29/99 Finder's Fee in connection with Merger valued at
$1.34
Venture Investment 80,000 11/29/99 Finder's Fee in connection with PTC
Group, Inc. Holings, Inc. Merger valued at $1.34
Sandra Marshman 71,839 12/10/99 Rule 504 offering valued at $0.696 per share
Mark J. Sodden 49,020 12/13/99 Rule 504 offering valued at $0.714 per share
Sandra Marshman 111,111 12/13/99 Rule 504 offering valued at $0.900 per share
Orienstar Finance Ltd 175,070 12/14/99 Rule 504 offering valued at $0.714 per share
Waterford Enterprises 33,333 12/15/99 Rule 504 offering valued at $0.900 per
LLC. share
Orienstar Finance Ltd 93,939 12/20/99 Rule 504 offering valued at $0.825 per share
Sandra Marshman 20,773 12/23/99 Rule 504 offering valued at $0.828 per share
Edward Meyer 25,000 1/4/2000 Loan Agreement dated 8/9/99 valued at $2.75
Edward T. Whelan 25,000 1/4/2000 Loan Agreement dated 8/9/99 valued at $2.75
Robert Bylin 97,580 1/4/2000 Conversion of $100,000 debt per agreement 12/29/99
valued at $1.025 per share
CJB Consulting Inc. 30,000 1/18/2000 Consulting Agreement valued at $3.8125
Gold Capital Group 30,000 1/18/2000 Consulting Agreement valued at $3.8125
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
NAME NO. OF UNITS DATE CONSIDERATION
---- ------------ ---- -------------
<S> <C> <C> <C>
A.J.B.de Jong Luneau 47,619 1/7/00 Private Placement Subscription
Agreement valued at $2.10 per unit
Carl A.P.Fricke Trust 62,792 1/20/00 Private Placement Subscription
Agreement valued at $3.185 per unit
David Weissberg 40,390 1/24/00 Private Placement Subscription
Agreement valued at $3.169 per unit
Steven & Sharon Weinberg 10,000 1/25/00 Private Placement Subscription
Agreement valued at $3.209 per unit
Bill J. Tomasik 15,625 1/26/00 Private Placement Subscription
Agreement valued at $3.20 per unit
Charles Weiner 7,813 1/26/00 Private Placement Subscription
Agreement valued at $3.20 per unit
John P. Cole 20,000 1/27/00 Private Placement Subscription
Agreement valued at $3.25 per unit
Michael D. Lockwood 1,000,000 1/27/00 Private Placement Subscription
Agreement valued at $3.00 per unit
Howard Lockwood 30,677 1/27/00 Private Placement Subscription
Agreement valued at $3.259 per unit
John V. Doyle/Trustee 15,338 1/28/00 Private Placement Subscription
Agreement valued at $3.259 per unit
John V. Doyle 30,677 1/28/00 Private Placement Subscription
Agreement valued at $3.259 per unit
Bill J. Tomasik 7,576 1/31/00 Private Placement Subscription
Agreement valued at $3.299 per unit
Jeffrey Freedman 50,000 2/1/00 Private Placement Subscription
Agreement valued at $3.00 per unit
Darryl Cohen 28,011 2/4/00 Private Placement Subscription
Agreement valued at $3.570 per unit
Murray Investment Club 13,588 2/7/00 Private Placement Subscription
George A. Murray TTEE Agreement valued at $3.679 per unit
George A. Davala 26,525 2/8/00 Private Placement Subscription
Agreement valued at $3.770 per unit
CounterPoint Master LLC 66,313 2/8/00 Private Placement Subscription
Agreement valued at $3.770 per unit
Dennis & Leslie Berquist 20,000 2/9/00 Private Placement Subscription
Agreement valued at $3.854 per unit
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
NAME NO. OF UNITS DATE CONSIDERATION
---- ------------ ---- -------------
<S> <C> <C> <C>
Robert & Amy Banov 6,487 2/9/00 Private Placement Subscription
Agreement valued at $3.854 per unit
Lisa Brown 12,973 2/9/00 Private Placement Subscription
Agreement valued at $3.854 per unit
Ambion Properties Ltd. 48,019 2/11/00 Private Placement Subscription
Agreement valued at $4.165 per unit
Alan Smith 24,010 2/11/00 Private Placement Subscription
Agreement valued at $4.165 per unit
Steven Kamhi 12,005 2/11/00 Private Placement Subscription
Agreement valued at $4.165 per unit
Arnold Kamhi 12,005 2/11/00 Private Placement Subscription
Agreement valued at $4.165 per unit
Frederic Seamon III 24,010 2/11/00 Conversion of $100,000 debt valued at
$4.165 per share.
Kevin Brown 15,000 2/14/00 Private Placement Subscription
Agreement valued at $4.334 per unit
Brad Hall 5,326 2/15/00 Private Placement Subscription
Agreement valued at $4.694 per unit
Murray Investment Club 4,260 2/15/00 Private Placement Subscription
George A. Murray TTEE Agreement valued at $4.694 per unit
Thomas E. Hamlin 9,000 2/17/00 Private Placement Subscription
Agreement valued at $5.381 per unit
R. Weatherford 9,124 2/22/00 Private Placement Subscription
Agreement valued at $5.480 per unit
R. Hoffman 9,124 2/22/00 Private Placement Subscription
Agreement valued at $5.480 per unit
S. Hastings 2,000 2/22/00 Private Placement Subscription
Agreement valued at $5.480 per unit
Bill J. Tomasik 14,018 2/23/00 Private Placement Subscription
Agreement valued at $5.350 per unit
William N. Walling, Jr. 4,000 2/24/00 Private Placement Subscription
Agreement valued at $5.430 per unit
Jeffrey Freedman 9,208 2/24/00 Private Placement Subscription
Agreement valued at $5.430 per unit
Kevin Smokowski 21,352 2/25/00 Private Placement Subscription
Agreement valued at $5.620 per unit
Bio Ventures 12,495 2/28/00 Private Placement Subscription
Agreement valued at $5.990 per unit
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
NAME NO. OF UNITS DATE CONSIDERATION
---- ------------ ---- -------------
<S> <C> <C> <C>
Pearlmay S. Schoensee 2,500 2/29/00 Private Placement Subscription
Agreement valued at $6.570 per unit
Alan Smith 7,610 2/29/00 Private Placement Subscription
Agreement valued at $6.570 per unit
AlanRoss Keen 1,522 2/29/00 Private Placement Subscription
Agreement valued at $6.570 per unit
Lisa Brown 7,610 2/29/00 Private Placement Subscription
Agreement valued at $6.570 per unit
Darryl Cohen 15,220 2/29/00 Private Placement Subscription
Agreement valued at $6.570 per unit
Robert & Amy Banov 7,610 2/29/00 Private Placement Subscription
Agreement valued at $6.570 per unit
Michael H. Blank 3,805 2/29/00 Private Placement Subscription
Agreement valued at $6.570 per unit
Jay R. Stone 3,805 2/29/00 Private Placement Subscription
Agreement valued at $6.570 per unit
Kendall Stone 3,805 2/29/00 Private Placement Subscription
Agreement valued at $6.570 per unit
Ruth & Ted Bauer Family Foundation 7,610 2/29/00 Private Placement Subscription
Agreement valued at $6.570 per unit
Ben Reppond 10,000 2/29/0 Private Placement Subscription
Agreement valued at $6.570 per unit
Kevin Comcowich 8,554 2/29/00 Private Placement Subscription
Agreement valued at $6.570 per unit
Kenneth G. Puttick 26,882 3/1/00 Private Placement Subscription
Agreement valued at $7.44 per unit
Siri Berg 3,360 3/1/00 Private Placement Subscription
Agreement valued at $7.44 per unit
Andrew D. Hart 3,360 3/1/00 Private Placement Subscription
Agreement valued at $7.44 per unit
William C. Adams 1,342 3/1/00 Private Placement Subscription
Agreement valued at $7.450 per unit
Edward J. Tirello, Jr. 6,711 3/1/00 Private Placement Subscription
Agreement valued at $7.450 per unit
Charles T. Bauer 6,075 3/2/00 Private Placement Subscription
Agreement valued at $8.230 per unit
Cameron Holdings, Inc. 20,266 3/3/00 Conversion of $121,392 of debt per
agreement dated March 3, 2000. value
per share is $5.99.
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
NAME NO. OF UNITS DATE CONSIDERATION
---- ------------ ---- -------------
<S> <C> <C> <C>
Carl A.P.Fricke Trustee 62,792 3/9/00 Exercise of Warrants re Private
Placement Subscription Agreement dated
1/20/00 valued at $1.991 per warrant
Crane Kirkbride 6,165 3/14/00 Private Placement Subscription
Agreement valued at $8.110 per unit
Regis Investment Company 66,667 3/16/00 Conversion of a $100,000 Debenture
dated November 16, 1999. Certificate is
to be dated 11/16/99
Regis Investment Company 133,333 3/16/00 Conversion of a $100,000 Debenture
dated November 16, 1999.
Hoi XuanNgo 1,034 3/20/00 Private Placement Subscription
Agreement valued at $6.770 per unit
Bradley B. Crawford 7,657 3/21/00 Private Placement Subscription
Agreement valued at $6.770 per unit
Terence Foley 2,210 3/27/00 Conversion of $10,420 debt per signed
agreement dated 20 March, value per
share is $4.714.
Hoi XuanNgo 832 3/31/00 Private Placement Subscription
Agreement valued at $6.010 per unit
Steven W. Martineau 47,393 4/17/00 Private Placement Subscription
Agreement valued at $3.165 per unit
Bill J. Tomasik 5,679 4/24/00 Private Placement Subscription
Agreement valued at $2.600 per unit
Steven Weinberg 10,000 4/24/00 Private Placement Subscription
Agreement valued at $2.600 per unit
David Weissberg 15,000 4/24/00 Private Placement Subscription
Agreement valued at $2.600 per unit
Bensonal Limited 296,372 5/17/00 Conversion of $444,558 of debt per agreement
dated December 31, 1999
Venture Investment Group 296,372 5/17/00 Conversion of $444,558 of debt per agreement
dated December 31, 1999
</TABLE>
31
<PAGE>
None of the issuances of shares listed above were registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"). Sales of shares made in reliance on the exemption provided by
Regulation D, Rule 504, were made in the State of Colorado pursuant to
applicable Colorado law. Sales of shares pursuant to the private placement
financing were made in reliance on the exemption provided by Section 4(6) of the
Securities Act. Issuances of shares pursuant to the conversion of debentures
were made in reliance upon the exemption provided by Section 3(a)(9) of the Act.
All other issuances including the exchange of shares for the merger with PTC
Holdings, Inc., the acquisition of Tessier Resources, Inc., conversion of debt,
and pursuant to various contracts were made in reliance on the exemption
provided by Section 4(2) of the Act. The Company believes that the Section 4(2)
exemption was available and appropriate because the issuances were made in
private and isolated transactions with informed investors.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the provisions of the General Corporation Law of the State
of Delaware (the "Delaware Code"), the Company has the power to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that the person
is or was a director, officer, employee or agent of the corporation if such
officer or director acted in good faith and in a manner reasonably believed to
be in or not opposed to the best interest of the Company. Any such person may be
indemnified against expenses, including attorneys' fees, judgments, fines and
settlements to the extent they have been successful on the merits or otherwise
in defense of any action, suit or proceeding. Further, the Delaware Code permits
a corporation to purchase and maintain liability insurance on behalf of its
officers, directors, employees and agents. Neither the Company's Articles of
Incorporation nor By-Laws makes provisions for the indemnification of the
Company's officers and directors nor for the purchase of liability insurance on
behalf of its officers, directors, employees and agents. The Company does not
maintain any such liability insurance.
32
<PAGE>
PART F/S
The Company's consolidated financial statements for the fiscal years ended
December 31, 1998 and 1999, have been examined to the extent indicated in their
reports by Jones, Jensen & Company, independent certified public accountants,
and have been prepared in accordance with generally accepted accounting
principles and pursuant to Regulation S-B as promulgated by the Commission and
are included herein in response to Item 15 of this Form 10-SB.
33
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
<PAGE>
C O N T E N T S
Independent Auditors' Report................................................. 3
Consolidated Balance Sheet................................................... 4
Consolidated Statements of Operations........................................ 6
Consolidated Statements of Stockholders' Equity (Deficit).................... 7
Consolidated Statements of Cash Flows........................................ 9
Notes to the Consolidated Financial Statements...............................11
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Ocean Power Corporation
(Formerly PTC Group, Inc. and Subsidiary)
El Dorado Hills, California
We have audited the accompanying consolidated balance sheet of Ocean Power
Corporation (formerly PTC Group, Inc. and Subsidiary) (a development stage
company) as of December 31, 1999, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the years ended
December 31, 1999 and 1998 and from inception on March 26, 1992 through December
31, 1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits 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
consolidated financial statement presentation. We believe that our audits
provide 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 Ocean Power
Corporation (formerly PTC Group, Inc. and Subsidiary) (a development stage
company) as of December 31, 1999, and the results of their operations and their
cash flows for the years ended December 31, 1999 and 1998 and from inception on
March 26, 1992 through December 31, 1999 in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 7 to the
consolidated financial statements, the Company is a development stage company
which has generated significant losses from inception and a stockholders deficit
of $5,006,233 at December 31, 1999 which raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 7. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
By:/s/Jones, Jensen & Company
- -----------------------------
Jones, Jensen & Company
Salt Lake City, Utah
April 30, 2000
3
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Consolidated Balance Sheet
ASSETS
------
December 31,
1999
--------
CURRENT ASSETS
Cash $368,276
--------
Total Current Assets 368,276
--------
EQUIPMENT (Note 2) 52,555
--------
OTHER ASSETS
Equipment procurement costs (Note 3) 364,110
Deposits 20,402
--------
Total Other Assets 384,512
--------
TOTAL ASSETS $805,343
========
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
December 31,
1999
------------
CURRENT LIABILITIES
Accounts payable $ 1,453,908
Accrued expenses (Note 6) 326,582
Notes payable - related parties (Note 4) 3,381,086
Convertible debentures payable (Note 5) 650,000
------------
Total Current Liabilities 5,811,576
------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 20,000,000 shares authorized of
$0.001 par value; no shares outstanding --
Common stock: 500,000,000 shares authorized of
$0.01 par value; 32,835,925 shares issued and outstanding 328,359
Additional paid-in capital 5,782,025
Deficit accumulated during the development stage (11,116,617)
------------
Total Stockholders' Equity (Deficit) (5,006,233)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 805,343
============
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Consolidated Statements of Operations
<TABLE>
<CAPTION>
From
Inception on
For the Years Ended March 26,
December 31, 1992 Through
-------------------------- December 31,
1999 1998 1999
----------- ----------- -------------
<S> <C> <C> <C>
REVENUES $ - $ - $ -
EXPENSES
General and administrative 5,053,844 2,652,181 9,948,259
Depreciation and amortization 18,742 17,136 50,694
----------- ----------- -----------
Total Expenses 5,072,586 2,669,317 9,998,953
----------- ----------- -----------
LOSS FROM OPERATIONS (5,072,586) (2,669,317) (9,998,953)
----------- ----------- -----------
OTHER INCOME (EXPENSE)
Loss on sale of assets (387,649) -- (387,649)
Interest expense (432,052) (248,647) (730,015)
----------- ----------- -----------
Total Other Income (Expense) (819,701) (248,647) (1,117,664)
----------- ----------- -----------
NET LOSS $(5,892,287) $(2,917,964) $(11,116,617)
=========== =========== ===========
BASIC LOSS PER SHARE $ (0.22) $ (0.23)
=========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING 26,465,941 12,501,630
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
6
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
-------------------------- Paid-In Development
Shares Amount Capital Stage
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Inception, March 26, 1992 -- $ -- $ -- $ --
Net loss from inception on
March 20, 1992 through
December 31, 1997 -- -- -- (2,306,366)
----------- ----------- ----------- -----------
Balance, December 31, 1997 -- -- -- (2,306,366)
Common stock issued for cash
at $0.003 per share 949,420 9,494 (6,923) --
Common stock issued for
conversion of debt at $0.003
per share 24,094,726 240,947 (157,066) --
Net loss for the year ended
December 31, 1998 -- -- -- (2,917,964)
----------- ----------- ----------- -----------
Balance, December 31, 1998 25,044,146 250,441 (163,989) (5,224,330)
Recapitalization (Note 1) 6,426,450 64,265 3,524,750 --
September 2, 1999, common
stock issued for services valued
at $0.29 per share 20,000 200 5,600 --
September 9, 1999, options
issued below market value -- -- 190,000 --
September 9, 1999, common
stock issued for cash at $1.00
per share 100,000 1,000 99,000 --
October 1, 1999, cancellation of
common stock valued at zero (502,500) (5,025) 5,025 --
November 16, 1999, warrants
issued below market value -- -- 650,000 --
----------- ----------- ----------- -----------
Balance forward 31,088,096 $ 310,881 $ 4,310,386 $(5,224,330)
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
7
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
-------------------------- Paid-In Development
Shares Amount Capital Stage
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance forward 31,088,096 $ 310,881 $ 4,310,386 $ (5,224,330)
November 29, 1999, common
stock issued for finders fee
valued at $1.34 per share 400,000 4,000 533,200 --
Stock offering costs -- -- (537,200) --
December 10, 1999, common
stock issued for cash at $0.70
per share 71,839 718 49,282 --
December 10, 1999, common
stock issued for cash at $0.71
per share 175,070 1,751 123,249 --
December 13, 1999, common
stock issued for cash at $0.84
per share 160,131 1,601 133,399 --
December 15, 1999, common
stock issued for cash at $0.90
per share 33,333 333 29,667 --
December 20, 1999, common
stock issued for cash at $0.83
per share 193,939 1,939 158,061 --
December 23, 1999, common
stock issued for cash at $0.83
per share 120,773 1,208 98,792 --
December 31, 1999, common
stock issued for conversion of
related party debt at $1.50 per
share 592,744 5,928 883,189 --
Net loss for the year ended
December 31, 1999 -- -- -- (5,892,287)
------------ ------------ ------------ ------------
Balance, December 31, 1999 32,835,925 $ 328,359 $ 5,782,025 $(11,116,617)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
8
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
From
Inception on
For the Years Ended March 26,
December 31, 1992 Through
---------------------------- December 31,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (5,892,287) $ (2,917,964) $(11,116,617)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation 18,742 17,136 50,694
Common stock issued for services and
equity discounts 845,800 -- 845,800
Loss on sale of assets 387,649 -- 387,649
Change in operating asset and liability accounts:
(Increase) decrease in other assets (481,088) (417,957) (1,043,477)
Increase (decrease) in accounts payable 1,301,381 523,741 2,279,029
Increase (decrease) in cash overdraft -- (33,229) --
Increase (decrease) in accrued expenses 162,030 126,600 326,582
------------ ------------ ------------
Net Cash Used by Operating Activities (3,657,773) (2,701,673) (8,270,340)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of assets 1 -- --
Purchase of fixed assets -- (17,151) (106,331)
------------ ------------ ------------
Net Cash (Used) Provided by Investing Activities 1 (17,151) (106,331)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of note payable (246,933) (1,302) (248,235)
Loans from related parties 2,919,797 2,636,857 7,556,729
Issuance of convertible debentures 650,000 -- 650,000
Common stock issued for cash 700,000 86,453 786,453
------------ ------------ ------------
Net Cash Provided by Financing Activities 4,022,864 2,722,008 8,744,947
------------ ------------ ------------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 365,092 3,184 368,276
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 3,184 -- --
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 368,276 $ 3,184 $ 368,276
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
9
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
From
Inception on
For the Years Ended March 26,
December 31, 1992 Through
------------------------- December 31,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
CASH PAID FOR:
Interest $ -- $ -- $ --
Income taxes $ -- $ -- $ --
NON-CASH FINANCING ACTIVITIES
Common stock issued for services and
equity discounts $ 845,800 $ -- $ 845,800
Common stock issued in acquisition of subsidiary $ 3,589,015 $ -- $ 3,589,015
Common stock issued for conversion of related
party debt $ 889,117 $ -- $ 889,117
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
10
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The consolidated financial statements presented are those of Ocean
Power Corporation and its wholly-owned Subsidiaries (the Company).
The Company has had limited activities since inception and is
considered a development stage company because no significant
revenues have been realized and planned principal operations have
not yet commenced. The Company is planning to engage in the
business of developing and marketing water desalination and
renewable power generation systems that will be modular and mass
produced. The Company plans to pursue regional joint ventures in
water and power challenged markets to build, own, operate and
transfer modular seawater desalination and power plants.
PTC Holdings, Inc. (Holdings) (formerly H Power Technologies,
Inc.) was incorporated on March 26, 1992 under the laws of the
State of Delaware to engage in any lawful act or activity for
which corporations may be organized under the General Corporation
Laws of Delaware.
PTC Group, Inc., (Group) (formerly Intryst, Inc.) was incorporated
under the laws of the State of Idaho on April 24, 1969.
On June 22, 1999, Group and Holdings completed an Agreement and
Plan of Merger whereby Group issued 25,044,146 shares of its
common stock in exchange for all of the outstanding common stock
of Holdings. Immediately prior to the Agreement and Plan of
Merger, Group had 6,426,450 shares of common stock issued and
outstanding. The acquisition was accounted for as a
recapitalization of Holdings because the shareholders of Holdings
controlled Group after the acquisition. Therefore, Holdings was
treated as the acquiring entity for accounting purposes and Group
was the surviving entity for legal purposes. There was no
adjustment to the carrying value of the assets or liabilities of
Holdings. On August 19, 1999, the shareholders of the Company
authorized a 1 for 10 reverse stock split. All references to
shares of common stock have been retroactively restated.
On July 12, 1999, Group changed its name to Ocean Power
Corporation (Idaho).
On July 21, 1999, Ocean Power Corporation (Delaware) was formed
for the purpose of changing the domicile of Ocean Power
Corporation (Idaho).
On July 28, 1999, Delaware and Idaho merged to change the domicile
from Idaho to Delaware with Delaware being the surviving entity.
11
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS (Continued)
The Subsidiaries:
Integrated Water and Power Corporation (IWP) (formerly Clean Air
Power Technologies Corporation) (formerly Advanced Technologies
Manufacturing Corporation) was incorporated on December 11, 1996
under the laws of the State of Delaware to engage in any lawful
act or activity for which corporations may be organized under the
General Corporation Laws of Delaware. IWP is currently inactive.
Advanced Power Sources Corporation (APS) (formerly ZE-Power
Technologies Corporation) (formerly P.T.C. Corporation) was
incorporated on March 26, 1992 under the laws of the State of
Delaware to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Laws
of Delaware. APS is currently inactive.
Manufacturing Technologies Corporation (MTC) was incorporated on
January 7, 1997 under the laws of the State of Delaware to engage
in any lawful act or activity for which corporations may be
organized under the General Corporation Laws of Delaware. MTC is
currently inactive.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's consolidated financial statements are prepared using
the accrual method of accounting. The Company has elected a
December 31 year end.
12
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
b. Basic Loss Per Share
The computation of basic loss per share of common stock is based
on the weighted average number of shares outstanding during the
period of the financial statements. Fully diluted loss per share
is not presented because of the antidilutive nature of the stock
equivalents.
<TABLE>
<CAPTION>
For the Year Ended
December 31, 1999
--------------------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Net loss $ (5,892,287) 26,465,941 $ (0.22)
================= ================== =================
For the Year Ended
December 31, 1998
--------------------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
Net loss $ (2,917,964) 12,501,630 $ (0.23)
================= ================== =================
</TABLE>
c. Provision for Taxes
At December 31, 1999, the Company has net operating loss
carryforwards of approximately $11,000,000 that may be offset
against future taxable income through 2019. No tax benefit has
been reported in the financial statements, because the Company
believes there is a 50% or greater change the carryforwards will
expire unused. Accordingly, the potential tax benefits of the loss
carryforwards are offset by a valuation allowance of the same
amount.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
e. Principles of Consolidation
The December 31,1999 financial statements are consolidated with
Ocean Power Corporation, Integrated Water and Power Corporation,
Advanced Power Sources Corporation and Manufacturing Technologies
Corporation. All significant intercompany accounts and
transactions have been eliminated.
13
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Equipment
Office equipment is recorded at cost. Major additions and renewals
are expensed in the year incurred. Major additions and renewals
are capitalized and depreciated over their estimated useful lives
of 5 to 7 years using the straight-line method. Depreciation
expense for continuing operations for the years ended December 31,
1999 and 1998 was $18,742 and $17,136, respectively.
Equipment consists of the following:
December 31,
1999
-----------------
Office equipment and furniture $ 36,748
Computers and software 46,834
Phone system 19,667
Accumulated depreciation (50,694)
-----------------
Net Equipment $ 52,555
=================
g. 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 and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ form those estimates.
h. Change in Accounting Principle
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending
on the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. The adoption of this statement had no material
impact on the Company's financial statements.
i. Revenue Recognition Policy
The Company currently has no source of revenues. Revenue
recognition policies will be determined when principal operations
begin.
14
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
j. Advertising
The Company follows the policy of charging the costs of
advertising to expense as incurred.
k. Long-lived Assets
All long-lived assets are evaluated yearly for impairment per SFAS
121. Any impairment in value is recognized as an expense in the
period when the impairment occurs.
NOTE 3 - EQUIPMENT PROCUREMENT COSTS
During July and August 1999, the Company made deposits on a vapor
compression distillation unit to be used in the development of its
water desalination system in the amount of $300,000. The $300,000
will be applied to the $500,000 purchase price of the equipment.
The title of the equipment will be transferred to the Company when
the remaining $200,000 is received.
During September 1999, the Company paid moving, storage and set up
costs on the above mentioned equipment of $64,110 which will have
been capitalized, and will be part of the cost of the equipment
once the title to the equipment is transferred to the Company.
NOTE 4 - NOTES PAYABLE - RELATED PARTIES
<TABLE>
<CAPTION>
Notes payable at December 31, 1999 consist of the following:
<S> <C>
Note payable to a related party bearing interest at 10% per annum,
due upon demand, secured by personal
guarantee of officer. $ 500,000
Unsecured note payable to a related party bearing interest at 10%
per annum, all unpaid interest and principle due
on demand. 215,704
Unsecured note payable to a related party bearing interest at 10%
per annum, all unpaid interest and principle due
on demand. 350,557
Unsecured note payable to a related party bearing interest at 10%
per annum, all unpaid interest and principle due
on demand. 174,223
-----------------
Balance Forward $ 790,484
-----------------
</TABLE>
15
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
<TABLE>
<CAPTION>
NOTE 4 - NOTES PAYABLE - RELATED PARTIES (Continued)
<S> <C>
Balance Forward $ 790,484
Unsecured note payable to a related party bearing interest at 10%
per annum, all unpaid interest and principle due
upon demand. 633,059
Unsecured note payable to a related party bearing interest at
10% per annum, due upon demand. 609,818
Unsecured note payable to a related party bearing interest at
10% per annum, due upon demand. 121,718
Unsecured note payable to a related party bearing interest at
10% per annum, due on demand. 121,647
Unsecured note payable to a related party bearing interest at
10% per annum, due upon demand. 31,209
Unsecured note payable to a related party bearing interest at
10% per annum, due upon demand. 402,186
Unsecured note payable to a related party bearing interest at
10% per annum, due upon demand. 61,884
Unsecured note payable to a related party bearing interest at
10% per annum, due upon demand. 229,968
Unsecured note payable to a related party bearing interest at
10% per annum, due upon demand. 43,347
Unsecured note payable to a related party bearing interest at
10% per annum due upon demand. 143,644
Unsecured note payable to a related party bearing interest at
10% per annum, due upon demand. 51,087
Note payable bearing interest at 10% per annum, due upon demand,
secured by technology, life insurance and proceeds
from operations. 100,000
Unsecured note payable to a related party bearing interest at
10% per annum, due upon demand. 250,000
-----------------
Balance Forward $ 4,040,051
-----------------
</TABLE>
16
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 4 - NOTES PAYABLE - RELATED PARTIES (Continued)
Balance Forward $ 4,040,051
Less advances to employees:
1997 123,826
1998 114,805
1999 420,334
-----------------
Total advances 658,965
-----------------
Total Notes Payable - Related Parties, Net $ 3,381,086
=================
Annual maturities of notes payable -
related parties are as follows:
Years Ending
December 31,
------------
2000 $ 3,381,086
=================
Total interest expense to related parties was $332,545 and
$228,842 for the years ended December 31, 1999 and 1998,
respectively.
During 1997, 1998 and 1999, the Company made cash advances of
$658,965 to employees. The advances were formalized through the
signing of notes receivable bearing interest at 10% per annum with
each employee at the end of each year. This amount is netted
against the notes payable - related parties balance at December
31, 1999 due to management's intent to net these receivables with
the respective related party notes when settled in 2000.
NOTE 5 - CONVERTIBLE DEBENTURES
During November 1999, the Company issued three convertible
debentures for $100,000 each. Two of the debentures are due August
1, 2004 and the third is due November 1, 2004. The debentures
accrue interest at 12% per annum. The holders of the debentures
retain the option to convert for a period of five years any
portion of the debt into the Company's restricted common stock at
a price of $1.50 per share. Any shares issued under the conversion
privileges of these debentures carry two purchase warrants
allowing the holder to purchase one additional restricted share
for each share purchase warrant held at a price of $0.75 per
share. The share purchase warrants are valid for five years after
the date of purchase. Interest expense associated with these
debentures amounted to $6,000 at December 31, 1999.
17
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 5 - CONVERTIBLE DEBENTURES (Continued)
During November 1999, the Company issued a convertible debenture
for $350,000. The debenture is due August 1, 2004 and accrues
interest at 12% per annum. The holder of the debenture retains the
option to convert for a period of five years any portion of the
debt into the Company's restricted common stock at a price of
$1.50 per share. Any shares issued under the conversion privileges
of this debenture also carry two purchase warrants allowing the
holder to purchase one additional restricted share for each share
purchase warrant held at a price of $0.75 per share. The share
purchase warrants are valid for five years after the date of
purchase. Interest expense associated with this debenture amounted
to $7,000 at December 31, 1999.
The Company recognized additional compensation expense of $650,000
to reflect the discount on the warrants.
NOTE 6 - ACCRUED EXPENSES
The company's accrued expenses is comprised of the following
items:
December 31,
1999
-----------------
Accrued payroll taxes payable $ 50,411
Accrued interest payable - payroll 52,717
Accrued payroll tax penalty 98,845
Accrued interest payable - notes 124,609
-----------------
Total $ 326,582
=================
During 1997, 1998 and 1999, the Company made cash advances of
$658,965 to employees. Due to the advances resembling payroll
activities, the Company has accrued payroll taxes for the
employer's portion at 7.65%, interest at 8% and penalties at 15%
for each year.
NOTE 7 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has
incurred losses from its inception through December 31, 1999. The
Company does not have an established source of revenues sufficient
to cover its operating costs and to allow it to continue as a
going concern. It is the intent of the Company to seek additional
financing through private placements of its common stock (see Note
11). The Company expects that it will need $4,000,000 to
$6,000,000 of additional funds for operations and expansion in
2000.
18
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 8 - COMMITMENTS AND CONTINGENCIES
a. Employment Agreements
During June 1998, the Company entered into a five year employment
agreement with its President. The agreement calls for a base
salary of $182,000 per year allowing for increases each year based
on the Consumer Price Index, merit increases and increases in
salary or bonus as deemed appropriate to reflect the value of
services provided. The agreement also calls for the extension of
certain executive benefits.
During June 1998, the Company entered into a five year employment
agreement with its Secretary/Treasurer. The agreement calls for a
base salary of $130,000 per year allowing for increases each year
based on the Consumer Price Index, merit increases and increases
in salary or bonus as deemed appropriate to reflect the value of
services provided. The agreement also calls for the extension of
certain executive benefits.
During June 1998, the Company entered into a four year employment
agreement with an employee. The agreement calls for a base salary
of $55,000 per year allowing for increases each year based on the
Consumer Price Index, merit increases and increases in salary or
bonus as deemed appropriate to reflect the value of services
provided. The agreement also calls for the extension of certain
executive benefits.
During June 1998, the Company entered into a five year employment
agreement with its Vice President. The agreement calls for a base
salary of $182,000 per year allowing for increases each year based
on the Consumer Price Index, merit increases and increases in
salary or bonus as deemed appropriate to reflect the value of
services provided. The agreement also calls for the extension of
certain executive benefits.
b. Consulting Agreements
During July 1997, the Company entered into a consulting agreement
with Richard Morris Associates. The agreement is for one year and
calls for the payment of $1,000 per month plus expenses. During
June 1998, the Company extended this agreement through December
1998. During January 1999, the Company extended this agreement
through December 1999. During January 2000, the Company extended
this agreement through December 2000.
During June 1999, the Company entered into a consulting agreement
with D. Weckstein & Co., Inc. as financial consultants and
investment bankers for a period of two years. The agreement calls
for the Company to issue options to purchase 300,000 shares of the
Company's common stock at a price of $5.00 per share for a period
of three years from the date of the agreement. The agreement also
calls for cash payments in connection with certain financial
transactions consummated as a result of introduction by Weckstein
such as mergers, acquisitions, joint ventures, debt or lease
placements and similar or other, on-balance or off-balance sheet
corporate finance transactions as follows:
19
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)
a. 7% of the first $1,000,000 of the consideration paid in such
transaction;
b. 6% of the consideration in excess of $1,000,000 and up to
$3,000,000;
c. 5% of the consideration in excess of $3,000,000 and up to
$5,000,000;
d. 4% of the consideration in excess of $5,000,000 and up to
$7,000,000;
e. 3% of the consideration in excess of $7,000,000 and up to
$9,000,000; and
f. 2% of the consideration in excess of $9,000,000.
During December 1999, the agreement was amended whereby Weckstein
will receive options to purchase up to 125,000 shares of common
stock at a price of $1.00 per share until December 31, 2003.
During 1999, the Company paid $10,000 in commissions to
Weckstein. No options were exercised as of December 31, 1999 (see
Note 10).
During March 1999, the Company entered into a consulting
agreement with Richard Brown. The agreement calls for the payment
of a 10% commission for any and all funds delivered to the
Company during 1999. No funds were delivered to the Company and
no commission payments were made during 1999.
During July 1999, the Company entered into a six month business
consulting agreement with Xcel Associates, Inc., which may be
renewed for a provisional three month period upon mutual
agreement of the parties. The agreement calls for the Company to
issue 500,000 shares of the Company's common stock as follows: 1)
150,000 shares within one week of signing the agreement; b)
150,000 shares within 30 days based on mutually agreed upon
performance; and 3) 200,000 within the following 60 days based on
mutually agreed upon performance as well as the right to purchase
up to 1,000,000 shares of common stock at $0.50 per share and the
payment of expenses incurred.
During November 1999, the Company entered into a 30 day
consulting agreement with International Capital Corp. The
agreement calls for the Company to pay $42,000 for services,
$6,000 for expenses and issue 60,000 shares of the Company's
common stock. The Company paid all fees and expenses and issued
60,000 shares of common stock in conjunction with this agreement
and allowed the agreement to expire.
c. Office Lease
The Company leases its office space under a non-cancellable
operating lease which expires on April 30, 2002. The monthly rent
amount is $17,000 with yearly increases of approximately 2% per
year. Rent expense for the years ended December 31, 1999 and 1998
was $220,565 and $217,619, respectively.
20
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 9 - RELATED PARTY TRANSACTIONS
During the years ended December 31, 1999 and 1998, related
parties advanced $2,919,797 and $2,636,857, respectively, to the
Company in the form of deferred wages, expenses paid for the
Company and cash advances.
On December 31, 1999, the Company issued 592,744 shares of common
stock for the conversion of $889,117 of debt.
NOTE 10 - DILUTIVE INSTRUMENTS
The Company applied Accounting Principles Board ("APB") Option
25, "Accounting for Stock Issued to Employees," and related
Interpretations in accounting for all stock option plans. Under
APB Option 25, compensation cost is recognized for stock options
granted to employees when the option price is less than the
market price of the underlying common stock on the date of grant.
FASB Statement 123, "Accounting for Stock-Based Compensation"
("SFAS No.1 23"), requires the Company to provide proforma
information regarding net income and net income per share as if
compensation costs for the Company's stock option plans and other
stock awards had been determined in accordance with the fair
value based method prescribed in SFAS No. 123. The Company
estimates the fair value of each stock award at the grant date by
using the Black-Scholes option pricing model with the following
weighted average assumptions used for grants, respectively;
dividend yield of zero percent for all years; expected volatility
of 32 percent for all years; risk-free interest rates of 10.0
percent and expected lives of 4.5 years.
The company has granted the following warrants and options as of
December 31, 1999:
<TABLE>
<CAPTION>
Date of Exercise Exercise
Type Grant Number Price Date
---- ----- ------ ----- ----
<S> <C> <C> <C> <C>
Options Mar.16, 1999 30,000 $ 5.00 Mar. 16, 2002
Warrants May 17, 1999 720,728 $ 1.50 May 17, 2004
Option July 12, 1999 100,000 $ 5.00 July 12, 2000
Warrants Nov. 16, 1999 1,733,333 $ 0.75 Nov. 16, 2004
</TABLE>
The Company has recognized additional compensation expense of
$6,000 for the options issued on March 16, 1999 which is recorded
as part of the recapitalization.
The Company has recognized additional compensation expense of
$250,000 for the options granted on July 12, 1999 which is
recorded as part of the recapitalization.
21
<PAGE>
OCEAN POWER CORPORATION
(Formerly PTC Group, Inc. and Subsidiary)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 10 - DILUTIVE INSTRUMENTS (Continued)
The Company has recognized additional compensation expense of
$650,000 for the warrants granted on November 16, 1999.
The compensation expenses recorded reflect the discounts from the
trading value of the stock on the date of grant.
NOTE 11 - SUBSEQUENT EVENTS
Subsequent to the year end, the Company has sold 1,865,849 shares
for $6,733,461 pursuant to a private placement offering.
Subsequent to the year end, the Company has issued 62,792 shares
for $125,019 pursuant to the exercise of outstanding warrants.
During January 2000, the Company entered into a three year
consulting agreement with Clement J. Wohlreich. The agreement
calls for the Company to issue 100,000 units at $3.00 per unit,
consisting of one share of the Company's common stock and one
warrant. The warrants will have a life of three years and a
purchase price of $1.50 per warrant.
During January 2000, the Company entered into a three year
consulting agreement with EBM, Inc. The agreement calls for the
Company to pay $4,000 per month until the Company secures a total
of $5,000,000 in financing, then the Company will pay $6,000 per
month for 12 months and grant 100,000 options to purchase the
Company's common stock. The options will have a four year life
and will be priced at $1.50 per share.
During January 2000, the Company entered into a consulting
agreement with Donner Corp. International. The agreement calls
for the Company to pay a retainer of $2,500, $10,000 for services
in connection with assisting the Company to implement its
business objectives and issue 10,000 warrants to purchase the
Company's common stock at a strike price equal to 80% of the
lowest five-day average stock closing price from January 2-31,
2000. The warrants are exercisable for three years beginning
February 1, 2000.
During February 2000, the Company signed an amendment to its
agreement for consulting services with D. Weckstein & Co. The
amendment calls for the Company to issue 75,000 options to
purchase the Company's common stock exercisable at $6.00 per
share for three years.
22
<PAGE>
PART III
ITEM 1 AND
- ----------
ITEM 2 INDEX TO EXHIBITS AND DESCRIPTION OF EXHIBITS
- ------
Articles of Incorporation
of Kaniksu American Mining Dated April 5, 1969
Company (Idaho)
Certificate of Amendment
Kaniksu American Mining Dated August 28, 1995
name change to Kaniksu
Ventures, Inc.
Certificate of Amendment
Kaniksu Ventures, Inc., Dated April 2, 1997
name change to Intryst, Inc
Articles of Amendment of
Intryst, Inc., name change Dated December 24, 1997
to PTC Group, Inc.
Articles of Amendment of
PTC Group, Inc., name change Dated July 14, 1999
to Ocean Power Corporation
Certificate of Incorporation
of Ocean Power Corporation Dated July 21, 1999
a Delaware Corporation
Articles of Merger of Ocean
Power Corporation Idaho With Dated July 28, 1999
Ocean Power Corporation Delaware
Bylaws Dated July 22, 1999
Certificate of Merger of
Foreign and Domestic Corporation Dated July 28, 1999
Employment Contracts
<PAGE>
PART IV
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
OCEAN POWER CORPORATION
Date: By:/s/Joseph P. Maceda
------------------ -------------------
Joseph P. Maceda, President
STATE OF IDAHO
DEPARTMENT OF STATE
CERTIFICATE OF AMENDMENT
OF
KANIKSU AMERCAN MINING COMPANY
File Number C40809
1, PETE T. CENARRUSA, Secretary of State of the State of Idaho, hereby
certify that: duplicate originals of Articles of Amendment to the Articles of
Incorporation of' KANIKSU AMERICAN MINING COMPANY, changing the corporate name
to KANIKSU VENTURES, INC., duly executed pursuant: to the provisions of the
Idaho Business Corporation Act, have been received in this office and are found
to conform to law.
ACCCRDINGLY and by virtue of the authority vested in me by law, I issue
this Certificate of Amendment to the Articles of Incorporation and attach hereto
a duplicate original of the Articles of Amendment.
Dated: March 4,1996
Great Seal of
The State of Idaho
/s/ Pete T. Cenarrusa
- ---------------------
Pete T. Cenarrusa
SECRETARY OF STATE
By:/s/Tonya Herold
---------------
Tonya Herold
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
KANIKSU AMERICAN MINING COMPANY
Pursuant to the provisions of the Idaho Code, the following amendment
to the Articles of Incorporation of IKANIKSU American Mining Company, an Idaho
corporation (the "Corporation"), was adopted by the shareholders of the
Corporation on August 28, 1995, in the manner Prescribed by the Idaho code
FIRST: Article 1 of the Articles Of Incorporation is hereby amended
to read as follows:
"ARTICLE I
The name of this Corporation shall be:
Kaniksu Ventures, INC."
SECOND: Article II of the Articles of Incorporation is hereby
amended to read as follows:
"ARTICLE 11
This Corporation is organized to engage in any lawful business
or activity which my be conducted under the laws of the State of Idaho
or any other state, country or jurisdiction, wherein this Corporation
shall be authorized to transact business."
THIRD: Article V of the Articles Of Incorporation in hereby amended
to road as follows
"ARTICLE V
The amount of the capital. stock of this Corporation shall be
twenty-five: million (25,000,O00) shares of common stock, par value On
Tenth of a Cent ($.001) per share, which shares shall be
non-assessable."
<PAGE>
FOURTH: Article VI of the Articles of Incorporation is hereby
amended to read as follows:
"ARTICLE VI
The number of directors of this Corporation shall be at least
three (3) and no more than nine (9)."
FIFTH: The Articles of Incorporation are hereby amended by adding a
new Article VII to read as follows:
"ARTICLE VIII
PREEMPTIVE RIGHTS
No stockholder shall have* any preemptive rights to acquire the
Corporation's unissued shares and any and all such existing preemptive
rights shall be extinguished."
The number of Shares: of the Corporation outstanding at, the time of
adoption of the above amendments was 1,008,250, and the number of shares
entitled to vote thereon vas 1,008,250. As to the five amendments set forth
above, the number of shares consenting and voting for each such amendment was
- -791,050- and the number of shares voting Against each such amendment was -O-.
As a result of Amendment THIRD changing the capitalization from 3,000,000 shares
of $.10 par value stock to 25,000,000 shares of $.001 par value stock, the
stated capital of the Corporation was reduced by $100,825 to 1,008.
DATED this 28th day of August, 1995
/s/ Dale Miller
---------------
DALE MILLER, President
/s/ J. Rockwell Smith
---------------------
J. ROCKWELL SMITH, Secretary
-2-
<PAGE>
ACKNOWLEDGEMENT
---------------
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE)
THE UNDERSIGNED, the President and Secretary respectively of Kaniksu
American Mining Company, a corporation Organized and existing under the laws
of' the State of Idaho, do hereby certify that at a Special Meeting in Lieu of
Annual Meeting of Shareholders, of said corporation properly called and held
on August 28, 1995, the foregoing Amendment to the Articles of Incorporation
for said Corporation was duly adopted and authorized by more than fifty
percent (50%) of the issued and outstanding shares of said Corporation, which
shares were properly represented and voted at said Meeting. Also that said
Meeting was held pursuant to a resolution of the Board of Directors setting
forth the amendment and directing that it be Submitted to a vote at the
meeting, and that written notice of said Special Meeting setting forth the
proposed, amendment was given by first class mail to each shareholder of
record entitled to vote thereon at least ten (10) days prior to the holding of
the Meeting. The undersigned further certify that the foregoing Amendment
correctly sets forth the amendments adopted by the shareholders and correctly
states the date of adoption thereof, the number of shares outstanding, the
number of shares voted for and the number of shares voted against each such
amendment.
/s/ Dale F. Miller
------------------
DALE MILLER, President
/s/ J. Rockwell Smith
---------------------
J. ROCKWELL SMITH, Secretary
SUBSCRIBED AND SWORN to before me this 28th day of August, 1995
/s/ Janis Patterson
-------------------
Janis Patterson NOTARY PUBLIC Residing at:
My Commission Expires: May 2nd 1998 (illegible address also stamped here)
-3-
<PAGE>
STATE of IDAHO
Department of State
I PETE T. CENARRUSA, Secretary of State of the State of Idaho, hereby certify
that I am the custodian of the corporation, limited partnership, and limited
liability company records of this State.
I FURTHER CERTIFY That the annexed is a full, true and complete transcript of
incorporation of KANIKSU AMERICAN MINING COMPANY, an Idaho Corporation, received
and filed in this office on April 25, 1969, under file number C 40809, including
all amendments filed thereto, as appears of record in this office as of this
date
Dated: March 28, 1995
Great Seal of The State of Idaho
/s/ Pete T. Centarrusa
- ----------------------
Pete T. Centarrusa
SECRETARY OF STATE
By:/s/ Sally T. Clark
------------------
Sally T. Clark
<PAGE>
STATE OF IDAHO
GREAT SEAL OF THE STATE OF IDAHO
DEPARTMENT OF STATE
CERTIFICATE OF INCORPORATION
I, PETE T. CENARRUSA, Secretary of State of the State of Idaho, and legal
custodian of the corporation records of the State of Idaho, do hereby certify
that the original of the articles of incorporation of
KANIKSU AMERICAN MINING COMPANY
was filed in the office of the Secretary of State on the twenty-fourth day
of April A.D., One Thousand Nine Hundred sixty-nine and will be duly recorded on
microfilm of Record of Domestic Corporations, of the State of Idaho, and that
the said articles contain the statement of facts required by Section 30-103,
Idaho Code.
I FURTHER CERTIFY, That the persons executing the articles and their
associates and successors are hereby constituted a corporation, by the name
hereinbefore stated, for Perpetual Existence from the date hereof, with its
registered office in this State located at Sandpoint, Idaho in the County of
Donner
IN TESTIMONY WHEREOF. I have hereunto set my hand and affixed the Great Seal
of the State. Done at Boise City, the Capital of Idaho. this 24th day of April
A.D., 1969
/s/Pete T. Cennarrusa
---------------------
Pete T. Cenarrusa
Secretary of State.
/s/ Margaret Laurence
---------------------
Margaret Laurence
Corporation Clerk.
<PAGE>
ARTICLES OF INCORPORATION
OF
KANIKSU AMERICAN MINING COMPANY
KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, being natural
persons of full age and citizens of the United States, in order to form, a
Corporation for the purposes hereinafter stated, and in accordance and pursuant
to the Laws of the State of Idaho, do hereby.certify as follows:
ARTICLE 1.
----------
The name of the Corporation is KANIKSU AMERICAN MINING COMPANY.
ARTICLE II.
-----------
The purposes for which said Corporation is formed are:
1. To engage in, conduct, promote, advertise and carry on and engage in the
business of buying, leasing and otherwise acquiring lands and interests in lands
of every kind and description wheresoever situated; buying, leasing and
otherwise acquiring and constructing and erecting, or contracting for the
construction and erection of buildings, structures, tunnells, in, on and under
and through such lands for any uses or purposes; holding owning improving,
developing, maintaining, operating, letting, leasing, mortgaging, selling or
otherwise disposing of such property, or any part thereof, or their minerals and
other produce, products, and deposits therein; equiping, furnishing, and
operating mines, buildings, warehouses, and in all manner developing real
property and the resources thereof.
<PAGE>
2. To appoint such officers, employees and agents as the business of the
Corporation may require and to allow them compensation.
3. To enter into contracts or obligations of any type or kind essential,
necessary or proper to the transaction of its ordinary business affairs, or for
the purposes of the Corporation.
4. To do all and everything necessary, suitable, and proper for the
accomplishment of any of the purposes or the attainment of any of the objects or
infurtherance of any of the powers hereinbefore set forth, either alone or in
association with other Corporations, firms, clubs or individuals, and to do
every act or acts, thing or things essential or impertinent to or growing out of
or connected with the aforesaid objects or purposes or any parts thereof,
provided the same be not inconsistent with the laws under which this Corporation
is organized.
5. To engage in any commercial enterprise calculated or designed to be
profitable to said Corporation and in conformity with the Laws of the State of
Idaho.
6. The foregoing clauses shall be construed both as purposes and powers, and
it is hereby expressly provided that the foregoing in numeration of specific
powers shall not be held to limit or restrict in any manner the powers of this
Corporation.
ARTICLE III.
------------
The commencement of the life of this Corporation shall be the date of the
issuance to it of a Certificate of incorporation by the Secretary of State of
the State of Idaho, and the duration of the life of this Corporation shall be
perpetual.
-2-
<PAGE>
ARTICLE IV.
-----------
The location and Post Office address of the registered office of the
corporation is Sandpoint, Bonner County, State of Idaho.
ARTICLE V.
----------
1. The amount of capital stock shall be Three-hundred-thousand ($300,000.00)
Dollars.
2. The number of shares of which capital stock shall consist of
three-million (3,000,000) shares of common stock of the par. value of ten (.10),
cents per share.
3. No other stock -or type of share shall be issued and said shares shall be
conveyed to the owners thereof.
ARTICLE VI.
-----------
There shall be five (5) directors. Directors shall be required to be
stockholders of this Corporation.
ARTICLE VII.
------------
The names and Post Office address of the incorporators and the number of
shares subscribed by each are as follows:
Don Maynard, Clark Fork, Idaho, ten (10) shares.
Dale Miller, Sandpoint, Idaho, ten (10) shares.
Dale Jackson, Sandpoint, Idaho, ten(10) shares.
IN WITNESS WHEREOF, We have hereunto set out hands and seals this 10th of
April, 1969.
/s/ Don Maynard
---------------
Don Maynard
/s/ Dale Miller
---------------
Dale Miller
/s/ Dale Jackson
----------------
Dale Jackson
- 3 -
<PAGE>
(STATE OF IDAHO)
ss
(County of Bonner)
On this 10th of April, 1969,. before me, a Notary Public, personally came
DON MAYNARD, DALE MILLER and DALE JACKSON, known to me to be the persons who
subscribed and executed the foregoing certificate and they severally duly
acknowledged to me that they executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the date
hereinbefore set forth.
/s/ Signature Illegible
-----------------------
Notary Public in and for the
State of Idaho, residing at
Sandpoint
-4-
<PAGE>
STATE OF IDAHO
DEPARTMENT OF STATE
CERTIFICATE OF AMENDMENT
OF
KANIKSU VENTURES, INC.
File Number C 40809
1, PETE T. CENARRUSA, Secretary of State of the State of Idaho, hereby
certify that duplicate originals of Articles of Amendment to the Articles of
Incorporation of KANIIKSU VENTURES, INC., changing the corporate name to
INTRYST, INC., duly executed pursuant to the provisions of the Idaho Business
Corporation Act, have been received in this office and are found to conform to
law.
ACCORDINGLY and by virtue of the authority vested in me by law, I issue
this Certificate of Amendment to the Articles of Incorporation and attach hereto
a duplicate original of the Articles of Amendment.
Dated: April 2,1997
Gread Seal of
The State of Idaho
/s/ Pete T. Cenarrusa
---------------------
Pete T. Cenarrusa
SECRETARY OF STATE
By:/s/Alisa Hartley
----------------
Alisa Harley
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
KANIKSU VENTURES, INC.
Pursuant to the provisions of the Idaho Business Corporation Act
("Idaho Code"), the following amendments to the Articles of Incorporation of
Kaniksu Ventures, Inc., an Idaho corporation (the "Corporation", were adopted by
the shareholders of the Corporation on March 10, 1997, in the manner prescribed
by the Idaho Code.
FIRST: Article I of the Articles of Incorporation is hereby
amended to read as follows:
"I
The name of the Corporation shall be Intryst, Inc."
SECOND: Article V of the Articles of Incorporation is hereby
amended read as follows:
"V
The aggregate number of shares of all classes of capital stock that
this corporation shall have authority to issue is 60,000,000 non-assessable
shares, 50,000,000 of which shall be of a class designated as common stock
(the "Common Stock") with a par value of one Tenth of a Cent ($0.001) per
share, and 10,000,000 shares of which shall be of a class designated as
preferred stock (the "Preferred Stock") with a par value of One Tenth of a
Cent ($0.001) per share. The Preferred Stock may be issued in various series
<PAGE>
and shall have preference as to dividends and to liquidation of the
Corporation. The Board of Directors of the Company shall establish the
specific rights, preference, voting privileges and restrictions of such
Preferred Stock, or any series thereof. Cumulative voting shall not prevail
in any election by the stockholders of this corporation."
The number of shares of the Corporation outstanding at the time of adoption of
the above amendments was 3,224,350, and the number of shares entitled to vote
thereon was 3,224,550. As to Amendment First set forth above, the number of
shares consenting and voting Against such amendment was 0-. As to Amendment
Second set forth above, the number of shares consenting and voting for such
amendment was 1,647,999, and the number of shares voting Against such amendment
was -0-.
Also approved at the meeting was the proposal to effect a two shares
for one share forward stock split of the shares of the Company's common stock
issued and outstanding at the time of the meeting. As a result of the forward
stock split, the stated capital of the corporation was increased by $3,224 to
$6,448.
DATED this 10th day of March, 1997
/s/ M. Cartmel
--------------
G. Michael Cartmel, Vice President
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
INTRYST, INC.
Pursuant to the provisions of the Idaho Business Corporation Act
("Idaho Code"), the following amendments to the Articles of Incorporation of
Intryst, Inc., an Idaho corporation (the "Corporation"), were adopted by the
shareholders of the Corporation on December 12, 1997, in the manner prescribed
by the Idaho Code.
FIRST: Article I of the Articles of Incorporation is hereby amended to
read as follows:
"I
The name of the Corporation shall be PTC Group, Inc."
SECOND: Article V of the Articles of Incorporation is hereby amended
read as follows:
"V
The aggregate number of shares of all classes of capital stock that
this corporation shall have authority to issue is 210,000,000
non-assessable shares, 200,000,000 of which shall be of a class designated
as common stock (the "Common Stock") with a par value of One Tenth of a
Cent ($0.001) per share, and 10,000,000 shares of which shall be of a class
as preferred stock (the "Preferred Stock") with a par value of One Tenth of
a Cent ($0.001) per share. The Preferred Stock may be issued in various
series and shall have preference as to dividends and to liquidation of the
Corporation. The Board of Directors of the Company shall establish the
specific rights, preferences, voting privileges and restrictions of such
Preferred Stock, or any series thereof. Cumulative voting shall not prevail
in any election by the stockholders of this corporation."
<PAGE>
The number of shares of the Corporation outstanding at the time of
adoption of the above amendments was 7,309,350, and the number of shares
entitled to vote thereon was 7,309,350. As to Amendment First set forth
above, the number of shares consenting and voting For such amendment was
5,144,051, and the number of shares voting Against such amendment was -0-.
As to Amendment Second set forth above, the number of shares consenting and
voting For such amendment was 5,144,051, and the number of shares voting
Against such amendment was -0-.
DATED this 22nd day of December, 1997.
/s/ Craig Bampton
-----------------
Craig Bampton, President
<PAGE>
ACKNOWLEDGEMENT
STATE OF UTAH )
:SS
COUNTY OF SALT LAKE )
THE UNDERSIGNED, the President of Intryst, Inc., a corporation
organized and existing under the laws of the State of Idaho, does hereby certify
that at a Special Meeting of Shareholders of said Corporation properly called
and held on December 12, 1997, the foregoing Amendment to the Articles of
Incorporation for said Corporation was duly adopted and authorized by more than
fifty percent (50%) of the issued and outstanding shares of said Corporation,
which shares were properly represented and voted at said Meeting. Also that said
Meeting was held pursuant to a resolution of the Board of Directors setting
forth the amendments and directing that it be submitted to a vote at the
Meeting, and that written notice of said Special Meeting setting forth the
proposed amendments was given by first class mail to each shareholder of record
entitled to vote thereon at least ten (10) days prior to the holding of the
Meeting. The Undersigned further certify that the foregoing Amendment correctly
sets forth the amendments adopted by the shareholders and correctly states the
date of adoption thereof, the number of shares outstanding, the number of shares
voted for and the number of shares voted against each such amendment.
/s/ Craig Bampton
-----------------
CRAIG BAMPTON, President
SUBSCRIBED AND SWORN to before me this 23rd day of December 1997.
/s/ Janice Patterson
--------------------
Janice Patterson
NOTARY PUBLIC
Residing at: Stamped:NOTARY PUBLIC JANIS A PATTERSON
1336 Rodgermarx Dr Sancy, UT 84092 My
Commission Expires May 2nd, 1998 STATE OF
UTAH
Stamped: FILED
97 DEC 24 AM 11:52
SECRETARY OF STATE
STATE OF IDAHO
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
PTC GROUP, INC.
Pursuant to the provisions of the Idaho Business Corporation Act
("Idaho Code"), the following amendment to the Articles of Incorporation of PTC
Group, Inc., an Idaho corporation (the "Corporation"), was adopted by the
shareholders of the Corporation on July 12, 1999, in the manner prescribed by
the Idaho Code.
FIRST: Article I of the Articles of Incorporation is hereby amended
to read as follows:
"I
The name of the Corporation shall be Ocean Power Corporation."
The number of shares of the Corporation outstanding at the time of
adoption of the above amendment was 292,484,484, and the number of shares
entitled to vote thereon was 292,484,484. As to Amendment first set forth above,
the number of shares consenting and voting For such amendment was 224,806,894,
and the number of shares voting Against such amendment was 0.
Dated this 12th day of July, 1999.
/s/ J.P. Maceda
---------------
Joseph P. Maceda, President
Stamped FILED
99 JUL 14 AM11:15
SECRETARY OF STATE
STATE OF IDAHO
Stamped: Idaho Secretary of State
07/14/1999 09:00
CK: 752 CT: 117996 BH: 233801
<PAGE>
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "OCEAN POWER CORPORATION". FILED IN THIS OFFICE QN THE
TWENTY-FIRST DAY OF JULY, A.D. 1999 AT 4:30 O'CLOCK, P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/S/Edward J. Freel
------------------
Edward J. Freel
Secretary of State
3037332 8100 AUTHENTICATION: 9880368
991301032 DATE: 07-22-99
<PAGE>
CERTIFICATE OF INCORPORATION
----------------------------
OF
--
OCEAN POWER CORPORATION
-----------------------
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the
"Corporation") is OCEAN POWER CORPORATION.
SECOND: The address, including street, number, city, and county, of the
registered office of the Corporation in the State of Delaware is 1209 Orange
Street, New Castle County, Wilmington, Delaware 19801; and the name of the
registered agent of the Corporation in the State of Delaware is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware, or any other state, country or jurisdiction
wherein the Corporation shall be authorized to transact business.
FOURTH: The aggregate number of shares of all classes of capital stock
which the Corporation shall have authority to issue is five hundred twenty
million (520,000,000) non-assessable shares, five hundred million (500,000,000)
of which shall be of a class designated as common stock (the "Common Stock")
with a par value of One Tenth of a Cent ($0.001) per share, and twenty million
(20,000,000) shares of which shall be of a class designated as preferred stock
(the "Preferred Stock") with a par value of One Tenth of a Cent ($0.001) per
share. The Preferred Stock may be issued in various series and shall have
preference as to dividends and to liquidation of the Corporation. The Board of
Directors of the Company shall establish the specific rights, preferences,
voting privileges and restrictions of such Preferred Stock, or any series
thereof. Cumulative voting shall not prevail in any election by the stockholders
of this corporation.
FIFTH: The name and the mailing address of the incorporator is as
follows:
Name Mailing Address
---- ---------------
J. Michael Hopper 5000 Robert J. Mathews Parkway
El Dorado Hills, California 95762
<PAGE>
SIXTH: The Corporation is to have perpetual existence.
-----
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code, or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
EIGHTH: For management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed by, or in the
manner provided in, the By-Laws. The phrase "Whole Board" and the phrase "Total
Number of Directors" shall be deemed to have the same meaning, to wit, the total
number of directors which the Corporation would have if there were no vacancies.
No election of directors need be by written ballot.
2. After the original or other By-Laws of the Corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 109 of the General Corporation Law of the State of
Delaware, and, after the Corporation has received any payment for any of its
stock, the power to adopt, amend, or repeal the By-Laws of the Corporation may
be exercised by the Board of Directors of the Corporation; provided, however,
that any provision for the classification of directors of the Corporation for
staggered terms pursuant to the provisions of subsection (d) of Section 141 of
the General Corporation Law of the State of Delaware shall be set forth in an
initial By-Law or in a By-Law adopted by the stockholders entitled to vote of
the Corporation unless provisions for such classification shall be set forth in
this certificate of incorporation.
<PAGE>
3. Whenever the Corporation shall be authorized to issue only one class
of stock, each outstanding share shall entitle the holder thereof to notice of,
and the right to vote at, any meeting of stockholders. Whenever the Corporation
shall be authorized to issue more than one class of stock, no outstanding share
of any class of stock which is denied voting power under the provisions of the
certificate of incorporation shall entitle the holder thereof to the right to
vote at any meeting of stockholders, except as the provisions of paragraph (2)
of subsection (b) of section 242 of the General Corporation Law of the State of
Delaware shall otherwise require; provided that no share of any such class which
is otherwise denied voting power shall entitle the holder thereof to vote upon
the increase or decrease in the number of authorized shares of said class.
NINTH: The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of Section 102 of the General Corporation Law of the State
of Delaware, as the same may be amended and supplemented.
TENTH: The Corporation shall, to the fullest extent permitted by the
provisions of Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters referred to in
or covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
ELEVENTH: From time to time, any of the provisions of this certificate
of incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
Signed on July 21, 1999
/s/ J. Michael Hopper
---------------------
J. Michael Hopper
Incorporator
ARTICLES OF MERGER
OF
OCEAN POWER CORPORATION
Pursuant to the provisions of section 30-1-1105 of the Idaho Business
Corporation Act, the following Articles of Merger are hereby submitted by
Ocean Power Corporation, a Delaware corporation (the "Delaware corporation"):
1. On the 26th day of July, 1999, Ocean Power Corporation, an Idaho
Corporation (the "Idaho corporation"), entered into an agreement consisting of
a plan of merger ("Agreement and Plan of Merger") to merge the Idaho
corporation with and into the Delaware corporation, with the Delaware
corporation being the surviving corporation (the "Merger"). As a result of the
Merger all of the shares of the Idaho corporation capital stock currently
issued and outstanding on the effective date of the Merger shall, by action of
the Merger and without any action on the part of the holders thereof,
automatically be converted into shares of the surviving Delaware corporation's
authorized but previously unissued common Stock, par value $.001 per share.
The Merger was ratified by the unanimous consent of, the Idaho corporation's
Board of Directors and the Board of Directors of the Delaware corporation. A
copy of the Agreement and Plan of Merger is annexed hereto as Exhibit No. 1
and by this reference made a part hereof.
2. At the Special Meeting of Shareholders of the Idaho corporation
held March 10, 1997 (the "Meeting"), the shareholders of the Idaho corporation
ratified the proposal to empower the Board of Directors to take all necessary
and requisite action to change the domicile of the Idaho corporation. At the
time of the Meeting, the Idaho corporation had issued and outstanding
3,224,350 shares of Common Stock. There were 1,647,999 shares represented at
the Meeting in person and by proxy. Those shares voting in favor of the change
in domicile were 1,647,999 (51%), and those shares voting against were -0-.
3. The Delaware corporation agrees that it may be served with process
in the State of Idaho in any proceeding for the enforcement of any obligation
of the Idaho corporation and in any proceeding for the enforcement of the
rights of a dissenting shareholder of the Idaho corporation against the
Delaware corporation; and the Delaware corporation further agrees that it will
promptly pay to the dissenting shareholders of the Idaho corporation, the
amount, if any, to which they shall be entitled under the provisions of the
Idaho Code with respect to the rights of dissenting shareholders.
DATED this 28th day of July, 1999.
OCEAN POWER CORPORATION
BY: /s/ Joseph P. Maceda
--------------------
ITS: Joseph P. Maceda
President
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is by and between Ocean Power
Corporation, an Idaho corporation (herein sometimes called the "Idaho
Corporation"), formerly PTC Group, Inc., and Ocean Power Corporation, a Delaware
corporation (herein sometimes called the "Delaware Corporation").
WITNESSETH:
WHEREAS, the Idaho Corporation was incorporated by the filing of a
Certificate of Incorporation in the office of the Secretary of State of the
State of Idaho on April 24, 1969; the total number of shares which it is
authorized to issue is 500,000,000 shares of common stock, $.001 par value per
share ("Common Stock"), and 20,000,000 shares of preferred stock, $.001 par
value per share (Preferred Stock:); and the total number of shares which are
issued and outstanding is 292,484,484 shares of Common Stock and -0- shares of
Preferred Stock;
WHEREAS, the Delaware Corporation was incorporated on July 21, 1999
under the provisions of the General Corporation Law of the State of Delaware;
it's registered office in Delaware is in the City of Wilmington, County of New
Castle; the total number of shares which it is authorized to issue is
500,000,000 shares of Common Stock, $.001 par value per share, and 20,000,000
shares of Preferred Stock, $.001 par value per share; and no shares have been
issued;
WHEREAS, the respective laws of the States of Delaware and Idaho permit
the merger of said corporations (herein sometimes called the "constituent
corporations")into a single corporation, and
WHEREAS, it is deemed advisable by the Board of Directors of each of
the constituent corporations that the Idaho Corporation be merged with and into
the Delaware Corporation;
NOW, THEREFORE, it is agreed as follows:
I. The Idaho Corporation as of the Effective Date (as defined herein)
shall be merged, pursuant to Section 252 of the General corporation Law of the
State of Delaware, with and into the Delaware Corporation (the "Merger"). The
Delaware Corporation shall be the surviving corporation and it shall continue
and shall be deemed to continue for all purposes whatsoever after the merger
with and into itself of the Idaho Corporation.
2. The Merger shall become effective when this Agreement has been
adopted by the Idaho Corporation and by the Delaware Corporation and appropriate
documentation has been prepared and filed in accordance with the respective laws
of the States of Idaho and Delaware. For operational, accounting and bookkeeping
purposes, the time when the Merger shall become effective is referred to herein
as the "Effective Date" which shall be the date fixed in accordance with the
laws of and the documentation filed with the state of incorporation of the
surviving corporation.
<PAGE>
3. After the Effective Date, the surviving corporation shall be
governed by the laws of the State of Delaware and its name shall continue to be
Ocean Power Corporation. The present Certificate of Incorporation of the
Delaware Corporation shall continue to be the Certificate of Incorporation of
the surviving corporation. The present By- Laws of the Delaware Corporation
shall be and remain the By-Laws of the surviving corporation. The directors and
officers of the Idaho Corporation immediately prior to the Effective Date shall
be the directors of the surviving corporation upon the Effective Date.
4. Each share of Common Stock of the Idaho Corporation shall be
converted into one share of Common Stock of the surviving corporation. Each
warrant, option, right or convertible security which entitles the holder to
purchase or convert into a share of Common Stock of the Idaho Corporation shall
be converted into a warrant, option, right or convertible security to purchase
or convert into one share of Common Stock of the surviving corporation.
5. Upon the Effective Date, the outstanding certificates for shares of
the Idaho Corporation's Common Stock will, until replaced by the surviving
corporation, represent the same number of shares of Common Stock of the
surviving corporation.
6. This Agreement may be terminated and abandoned by action of the
Board of Directors of the Idaho Corporation or the Delaware Corporation at any
time prior to the Effective Date, for any reason whatsoever.
7. This Agreement, upon being authorized, adopted, approved, signed and
acknowledged by each of the constituent corporations in accordance with the laws
under which it is formed, and filed in the office of the Secretary of State of
the State of Delaware, shall take effect and shall thereupon be deemed and taken
to be the Agreement and act of merger and consolidation of the constituent
corporations; and the organization and separate corporate existence of the Idaho
Corporation, except in so far as it may be continued by statute, shall cease.
The point of time at which the constituent corporations shall become a single
corporation shall be the Effective Date.
8. Upon the Effective Date, all and singular rights, capacity,
privileges, powers, franchises and authority of each of the constituent
corporations, and all property, real, personal and mixed, and all debts,
obligations and liabilities due to each of the constituent corporations on
whatever account as well as for subscriptions for shares as for all other
things, belonging to each of the constituent corporations shall be vested in the
surviving corporation; and all such property, rights, capacity, privileges,
powers, franchises, authority and immunities and all and every other interest
<PAGE>
shall be thereafter as fully and effectually the property of the surviving
corporation as though they were the property of the several and respective
constituent corporations, and shall not revert or be in any way impaired by
reason of the Merger; provided however, that all rights of the creditors of the
constituent corporations shall be preserved unimpaired and all debts,
liabilities (including liability, if any, to dissenting shareholders) and duties
of the respective constituent corporations shall thenceforth be attached to the
surviving corporation and may be enforced against it to the same extent as if
said debts, liabilities and duties had been incurred or contracted by the
surviving corporation.
9. Each constituent corporation agrees that from time to time as when
it shall be requested by the surviving corporation or by its successors or
assigns, it will execute and deliver or cause to be executed and delivered all
such other instruments and will take or cause to be taken such further or other
action as the surviving corporation may deem necessary or desirable in order to
vest in and to confirm to the surviving corporation title to all of the
property, capacity, privileges, powers, franchises, authority, and immunities of
the constituent corporation and otherwise to carry out the intent and purposes
of this Agreement.
10. The surviving corporation agrees that it may be served with process
in the State of Delaware or in the State of Idaho, in any proceeding for
enforcement of any obligation of the Idaho Corporation as well as for
enforcement of any obligation of the corporation arising from the Merger,
including any suit or other proceeding to enforce the right of any stockholder
as determined in any appraisal proceeding pursuant to Section 30-1-1302 of the
Idaho Business Corporation Act and shall irrevocably appoint the Secretary of
State of the State of Delaware as its agent in Delaware and the Secretary of
State of the State of Idaho as its agent in Idaho to accept service of process
in any such suit or other proceeding. The address to which a copy of such
process shall be mailed by the Secretary of State of the State of Delaware shall
be c/o The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware
19801, and by the Secretary of State of the State of Idaho shall be Ocean Power
Corporation, 5000 Robert J. Mathews Parkway, El Dorado Hills, CA 95762.
11. The surviving corporation hereby reserves the right to amend,
alter, change or repeal any provisions contained in any of the articles of this
Agreement or as the same may hereafter be amended, in the manner now or
hereafter provided by the laws of the State of Delaware and all rights of the
stockholders of the surviving corporation are granted subject to this
reservation.
IN WITNESS WHEREOF, the undersigned have signed this Agreement this
26th day of July 1999.
OCEAN POWER CORPORATION OCEAN POWER CORPORATION
a Delaware corporation an Idaho corporation
By:/s/ Joseph P. Maceda By:/s/Joseph P.Maceda
-------------------- ------------------
Joseph P. Maceda Joseph P. Maceda
President President
<PAGE>
STATE OF DELAWARE
CERTIFICATE OF MERGER OF FOREIGN AND DOMESTIC CORPORATION
OCEAN POWER CORPORATION
Pursuant to Title 8, Section 252(c) of the Delaware General Corporations Law,
the undersigned corporation executed the following Certificate of Merger.
First: The name of the surviving corporation is Ocean Power Corporation, a
Delaware corporation. The name of the corporation being merged into this
surviving corporation is Ocean Power Corporation, an Idaho corporation.
Second: The Agreement and Plan of Merger has been approved, adopted, certified,
executed and acknowledged by each of the constituent corporations.
Third: The name of the surviving corporation is "Ocean Power Corporation," a
Delaware corporation.
Fourth: The Certificate of Incorporation of the surviving corporation shall be
its Certificate of Incorporation. No amendments or changes to its Certificate of
Incorporation are necessary or desired as a result of this merger.
Fifth: The authorized stock and par value of both the Delaware / surviving
corporation and the Idaho / non surviving corporation is:
Common Stock 500,000,000 $0 001 par value
Prefeffed Stock 20,000,000 $0.001 par value
Sixth: The executed Agreement and Plan of Merger is on file at the principal
place of business of the surviving corporation, the address of which is 5000
Robert J. Mathews Parkway, El Dorado Hills, California 95762
Seventh: A copy of the Agreement and Plan of Merger will be fumished by the
surviving corporation on request and without cost to any stockholder of the
constituent corporations.
Eight: The merger and this Certificate of Merger shall become effective on
July 28, 1999.
IN WITNESS WHEREOF, said surviving corporation has caused this certificate to be
signed by an authorized officer, the 28th day of July, 1999.
By:/s/ J.P. Maceda
---------------
Joseph P. Maceda
President
By Laws [X] Ocean Power Corporation
Page 1
BY-LAWS
FOR
OCEAN POWER CORPORATION
ARTICLE 1
---------
OFFICES-BOOKS AND RECORDS
-------------------------
Section 1.1 Offices. The Board of Directors shall fix the location of
the principal executive office of the corporation at any place within or without
the State of Delaware where the corporation is qualified to do business.
Section 1.2 Books and Records. The Corporation shall keep at its
principal executive office the following books and records and, any shareholder
of record for at least six months immediately preceding their demand, or who
shall be the holder of record of at least 5% of the total issued and outstanding
shares of the corporation, upon written demand stating the purpose thereof,
shall have the right to examine, in person, or by agent or attorney, at any
reasonable time or times, for any proper purpose, the same and to make extracts
therefrom:
(a) Its book and records of account.
(b) Its minutes of meetings of the Board of Directors and any
committees thereof.
(c) Its minutes of meetings of the shareholders
(d) Its record of shareholders which shall give their names and
addresses and the number and class of the shares held by each.
(e) Copies of its Articles of Incorporation and By-Laws as originally
executed and adopted together with all subsequent amendments
thereto.
Section 1.3 Financial Statements. Upon the written request of any
shareholder of the corporation, the corporation shall mail to such shareholder
its most recent annual or quarterly financial statements showing in reasonable
detail its assets and liabilities and the results if its operation unless the
shareholder has already received the same. Neither the corporation nor any
director, officer, employee, or agent of the corporation shall be liable to the
shareholder or anyone to whom the shareholder discloses the financial statements
or any information contained therein for any error or omission therein whether
caused without fault, by negligence or by gross negligence, unless (1) the error
or omission is material, (2) the director, officer, employee or agent in
<PAGE>
question knew of the error or omission and intended for the shareholder or other
person to rely thereon to this detriment, (3) the shareholder or other persons
did reasonably rely thereon, and, in addition, (4) they are otherwise liable
under applicable law.
ARTICLE II
----------
BY-LAWS
-------
Section 2.1 Amendments. These By-Laws may be altered, amended or
repealed and new By-Laws adopted by the majority approval of the shareholders or
the Board of Directors. Any such action shall be subjected to repeal or change
by action of the shareholders, but the alteration. amendment, repeal, change or
new By-Law (and the repeal of the old By-Law) shall be valid and effective and
no director, officer, shareholder, employee or agent of the corporation shall
incur any liability by reason of any action taken or omitted in reliance on the
same. The power of the shareholders to repeal or change any alteration,
amendment, repeal or new By-Law shall not extend to any original By-Law of the
corporation so long as it is not altered, amended or repealed, but only to
action by the Board thereafter. There shall be no time limit on its exercise.
Section 2.2 By-Law Provisions Additional and Supplemental to Provisions
of Law. All restrictions, limitations, requirements and other provisions if
these By-Laws shall be construed, insofar as possible, as supplemental and
additional to all provisions of law applicable to the subject matter thereof and
shall be fully complied with in addition to the said provisions of law unless
such compliance shall be illegal.
Section 2.3 By-Law Provisions Contrary to or Inconsistent with
Provisions of Law. Any article, section, subsection, subdivision, sentence,
clause or phase of these By-Laws which upon being construed in the manner
provided in Section 2.2 hereof, shall be contrary to or inconsistent with any
applicable provision of law , shall not apply so long as said provisions of law
shall remain in effect, but such result shall not affect the validity or
applicability of any other portions of these By-Laws, it being hereby declared
that these By-Laws would have been adopted and each article, section,
subsection, subdivision, sentence, clauses or phrase thereof, irrespective of
the fact that any or more articles, sections subdivisions, sentences, clauses or
phrases is or are illegal.
ARTICLE III
-----------
MEETINGS OF SHAREHOLDERS
------------------------
Section 3.1 Place of Meetings. All meetings of the shareholder, annual
or special, however called, shall be held at the registered office of the
corporation unless the Board of Directors designates another place. The Board of
Directors may designate any place for any meeting, either within or without the
State of Delaware.
<PAGE>
Section 3.2 Annual Meeting. An annual meeting of the shareholders shall
be held on the second Monday in the month of April (unless that day is a legal
holiday, and then on the next succeeding day, that is not a legal holiday) at
10:00 a.m., the local time of the place of the meeting in effect on the day of
the meeting.
The Board of Directors may postpone the time of holding the annual
meeting of shareholders for such period not exceeding ninety (90) days, as they
may deem advisable. Failure to hold the annual meeting at the designated time
shall not work a dissolution of the Corporation nor impair the powers, rights
and duties of the Corporation's Officers and Directors. At annual meetings, the
shareholders shall elect Directors and transact such other business as may
properly be brought before the meeting. If the election of Directors shall not
be held on the day designated herein for any annual meeting of the shareholders
or at any adjournment thereof, the Board of Directors shall cause the election
to be held at a special meeting of the shareholders as soon thereafter as is
convenient.
Section 3.3 Special Meeting. Special meetings of the shareholders may
be called by the Chairman of the Board, the President, the Board of Directors or
the holders of not less than one-tenth of all the shares entitled to vote at the
meeting.
Section 3.4 Notice of Shareholders' Meetings. Written or printed notice
stating the place, day and hour of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten (10), nor more than sixty (60) days before the date
of the meeting , either personally or by mail, by or at the direction of the
President, the Secretary, or the officer or persons calling such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States Mail addressed to the shareholder at his address as it appears on the
stock transfer books of the corporation with postage thereon prepaid.
Section 3.5 Waiver of Notice. Any shareholder may waive notice of any
meeting of shareholders, (however called or noticed, whether or not called or
noticed and whether before, during or after the meeting) by signing a written
waiver of notice or a consent to the holding of such meeting, or in approval of
the minutes thereof. Attendance at a meeting in person or by proxy, shall
constitute waiver of all defects of call or notice regardless of whether waiver,
consent or approval is signed or any objections are made. All such waivers,
consents, or approvals shall be made a part of the minutes of the meeting.
<PAGE>
Section 3.6 Fixing Record Date for Meeting. The Board of Directors may
fix, in advance, a record date for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of the shareholders, which date
shall not be more than sixty (60) nor less than ten (10) days before the date of
such meeting, nor more than sixty (60) days prior to any other action. If no
record date is fixed, the record date fir determining shareholders entitled to
notice of or to vote at a meeting of the shareholders shall be at the close of
business on the next preceding the day on which notice is given, or, if notice
is waived, at the close of business on the day next preceding the day on which
the meeting is held. When a determination of shareholders entitled to vote at
any meeting of shareholders has been made under this section , such
determination shall apply to any adjournments thereof, provided, however, that
the Board of Directors may fix a new record date for the adjourned meeting.
Section 3.7 Voting List. The officer or agent having charge of the
stock transfer books for shares of a corporation shall make, at least ten (10)
days before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each,
which list, for a period of ten (10) days prior to the meeting, shall be kept on
file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder during the whole time of
the meeting. The original stock transfer books shall be the only evidence as to
who are the shareholders entitled to examine such list or transfer books or to
vote at any meeting of shareholders. Failure to comply with the requirements of
this section shall not affect the validity of any action taken at such meeting.
Section 3.8 Quorum of Shareholders, Vote. A majority of the shares
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If a quorum is present, the affirmative vote of
the majority if the shares represented at the meeting and entitled to vote on
the subject shall be the act of the shareholders, unless the vote of a greater
number or voting by classes is required by the General Corporation Law of the
State of Delaware or the Articles of Incorporation. Shares shall not be counted
to make up a quorum for a meeting if voting of them at the meeting had be
enjoined or for any reason they cannot be lawfully voted at the meeting. The
shareholders present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
<PAGE>
Section 3.9 Voting of Shares. Each outstanding share regardless of
class shall be entitled to one vote on each matter submitted to vote at a
meeting of shareholders, except to the extent that the voting rights of the
shares of any class or classes are limited or denied by the Articles of
Incorporation.
Neither treasury shares nor shared held by another corporation if a
majority of the shared entitled to vote for the election of Directors of such
other corporation is held by the corporation, shall be voted at any meeting or
counted in determining the total number of outstanding shares at any given time.
Section 3.10 Action Take Without Meeting. Any action which may be taken
at any annual or special meeting of shareholders may be taken without a meeting
and without prior notice, if one or more consents in writing, setting forth the
action so taken, shall be signed by the holders of outstanding shares having not
less than the minimum number of votes that would be necessary to authorize or
take the action at a meeting at which all shares entitled to vote thereon were
present and voted. Unless the written consent of all shareholders entitled to
vote on a specific proposal have been obtained, the corporation must give prompt
notice of any shareholder approval or action without a meeting. Notice must be
given to those shareholders entitled to vote who have not consented in writing
and to any other shareholders entitle to notice pursuant to the provisions of
the Act. Any shareholder given a written consent shall have the right to revoke
the consent by submitting a signed writing describing the action and stating
that the shareholder's prior to the effectiveness of the action. Any action
taken by written consent as provided herein shall have the same effect as action
taken at a duly convened meeting of shareholders and may be so described in any
document.
Section 3.11 Proxies. A shareholder may vote either in person or by
proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Except as otherwise limited therein, proxies shall entitle the
person named therein to vote at any meeting, or adjournment of such meeting but
shall not be valid after final adjournment of such meeting. Any shareholder
giving a written consent, or his proxy, or his transferee or personal
representative, or their respective proxies, may revoke the same prior to the
time that written consents of the number of shares required to authorize the
proposed action may have been filed with the Secretary of the corporation, but
may not do so thereafter.
<PAGE>
Section 3:12 Inspectors. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail to
appear or act, the chairman of the meeting may, or if inspectors shall not have
been appointed, the Chairman of the meeting shall, appoint one or more
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares of capital stock of the
Corporation outstanding and the voting power of each, the number of shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the results and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the chairman of the meeting, the inspectors shall make a report in
writing of any challenge, request or matter determined by them and shall execute
a certificate of any fact found by them. No directors or candidate for the
office of directors shall act as an inspector of an election of directors.
Section 3.13 Elections of Directors. At each election for Directors
every shareholder entitled to vote at such election shall have the right to
vote, in person or by proxy, the number of shares owned by him for as many
persons as there are Directors to be elected and for whose election he has a
right to vote. The candidates receiving the highest number of votes up to the
number of Directors to be elected shall be declared elected. Elections for
Directors need not be by ballot except upon demand made by a shareholder at the
election and before the voting begins.
Section 3.14 Adjournments. Any shareholders' meeting, whether or not a
quorum is present, may be adjourned from time to time by the vote of a majority
of the shares, the holders of which are either present in person or represented
by proxy thereat, but, except as provided in Section 3.8 hereof, in the absence
of a quorum no other business may be transacted at such meeting. When a meeting
is adjourned for thirty (30) days or more, or if after the adjournment a new
record date is fixed for the adjourned meeting, notice of the adjourned meeting
shall be given as in the case of an original special meeting. Save as aforesaid,
it shall not be necessary to give any notice of the time and place of the
adjourned meeting or of the business to be transacted thereat other than by
announcement at the meeting at which such adjournment is taken.
<PAGE>
ARTICLE IV
----------
DIRECTORS
---------
Section 4.1 Exercise if Corporate Power. The business and affairs of
the corporation shall be managed by the Board of Directors.
Section 4.2 Qualifications. Directors need not to be residents of the
State of Delaware or shareholder of the Corporation. They need have no other
qualifications.
Section 4.3 Compensation. The Board of Directors shall have authority
to fix the compensation of Directors. Such compensation so fixed shall be
reported to the shareholders. Any compensation so fixed shall be for services as
a Director only, and a Director who serves the corporation in any other capacity
may receive a separate compensation therefor.
Section 4.4 Number. The total number of Directors of the corporation
shall be no less than one (1) and not more than seven (7). The number if
Directors may be increased or decreased at any time, except as otherwise
provided in the Articles of Incorporation, by the vote of the majority of the
shareholders entitled to vote at any regular meeting or any special meeting of
shareholders, notice of which has been given, and a statement to the effect that
such increase or decrease is to be undertaken is made in such notice.
Section 4.5 Term. The term of each Director shall begin immediately on
his election and shall continue until the date set under these By-Laws for the
next annual meeting of the shareholders. Each Director shall hold office for the
term for which he is elected and until his successor shall have been elected and
qualified.
Section 4.6 Elections. At each annual meeting the shareholders shall
elect Directors, provided that if for any reason said annual meeting or an
adjournment thereof is not held or the Directors are not elected thereat, then
the Directors may be elected at any special meeting of the shareholders called
and held for that purpose.
Section 4.7 Vacancies. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining Directors
though less than a quorum of the Board of Directors. A Director elected to fill
vacancy shall be elected for the unexpired term of his predecessor in office.
The shareholders may elect the successor at the next annual meeting of
shareholders or at any special meeting duly called for that purpose and held
prior to the next annual meeting. Any directorship to be filled by reason of
increase in the number of Directors may be filled by the Board of Directors for
a term of office continuing only until the next election of Directors by the
shareholder.
<PAGE>
Section 4.8 Removal. Any director may be removed for cause by action of
the Board of Directors. At a meeting if shareholders expressly called for that
purpose, one or more Directors may be removed, with or without cause, by a vote
of shareholders representing not less a majority of the voting power of the
issued and outstanding shares entitled to vote at an election of Directors.
Section 4.9 Indemnification. The corporation, through the Board of
Directors, shall have the power to indemnify any director, officer, employee or
agent of the corporation or any person serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise to the fullest extent permitted by the
General Corporation Law of the State of Delaware.
Section 4.10 Regular Meetings. The Board of Directors will meet each
year immediately following the annual meeting of the shareholders to appoint the
members of such committees of the Board of Directors as the Board may deem
necessary or advisable, to elect officers for the ensuing year and to transact
such other business as may properly come before the Board of Directors at such
meeting. No notice of such meeting will be necessary to the newly elected
Directors in order legally to constitute the meeting provided a quorum will be
present. Regular meetings may be held at such other times as shall be designated
by the Board of Directors without notice to the Directors.
Section 4.11 Special Meetings. Special Meetings of the Board of
Directors will be held whenever called by the Chairman of the Board, Chief
Executive Officer, chairman of the Executive Committee or by two or more
Directors. Notice of each meeting shall be given at least three (3) days prior
to the date of the meeting either personally or by telephone or telegraph to
each Director, and will state the purpose, place, day and hour of the meeting.
Waiver by a Director in writing of notice of a Directors meeting, signed by the
Director, whether before or after the time of said meeting, shall be equivalent
to the giving of such notice. Attendance by a Director, whether in person or by
proxy, at a Directors' meeting shall constitute a waiver of notice of such
meeting of which the Director had no notice.
Section 4.12 Quorum. A majority of the number of Directors holding
office shall constitute a quorum for the transaction of business at any meeting
of the Board of Directors, but if less than such majority is present at a
meeting, a majority of the Directors present may adjourn the meeting from time
to time without further notice.
<PAGE>
Section 4:13 Telephone Meetings. Subject to the provisions of
applicable law and these By Laws regarding notice of meetings, the Directors may
participate in and hold a meeting using conference telephone or similar
communications equipment by means of which all persons participating in a
meeting can hear each other, and participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting. A Director so
attending will be deemed present at the meeting for all purposes including the
determination of whether a quorum is present except when a person participates
in the meeting for the express purpose of objecting to the transaction of any
business on the ground the meeting was not lawfully called or convened.
Section 4.14 Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 4.15 Action by Directors Without a Meeting. Any action required
that may be taken at any regular or special meeting of the Board of Directors
may be taken without a meeting if a consent in writing, setting forth the action
so taken, shall be signed by all of the Directors, or all of the members of the
committee, as the case may be. Such consent shall have the same effect as a
unanimous vote.
Section 4:16 Attendance Fees. Directors will not receive any stated
salary, as such, for their services, but by resolution of the Board of Directors
a fixed sum and expenses of attendance may be allowed for attendance at each
regular or special meeting of the Board; however, this provision will not
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 4.17 Committees. The Board of Directors by resolution adopted
by the majority of the number of Directors fixed by the By-Laws may designate a
committee or committees consisting of one (1) or more Directors, which committee
of committees, to the extent provided in such resolution, shall have and may
exercise all the authority therein provided; but the designation of such
committee or committees and the delegation thereto of authority shall not
operate to relieve the Board of Directors, or any member thereof, of any
responsibility imposed upon it or him by Law.
ARTICLE V
---------
OFFICERS
--------
Section 5.1 Election and Qualifications. The officers of this
corporation shall consist of a President, one or more Vice Presidents, a
Secretary and a Treasurer, each of whom shall be elected by the Board of
<PAGE>
Directors at the meeting of the Board of Directors next following the annual
meeting of the shareholders (or at any meeting if an office is vacant) and such
other officers, including a Chairman of the Board of Directors, and assistant
officers and agents, as the Board of Directors shall deem necessary, who shall
be elected and shall hold their offices for such terms as the Board of Directors
shall may prescribe. Any two or more offices may be held by the same person
except those of President and Secretary. Any Vice President, Assistant
Treasurer, or the Secretary, respectively, as directed by the Board of Directors
and shall perform such other duties as are imposed upon him by the By- Laws or
the Board of Directors.
Section 5.2 Term of Office and Compensation. The term of office and
salary of each of officer and the manner and time of the payment of such
salaries shall be fixed and determined by the Board of Directors and may be
altered by said Board from time to time at its pleasure.
Section 5.3 Removal and Vacancies. Any officer or agent of the
corporation may be removed by the Board of Directors at any meeting whenever in
its judgement the best interests of the corporation will be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights. If any vacancy occurs in any office of the
corporation, the Board of Directors may elect a successor to fill such vacancy
for the remainder of the unexpired term and until his successor is fully chosen
and qualified.
ARTICLE VI
----------
CHAIRMAN OF THE BOARD
---------------------
Section 6.1 Powers and Duties. The Chairman of the Board of Directors,
if there be one, shall have the power to preside at all meetings of the Board of
Directors and shall have such powers and shall be subject to such other duties
as the Board of Directors may from time to time prescribe.
ARTICLE VII
-----------
PRESIDENT
---------
Section 7.1 Powers and Duties. The powers and duties of the
President are:
(a) To act as the chief executive officer of the corporation and,
subject to the control of the Board of Directors, to have general
supervision, direction and control of the business and affairs of
the corporation.
(b) To preside at all meetings of the shareholders and, in the
absence of the Chairman of the Board, or if there be none, at all
meetings of the Board of Directors.
<PAGE>
(c) To call meetings of the shareholders and also of the Board of
Directors to be held at such times and subject to the limitations
prescribed by law or by these By-Laws, at such places as he shall
deem proper.
(d) To affix the signature of the corporation to all deeds,
conveyances, mortgages, leases, obligations, bonds, certificates
and other papers and instruments in writing which have been
authorized by the Board of Directors or which, in the judgement
of the President, should be executed on behalf of the corporation
and do not require such authorization, to sign certificates for
shares of stock of the corporation and, subject to the direction
if the Board of Directors, to have general charge of the property
of the corporation and to supervise and control all officers,
agents and employees of the corporation.
(e) The President may appoint or employ and discharge employees
and agents of the Corporation and fix their compensation.
Section 7.2 President pro tem. If neither the Chairman of the Board,
the President, nor the Vice President is present at the time of the meeting of
the Board of Directors, a President Pro Tem may be chosen to preside and act at
such meeting. If neither the President nor the Vice President is present at any
meetings of the shareholders, a President Pro Tem may be chosen to preside at
such meeting.
Section 7.3 Succession.. In case of the absence, disability or death of
the President, the Chairman of the Board of Directors shall exercise all his/her
powers and perform all his/her duties, until such a time as a President is
elected by the Board of Directors.
ARTICLE VIII
------------
VICE-PRESIDENT
--------------
Section 8.1 Powers and Duties. Each Vice President will perform the
duties prescribed or delegated by the President or by the Board of Directors.
<PAGE>
ARTICLE IX
----------
SECRETARY
---------
Section 9.1 Power and Duties. The power and duties of the Secretary
are:
(a) To keep a book of minutes at the principal office of the
corporation or other place as the Board of Directors may order,
or all meetings of its Directors and shareholders with the time
and place of holding, whether regular or special, and, if
special, how authorized, the notice thereof given, the names of
those present at Directors meetings, the number of shares present
or represented at shareholders meeting and the proceedings
thereof.
(b) To keep the seal of the corporation and to affix the same to
all instruments which may require it.
(c) To keep or cause to be kept at the principal office of the
corporation, or at the office of the transfer agent or agents, a
share register, or duplicate share registers, showing the names
of the shareholders and their addresses, the number and classes
of shares held by each, the number and date of certificates
issued for shares, and the number and date of cancellation of
every certificate surrendered for cancellation.
(d) To keep or cause to be kept at the registered office of the
corporation the books and records required by Sections 1.3(b),
(c), (d) and (e) above.
(e) To oversee the supply of certificates for shares of the
corporation, to fill in all certificates issued, and to make
proper record of each such issuance; provided, that so long as
the corporation shall have one or more duly appointed and acting
transfer agents of the shares, or any class or series of shares,
of the corporation, such duties with respect to such shares shall
be performed by such transfer agent or transfer agents.
(f) To transfer upon the share books of the corporation any and
all shares of the corporation; provided, that so long as the
corporation shall have one or more duly appointed and acting
transfer agents of the shares, or any class or series of shares,
of the corporation, such duties with respect to such shares shall
be performed by such transfer agent or transfer agents, and he
<PAGE>
method of transfer of each certificate shall be subject to the
reasonable regulations of the transfer agent to which the
certificate is presented for transfer, and also if the
corporation then has one or more duly appointed and acting
registrars, to the reasonable regulations of the registrar to
which the new certificate is presented to registration; and
provided, further, that no certificate for shares of stock shall
be issued or delivered or, if issued or delivered, shall have any
validity whatsoever until and unless it has been signed or
authenticated in the manner provided in Section 11.5 hereof.
(g) To make service and publication of all notice that may be
necessary or proper, and without command or direction from
anyone. In case of the absence, disability, refusal or neglect of
the Secretary to make service or publication of any notices, then
such notices may be served and/or published by the President or a
Vice President, or by any person thereunto authorized by either
of them or by the Board of Directors or by the holders of a
majority of the outstanding shares of the corporation.
(h) To prepare the voting lists required by Section 3.7
above.
(i) Generally to do and perform all such duties as pertain to his
office and as may be required by the Board of Directors.
ARTICLE X
---------
TREASURER
---------
Section 10.1 Powers and Duties.The powers and duties of the Treasurer
are:
(a) To supervise and control the keeping and maintaining of
adequate and correct accounts of the corporation's properties and
business transaction, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital,
surplus and shares. Any surplus, including earned surplus,
paid-in surplus and surplus arising from a reduction of stated
capital, shall be classified according to source and shown in a
separate account. The books of account shall at all reasonable
times be open to inspection by any Director and by any
shareholder as provided in Section 1.3 above.
(b) To keep or cause to be kept at a registered office of the
corporation the books and records required by Section 1.3(a)
above.
(c) To have the custody of all funds, securities, evidences of
indebtedness and other valuable documents of the corporation and
at his discretion, to cause any or all thereof to be deposited
for the account of the corporation with such depository as may be
designated from time to time by the Board of Directors.
<PAGE>
(d) To receive or cause to be received, and to give or cause to
be given, receipts, and acquittance for monies paid in for the
account of the corporation.
(e) To disburse, or cause to disbursed, all funds of the
corporation as may be directed by the Board of Directors, taking
proper vouchers for such disbursements.
(f) To render to the President and to the Board of Directors,
whenever they may require, accounts of all transactions as
Treasurer of the financial condition of the corporation.
(g) Generally to do and perform all such duties as pertain to his
office and as may be required by the Board of Directors.
ARTICLE XI
----------
SUNDRY PROVISIONS
-----------------
Section 11.1 Instruments in Writing. All checks, drafts, demands for
money and notes of the corporation, and all written contracts of the
corporation, shall be signed by such officer or officers, agent or agents, as
the Board of Directors may from time to time by resolution designate. No
officer, agent, or employee of the corporation shall have power to bind the
corporation by contract or otherwise unless authorized to do so by these By-Laws
or by the Board of Directors.
Section 11.2 Fiscal Year. The fiscal year of this corporation shall
be January 1, through December 31. -----------
Section 11.3 Shares Held by the Corporation. Shares in other
corporations standing in the name of this corporation may be voted or
represented and all rights incident thereto may be exercised on behalf of this
corporation by any officer of this corporation authorized so to do by resolution
of the Board of Directors. The corporation may purchase its own shares of
capital stock.
Section 11.4 Dividends. The Board of Directors may from time to time
declare, and the corporation may pay, dividends on it outstanding shares of
capital stock in the manner and upon the terms and conditions provided by law.
<PAGE>
Section 11.5 Certificates of Stock. There shall be issued to each
holder of fully paid shares of the capital stock of the corporation a
certificate or certificates for such shares. Every such certificate shall be
either (a) signed by the President or a Vice President and the Secretary or
Assistant Secretary of the corporation and countersigned by a transfer agent of
the corporation (if the corporation shall then have a transfer agent) and
registered by the registrar of the shares of capital stock of the corporation
(if the corporation shall then have a registrar); or (b) authenticated by
facsimile of the signature of the President and Secretary of the corporation or
by facsimile of the signature of the President and the written signature of the
Secretary or an Assistant Secretary and countersigned by a transfer agent of the
corporation and registrar of the shares of the capital stock of the corporation.
Section 11.6 Lost Certificates. Where the owner of any certificate for
shares of the capital stock of the corporation claims that the certificate has
been lost, destroyed or wrongfully taken, a new certificate shall be issued in
place of the original certificate if the owner (a) so requests before the
corporation has notice that the original certificate has been acquired by a bona
fide purchaser, and (b) files with the corporation an indemnity bond in such
form and in such amount as shall be approved by the President or a Vice
President of the corporation, and (c) satisfies any other reasonable
requirements imposed by the corporation. The Board of Directors may adopt such
other provisions and restrictions with reference to lost certificates, not
inconsistent with applicable laws, as it shall in it discretion deem
appropriate.
Adopted this _________ day of ______________________, 1999.
/s/Joseph P. Maceda
-------------------
JOSEPH P. MACEDA, PRESIDENT
ATTEST:
/s/J. Michael Hopper
- -----------------
J. MICHAEL HOPPER, SECRETARY
<PAGE>
CERTIFICATE OF SECRETARY
------------------------
KNOW ALL MEN BY THESE PRESENTS: That the undersigned does hereby
certify that the undersigned is the Secretary of the aforesaid corporation, duly
organized and existing under and by virtue of the laws of the State of Delaware;
that the above and foregoing By-Laws of said corporation were duly and regularly
adopted as such by the Board of Directors of said corporation by unanimous
consent.
DATED this ___________ day of ________________________, 1999.
/s/J. Michael Hopper
--------------------
J. Michael Hopper, Secretary
EMPLOYMENT AGREEMENT
Agreement made as of the first day of June, 1998, by and among Joseph
P. Maceda ("Executive") and PTC Holdings, Inc., a Delaware corporation (the
"Company").
PREAMBLE
The Board of Directors of the Company recognizes Executive's potential
contribution to the growth and success of the Company and desires to assure the
Company of Executive's employment in an executive capacity. Executive wants to
be employed by the Company and to commit himself to serve the Company on the
terms provided herein. Executive's duties will expressly include research and
development of new technology, processes and products, including the invention
of novel items on behalf of the account of the Company.
NOW, THEREFORE, in consideration of the foregoing of the respective
covenants and agreements of the parties, the parties agree as follows:
ARTICLE 1
TERM OF EMPLOYMENT
Section 1.01. Specified Term. The Company hereby employees Executive
and Executive accepts employment with the Company for a period of five (5) years
beginning on January 1, 1998, and ending on January 1, 2003, on the terms and
conditions herein set forth.
Section 1.02. Earlier Termination. This Agreement may be terminated
earlier as provided in Article 4 hereinbelow.
Section 1.03. "Employment Term" Defined. As used herein, the phrase
"employment term" refers to the entire period of employment of Executive by the
Company hereunder, whether for the period provided above, or whether terminated
earlier as hereinafter provided, or extended by mutual agreement between the
Company and Executive.
ARTICLE 2
DUTIES AND OBLIGATIONS OF EMPLOYEE
Section 2.01. General Duties. Executive shall serve in various senior
executive capacities as mutually agreed to with the Board of Directors of the
Company. The initial positions held by the Executive are; Director of PTC, IWP,
APS and MTC, President of PTC, President and CEO of APS and MTC. In such
capacities, Executive shall do and perform all services, acts or things
necessary or advisable and fulfill the duties of an Officer of the company and
to manage and conduct the business of the Company, including the hiring and
firing of all employees including the officers of the Company other than the
Chairman, subject at all times to the Agreement and concurrence of the Chairman
and to the policies set by the Company's Board of Directors, and to the consent
1
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of the Board when required by the terms of this contract. Additional duties
shall include, but not be limited to: lead in defining the vision of the
Company, with the goal of establishing leadership in the field of power and
water infrastructure products; provide the initiative in creating the business
plan, and in setting the course for the Company; help in defining the philosophy
and mission, with responsibility for turning goals into operational reality;
coordinate, or oversee coordination of the work of the subsidiaries under
respective Presidents and Officers; ensure that the Chairman and Board of
Directors are informed on strategy, and they concur on major issues and at
important turning points; represent the Company dealing with customers and with
other persons and entities; and represent the Company in public.
Section 2.02. Matters Requiring Consent of Board of Directors.
Executive shall not, without specific approval of the Company's Board of
Directors, do or contract to do any of the following:
(a) Borrow on behalf of the Company during any one fiscal year an
amount in excess of $100,000.
(b) Purchase capital equipment for amounts in excess of the amounts
budgeted for expenditure by the Board of Directors;
(c) Sell any single capital asset of the Company having a market value
in excess of $10,000 or a total of capital assets during a fiscal year having a
market value in excess of $50,000.
Section 2.03. Best Efforts Covenant. Executive will, to the best of
his ability, devote his full professional and business time and best efforts to
the performance of his duties for the Company and its subsidiaries and
affiliates.
Section 2.04 Competitive Activities. During the term of this contract,
Executive shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director
or in any other individual or representative capacity, engage or participate in
any business that is in competition in any manner whatsoever with the business
of the Company. In furtherance, and not in limitation of the generality of the
preceding sentence, Executive shall not, for himself or on behalf of any person
or organization, directly or indirectly, compete with the Company in the
development, manufacture, sale, solicitation or servicing of any then existing
product or process of, or service or business engaged in, by the Company, or any
other product or process of, or service or business engaged in, or under
development by, the Company. The provisions of this Section 2.04 shall not be
construed as preventing Executive from (a) investing his personal assets in
businesses which do not compete with the Company in such form or manner as will
not require any services on the part of the Executive in the operation or the
affairs of the companies in which such investments are made and in which his
participation us solely that of an investor, (b) purchasing securities in any
corporation whose securities are regularly traded provided that such purchase
shall not result in his collectively owning beneficially at any time ten (10%)
percent or more of the equity securities of any corporation engaged in a
business competitive to that of the Company, and (c) participating in
conferences, preparing or publishing papers or books or teaching so long as the
Board of Directors approves of such activities prior to the Executive's engaging
in them. Prior to commencing any activity described in clause (c) above, the
Executive shall inform the Board of Directors of the Company, in writing of any
such activity.
2
<PAGE>
Section 2.05. Uniqueness of Executive's Services: Equitable Relief.
Executive hereby represents and agrees that the services to be performed under
the terms of this contract are of a special, unique, unusual, extraordinary and
intellectual character that gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in an action at law.
Executive, therefore, expressly agrees that the Company, in addition to any
other rights or remedies that the Company may possess shall be entitled to
injunctive and other equitable relief to prevent or remedy a breach of this
contract by Executive.
Section 2.06. Hired to Invent. Executive agrees that every improvement,
invention, process, apparatus, method, design and any other creation that
Executive may invent, discover, conceive or originate by himself or in
conjunction with any other person, especially during the term of Executive's
employment under this Agreement, that relates to the business carried on by the
Company, especially during the term of Executive's employment under this
Agreement, shall be the exclusive property of the Company. Executive agrees to
disclose to the Company every patent application, notice of copyright or other
action taken by Executive or any affiliate or assignee to protect intellectual
property during the twelve (12) months following Executive's termination of
employment at the Company, for whatever reason, so that the Company may
determine whether to assert a claim under this section or any other provision of
this Agreement.
Section 2.07. Confidential Information.
-------------------------
(a) Executive recognizes and acknowledges that the Company's trade
secrets and proprietary knowledge, information, processes and know-how and
property belonging to third parties which the Company shall be under obligation
to protect and keep confidential ("Customer Confidential Information"), as they
may exist from time to time ("Confidential Information"), are valuable, special
and unique assets of the Company's business, access to and knowledge of which
are essential to the performance of Executive's duties hereunder. Accordingly,
Executive agrees to execute and deliver concurrently with the execution and
delivery of this Agreement, an Employee's Agreement Re: Inventions and
Confidential Information, substantially in the form attached hereto as Exhibit
A.
(b) Executive shall use his best efforts to prevent the removal of any
Confidential Information from the premises of the Company, except as required in
his normal course of employment by the Company. Executive shall use his best
efforts to cause all persons or entities to whom any Confidential Information
shall be disclosed by him hereunder to observe the terms and conditions set
forth herein as though each such person or entity was bound hereby.
(c) Executive acknowledges and agrees that during the course of and in
connection with his employment with the Company, he will have access to a third
persons Customer Confidential Information. Executive agrees that if requested by
any such third person he will execute and deliver all documents and agreements
that may be reasonably requested by such third person as necessary to protect
such third person's rights in and to its Customer Confidential Information, and
approved by the Company.
(d) Under Section 2.05 of this Agreement, the Company shall be entitled
to injunctive relief to restrain any violation, actual or threatened, by
Executive of the provisions of this Agreement.
3
<PAGE>
ARTICLE 3
COMPENSATION
Section 3.01. Annual Salary: Adjustment:
-------------------------
(a) For all services rendered under this Agreement, subject to any
adjustment as provided in this Section 3.01, the Company shall pay an annual
salary of one-hundred and eighty-two thousand Dollars ($182,000) payable in
equal weekly installments.
(b) Commencing with January, 1999, and each January thereafter during
the term of this Agreement, the annual salary in effect on December 31 of the
immediately preceding year shall be adjusted for any change in the Consumer
Price Index from the then last preceding January through the then last preceding
December. As used in this Agreement, "Consumer Price Index" shall mean the
United States Department of Labor's Bureau of Labor Statistics' Consumer Price
Index, All Urban Consumers, All Items, Sacramento Metropolitan Area, California
(1967=100), or the successor of such index. If such index is discontinued or
revised, the index designated the successor or substitute index by the
government of the United States shall be substituted. If such index is changed
so that a year other than 1967 shall equal 100, then such index shall be
converted in accordance with the conversion fact published by the United States
Bureau of Labor Statistics.
(c) In addition to any adjustments to the annual salary pursuant to
sub-section 3.01(b), there shall be an annual review for merit by the Company's
Board of Directors and an increase in the annual salary and/or bonus as may be
deemed appropriate to reflect the value of the services of the Executive.
Section 3.02. Executive's Benefits.
--------------------
(a) The Executive shall be entitled to participate in or receive
benefits under any employee benefit plan or arrangement made available by the
Company in the future to its officers and key management employees, subject to
and on a basis consistent with the terms, conditions and overall administration
of such plans and arrangements. Without in any way limiting the foregoing, such
benefits shall include the following:
(i) The Company, in order to retain its valued employees, will
establish a contributory Internal Revenue Code Section 401(k) plan by September
30, 1998. Contributions of the participating employees, including Executive, may
be matched by contributions from the Company at the discretion of the Board of
Directors of the Company.
(ii) Executive shall be entitled to all paid legal holidays
made available by the Company to its employees, such holidays to include,
without limitation, New Years Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
(iii) In addition to such paid holidays, Executive shall be
entitled to twenty-five (25) vacation days each calendar year, during which time
Executive's compensation shall be paid in full. Vacation time not taken in the
calendar year will be accumulated and added to the vacation time for subsequent
years; provided, however, Executive shall not take vacations in excess of
fifteen (15) consecutive business days without at least four (4) weeks' prior
notice to the Chairman and Chief Executive Officer of the Company.
4
<PAGE>
(iv) The Company shall provide Executive fully-paid insurance
benefits as described in Exhibit B hereto.
(b) Nothing paid to the Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the annual salary payable to Executive pursuant to Section 3.02
hereinabove. Any payments or benefits payable to the Executive hereunder in
respect of any calendar year during which the Executive is employed by the
Company for less than the entire such year shall, unless otherwise provided in
the applicable plan or arrangement, be prorated in accordance with the number of
days in such calendar year during which he is so employed.
(c) In recognition of the necessity of the use of an automobile to the
efficient and expeditious performance of Executive's services, duties and
obligations to and on behalf of the Company, the Company shall provide to
Executive, at the Company's sole cost and expense, a car to be chosen by
Executive with an aggregate leasing cost to the Company of not more than
$1,000per month. In addition thereto, the Company shall bear the expense of
insurance, fuel and maintenance therefor.
Section 3.03 Reimbursement of Business Expenses. The Company shall
promptly reimburse Executive for all reasonable business expenses incurred by
Executive in promoting the business of the Company, including expenditures for
entertainment, gifts and travel. Each such expenditure shall be reimbursable
only if it is of a nature qualifying it as a proper deduction on the federal and
state income tax return of the Company. Each such expenditure shall be
reimbursable only if Executive furnishes to the Company adequate records and
other documentary evidence required by federal and state statutes and
regulations issued by the appropriate taxing authorities for the substantiation
of that expenditure as an income tax deduction.
ARTICLE 4
TERMINATION OF EMPLOYMENT
Section 4.01. Termination for Cause. The Company reserves the right to
terminate this Agreement if Executive (1) willfully breaches or habitually
neglects the duties which he is required to perform under the terms of this
Agreement; or (2) commits such acts of dishonesty, fraud, misrepresentation or
other acts of moral turpitude, that would prevent the effective performance of
his duties. The Company may in its opinion terminate this Agreement for the
reasons stated in this section by giving written notice of termination to
Executive without prejudice to any other remedy to which the Company may be
entitled, either at law, in equity or under this Agreement. The notice of
termination required by this section shall specify the ground for the
termination and shall be supported by a statement of relevant facts. Termination
under this section shall be considered "for cause" for the purposes of this
Agreement.
5
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Section 4.02. Termination Without Cause. The employment of Executive
under this Agreement shall cease and this Agreement, other than the provisions
if Section 2.07, shall terminate:
(a) Upon the death of Executive;
(b) If during the term of this Agreement, Executive shall sustain a
Disability, as hereinafter defined, Executive shall be entitled to receive only
the benefits, if any, as may be provided by any insurance to which he may become
entitled to pursuant to Section 3.02 hereinafter. "Disability" as used herein
means the complete and total disability of Executive resulting from, injury,
sickness, disease or infirmity due to age, whereby Executive, for a period of
sixty (60) consecutive days, is unable to perform his usual services for the
Company.
ARTICLE 5
MISCELLANEOUS
Section 5.01. Option Grant. It is the understanding of the Company and
Executive that PTC Group shall grant to Executive, an option to acquire shares
of the common stock of PTC Group, the number of shares subject to terms of a
separate memorandum of understanding between Dr. Rocco Guarnaccia, Joseph
Maceda, and Employee.
Section 5.02. Travel with Spouse. For up to four weeks per year, the
Executive's spouse or other family member may accompany the Executive while on
business related travel, at the expense of the Company, such expenses to
include: double room hotel accommodations with Executive, air travel at same
class as Executives, meals with Executive, and normal incidental travel
expenses.
Section 5.03. Club Memberships Executive holds membership in various
travel clubs and may join social clubs which the Company recognizes to bring
potential benefit to the Company when employed by the Executive as a means of
networking. The Company will pay normal annual dues to these clubs, together
with expenses of meals, lodging and entertainment directly attributed to
development of the Company. Such expenses will be budget and approved by the
Board of Directors as part of the normal budget approval process.
Section 5.04. Assignment. This Agreement may not be assigned by any
party hereto, provided that the Company may assign this Agreement: (a) to an
affiliate so long as such affiliate assumes the Company's obligations hereunder,
provided that no such assignment shall discharge the Company of its obligations
herein, or (b) in connection with a merger or consolidation involving the
Company or a sale of substantially all its assets to the surviving corporation
or purchaser as the case may be, so long as such assignee assumes the Company's
obligations thereunder.
Section 5.05. Governing Law. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
California.
Section 5.06. Interpretation.In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions in this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
Section 5.07. Notice. Any notice required or permitted to be given
hereunder shall be effective when received and shall be sufficient if in writing
and if personally delivered or sent by prepaid cable, telex or registered air
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<PAGE>
mail, return receipt requested, to the party to receive such notice at its
address set forth at the end of this Agreement or at such other address as a
party may by notice specify to the other.
Section 5.08. Amendment and Waiver. This Agreement may not be amended,
supplemented or waived except by a writing signed by the party against which
amendment or waiver is to be enforced. The waiver by any party of a breach of
any provision of this Agreement shall not operate to, or be construed as a
waiver of, any breach of that provision nor as a waiver of any breach of another
provision.
Section 5.09. Survival of Rights and Obligations. All rights and
obligations of the Executive or the Company arising during the term of this
Agreement shall continue to have full force and effect after the termination of
this Agreement unless otherwise provided herein.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the date first above written.
COMPANY: EXECUTIVE:
PTC Holdings, Inc.
By:/s/Rocco Guarnaccia By:/s/ Joseph P. Maceda
------------------- --------------------
Dr. Rocco Guarnaccia Joseph P. Maceda
Chairman 5309 Terrace Oak Circle
8008 Sacramento Street Fair Oaks, CA 95628
Fair Oaks, CA 95628
7
<PAGE>
Exhibit A
EMPLOYEE'S AGREEMENT RE:
------------------------
INVENTIONS AND CONFIDENTIAL INFORMATION
---------------------------------------
THIS AGREEMENT CREATES IMPORTANT OBLIGATIONS WHICH ARE BINDING . PLEASE READ
IT IN FULL BEFORE YOU SIGN IT.
THIS AGREEMENT is made by and between Integrated Water & Power, a
Delaware corporation (the "Company") and Joseph P. Maceda ("Employee").
PREAMBLE
1. The Company desires to preserve the goodwill of its business and
business relationships and to protect the details of its business and affairs
from disclosure and unauthorized use and to ensure ownership of certain
property.
2. Employee recognizes that the Company is engaged in a continuous
program of design and manufacture of proprietary infrastructure products and
understands that it is part of his responsibility as an employee to assist the
Company in such endeavors.
3. Employee recognizes and acknowledges that he shall have access to a
variety of knowledge, information and property related to the Company's business
or affairs and may have contact with the Company's customers, suppliers, or
other employees and similar persons and may assist in the creation and/or
development of certain property.
4. Employee recognizes the importance of protecting the Company's
rights to inventions, discoveries, ideas and confidential information, and any
similar or related rights.
NOW, THEREFORE, in consideration of the terms and conditions set forth
hereinbelow, and for other good and valuable consideration, including the
material benefits and training received as a result of his employment with the
Company and the continuation thereof, the sufficiency of which is hereby
acknowledged, and in reliance upon the recitals set forth above, which are fully
made a part of this Agreement, the Company and the Employee hereby agree as
follows:
1. DEFINITIONS
For the purposes of this Agreement:
(a) As used in this Agreement, the term "Confidential
Information" means all trade secrets and proprietary knowledge,
information, process and know-how and property relating to, or used or
possessed by, the Company (including any knowledge, information or
property belonging to third persons or entities which its Company is in
or an obligation to protect and keep secret), and includes, without
limitation the following:
8
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(i) all trade secrets and secret information,
whether of technical or business nature;
(ii) all software, including without limitation, all
programs, specifications, applications, routines, subroutines,
techniques and ideas for formulae;
(iii) all concepts, data, designs and documents;
(iv) the Company's business methods and practices;
(v) compilations of data or information concerning
the Company's business, including but not limited to:
(A) financial information whether related to
the Company generally, or to particular products,
services, geographical areas, or time periods;
(B) supply and service information, such as
goods and services suppliers' names or addresses,
terms of supply or service contracts of particular
transactions;
(C) marketing information, such as details
about past, present or proposed marketing programs by
or on behalf of the Company, sales forecasts or
results of marketing efforts or information about
impending transactions;
(D) personnel information, such as
compensation or other terms of employment, employee
lists, training methods or other employee
information;
(vi) the names of the Company's customers, the
nature of the Company's relationships with these customers,
and the business of the Company's customers;
(vii) any other information not generally known to
the public including information about the Company's
operations, plans, personnel, products or services which, if
misused or disclosed, could have a reasonable possibility of
adversely affecting the business of the Company.
(b) Employee agrees that all information possessed by him, or
disclosed to him, or to which he obtains access during the course of
his employment with the Company, shall be presumed to be Confidential
Information under the terms of this Agreement, and the burden of
proving otherwise shall rest with Employee.
(c) The term "Inventions" means all discoveries, developments,
designs, improvements, inventions, formulae, processes, techniques,
computer programs, strategies, and data whether or not patentable under
patent, copyright or similar statutes. Employee agrees that all
information possessed by him, or disclosed to him, or to which he
obtains access during the course of his employment with the Company,
shall be presumed to be Confidential Information under the terms of
this Agreement, the burden of proving otherwise shall rest with the
Employee.
2. CONFIDENTIAL INFORMATION
During the period of Employee's employment with the Company, and after
the termination thereof for any reason, Employee agrees that, because
9
<PAGE>
of the valuable nature of the Confidential Information, he shall use
his best efforts to maintain and protect the secrecy of Confidential
Information. Without in any manner limiting the generality of the
foregoing obligation, Employee agrees that he shall not, directly or
indirectly, undertake or attempt to undertake any of the following
activities:
(a) disclose any Confidential Information to any other person
or entity;
(b) use any Confidential Information for his own purposes;
(c) make any copies, duplicates or reproductions of any
Confidential Information;
(d) authorize or permit any other person or entity to use,
copy, disclose, publish or distribute any Confidential Information; or
(e) undertake or attempt to undertake any activity the Company
is prohibited from undertaking or attempting to undertake by any of its
present or future clients, customers, suppliers, vendors, consultants,
agents or contractors.
3. RETURN OF CONFIDENTIAL INFORMATION
Upon termination of Employee's employment with the Company for any
reason, Employee agrees not to retain or remove from the Company's
premises any records, files or other documents or copies thereof or any
other Confidential Information whatsoever, and he agrees to surrender
same to the Company, wherever it is located, immediately upon
termination of his employment.
4. EMPLOYEE INVENTIONS
(a) Disclosure and Ownership of Inventions
--------------------------------------
(i) During the Employee's service as an employee of
the Company and for a period of six (6) months thereafter,
Employee will promptly and fully disclose to the Company (and
to any persons designated by it) all Inventions generated,
made, conceived or reduced to practice or leaned by Employee,
either alone or jointly with others, which, in any way, result
from or suggested by any work, which Employee may for or on
behalf of the Company, or relate to or are useful in the
business of the Company; or result from the use of premises or
property owned, leased, licensed, or contracted for by the
Company. The Company shall have the right to such Inventions,
whether they are patentable or not.
(ii) Employee understands that the Company will have
no rights pursuant to this Agreement in any Invention of
Employee made during the term of Employee's employment by the
Company if such Invention has not arisen out of or by reason
of Employee's work with the Company, and does not relate to
the business or operations of the Company, although Employee
agrees to inform the Company of any such Invention.
(b) Assignment of Inventions
------------------------
Employee agrees that Employee's services on behalf of the Company are
works made for hire and all Inventions specified in Paragraph 4 (a)(i)
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shall be the sole property of the Company and its assigns, and the
Company and its assigns shall be the sole owner of all patents,
copyrights, trademarks, trade secrets, and other rights and protections
in connection therewith. Employee hereby assigns to the Company any and
all rights Employee now has or may hereafter acquire in such
Inventions. Employee further agrees, as to all such Inventions, to
assist the Company in every proper way (but at the Company's expense)
to obtain, and from time to time enforce, patents, copyrights,
trademarks, trade secrets, and other rights and protections relating to
such Inventions in any and all countries, and to that end Employee will
execute all documents for use in applying for and obtaining such
patents, copyrights, trademarks, trade secrets, and other rights and
protections on, and enforcing, such Inventions, as the Company may
desire, together with any assignments thereof to the Company or persons
designated by it.
Employee's obligation to assist the Company in obtaining and enforcing
patents, copyrights, trademarks, trade secrets, and other rights and
protections relating to such Inventions in any and all countries shall
continue beyond the termination of Employee's employment by the
Company, but the Company shall compensate Employee at a reasonable rate
after termination of employment for time actually spent by Employee, at
the Company's request, on such assistance. In the event the Company is
unable, after reasonable effort, to secure Employee's signature on any
document or documents needed to apply for or prosecute any patent,
copyright, trademark, trade secret, or other right or protection
relating to an Invention, whether because of Employee's physical or
mental capacity or for any reason whatsoever, Employee hereby
irrevocably designates and appoints the Company, its duly authorized
officers and agents as Employee's agent coupled with an interest and
attorney-in-fact, to act for and in Employee's behalf and stead to
execute and file any such application or applications and to do all
other lawfully permitted acts to further the prosecution and issuance
of patents, copyrights, trademarks, trade secrets, or similar rights or
protections thereon with the same legal force and affect as if executed
by Employee.
(c) Previous Inventions
-------------------
As a matter of record, Employee has identified in Exhibit A, attached
hereto, all Inventions that have been generated or conceived or first
reduced to practice or learned by Employee, alone or jointly with
others, prior to Employee's employment by the Company, which Employee
desire to remove from the operation of this Agreement. Employee
represents and warrants that such list is complete. If Employee does
not attach a list hereto, Employee represents that Employee has made no
such Inventions at the time of signing this Agreement.
5. LIMITATION ON OTHER ACTIVITIES AND COMPETITION
Employee agrees that while Employee is employed by the Company,
Employee will not without the Company's express written consent, engage
in any consulting, employment or business that is competitive with the
Company. In furtherance and not in limitation of the generality of the
preceding sentence, Employee shall not, for itself or on behalf of any
person or organization, directly or indirectly, compete with the
Company in the development, manufacture, sale, solicitation, or
servicing of any then existing project of, or service or business
engaged in by, the Company, or any other product of, or service or
business engaged in, or under development by, the Company.
11
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6. NO CONFLICTING OBLIGATIONS
(a) During Employment
-----------------
Employee represents and warrants to the Company that Employee
has no interest or obligation which is consistent with or in
conflict with this Agreement, or which would prevent, limit or
impair Employee's performance of any part of this Agreement.
Employee agrees to notify the Company immediately if any such
interest or obligation arises.
(b) After Termination of Employment
-------------------------------
For twelve (12) months following the termination of Employee's
employment by the Company, Employee agrees that if Employee
accepts employment, whether as a consultant, employee,
director, trustee or otherwise, with any persons or
organization, or engage in any type of activity on Employee's
behalf or on behalf of any person or organization that is in
any way related to the products, services or business of the
Company, Employee shall notify the Company in writing, within
thirty (30) days thereof, of the character of each such
activity, and of the name and address of each such person or
organization by which Employee is so employed.
7. CONFIDENTIALITY OF PREVIOUS EMPLOYERS
Employee represents that Employee's performance of all the terms of
this Agreement does not and will not breach any agreement to keep in
confidence proprietary information acquired by Employee in confidence
or in trust prior to the execution of this Agreement. Employee has not
entered into, and Employee agrees that Employee will not enter into,
any agreement either written or oral, in conflict with this Agreement.
Employee represents that Employee has not brought and will not bring
with Employee to the Company, or use in the performance of Employee's
responsibilities at the Company, any materials or documents of a
present or former employer or client that are not generally available
to the public, unless Employee has obtained express written
authorization from the present or former employers and clients during
Employee's service to the Company.
8. ENFORCEMENT
Employee agrees that in the event of a breach or threatened breach of
the provisions of this Agreement, the Company's remedies at law would
be inadequate, and the Company shall be entitled to an injunction to
enforce such provisions (without any bond or other security being
required), but nothing herein shall be construed to preclude the
Company from pursuing any remedy at law or in equity for any breach or
threatened breach.
9. MISCELLANEOUS
(a) Successors
----------
The rights and obligations under this Agreement shall survive
the termination of Employee's service to the Company in any
capacity and shall inure to the benefit of and shall be
binding upon: (i) Employee's heirs and personal
representatives, and (ii) the successors and assigns of the
Company.
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(b) Governing Law
-------------
The laws of the State of California shall govern all questions
relative to interpretation and construction of this Agreement
and to its performance.
(c) Severability
------------
If any such provision of this Agreement is wholly or partially
unenforceable for any reason, such unenforceability shall not
affect the enforceability of the balance of this Agreement,
and all provisions of this Agreement, shall if alternative
interpretations are applicable, be construed so a to preserve
the enforceability hereof.
(d) Waiver
------
The Company's waiver of any default by Employee shall not
constitute a waiver of its rights under this Agreement with
respect to any subsequent default by me.
EMPLOYEE HAS READ AND UNDERSTANDS THE FOREGOING AND AGREES TO ITS TERMS.
/s/ Joseph P. Maceda
--------------------
Joseph P. Maceda
5309 Terrace Oak Circle
Fair Oaks, CA 95628
6-3-98
------
Date
ACCEPTED AS A CONDITION OF EMPLOYMENT
PTC Holdings, Inc.
/s/ Rocco Guarnaccia
--------------------
Dr. Rocco Guarnaccia
Chairman
6-3-98
------
Date
13
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Exhibit B
EXHIBIT B TO EMPLOYMENT AGREEMENT
ARTICLE 3 SECTION 3.02(a)(liv)
The Company shall provide employee/family fully paid insurance benefits as
described herein:
1. Complete Medical Cover-- Family (100% coverage)
2. Complete Dental Cover-- Family (100% coverage)
3. Life Insurance-- For Employer ($1M Term Life)
4. Accidental Death and Dismemberment-- Employee
5. Vision Care-- Family
6. Long Term Disability--Employee
14
EMPLOYMENT AGREEMENT
Agreement made as of the first day of June, 1998, by and among J.
Michael Hopper ("Executive") and PTC Holdings, Inc., a Delaware corporation (the
"Company").
PREAMBLE
The Board of Directors of the Company recognizes Executive's potential
contribution to the growth and success of the Company and desires to assure the
Company of Executive's employment in an executive capacity. Executive wants to
be employed by the Company and to commit himself to serve the Company on the
terms provided herein. Executive's duties will expressly include research and
development of new technology, processes and products, including the invention
of novel items on behalf of the account of the Company.
NOW, THEREFORE, in consideration of the foregoing of the respective
covenants and agreements of the parties, the parties agree as follows:
ARTICLE 1
TERM OF EMPLOYMENT
Section 1.01. Specified Term. The Company hereby employees Executive
and Executive accepts employment with the Company for a period of five (5) years
beginning on January 1, 1998, and ending on January 1, 2003, on the terms and
conditions herein set forth.
Section 1.02. Earlier Termination. This Agreement may be terminated
earlier as provided in Article 4 hereinbelow.
Section 1.03. "Employment Term" Defined. As used herein, the phrase
"employment term" refers to the entire period of employment of Executive by the
Company hereunder, whether for the period provided above, or whether terminated
earlier as hereinafter provided, or extended by mutual agreement between the
Company and Executive.
ARTICLE 2
DUTIES AND OBLIGATIONS OF EMPLOYEE
Section 2.01. General Duties. Executive shall serve in various senior
executive capacities as mutually agreed to with the Board of Directors of the
Company. The initial positions to be filled by the Executive are: CFO and VP of
Administration of PTC and its three subsidiaries, IWP, APS and MTC. In such
capacities, Executive shall do and perform all services, acts or things
necessary or advisable and fulfill the duties of an Officer of the company and
to manage and conduct the business of the Company, subject at all times to the
Agreement and concurrence of the Chairman and to the policies set by the
Company's Board of Directors, and to the consent of the Board when required by
the terms of this contract. Additional duties shall include, but not be limited
to: lead in defining the vision of the Company, with the goal of establishing
leadership in the field of power and water infrastructure products; provide the
initiative in creating the business plan, and in setting the course for the
1
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Company; help in defining the philosophy and mission, with responsibility for
turning goals into operational reality; coordinate, or oversee coordination of
the work of the subsidiaries under respective Presidents and Officers; ensure
that the Chairman and Board of Directors are informed on strategy, and they
concur on major issues and at important turning points; represent the Company
dealing with customers and with other persons and entities; and represent the
Company in public.
Section 2.02. Matters Requiring Consent of Board of Directors.
Executive shall not, without specific approval of the Company's Board of
Directors, do or contract to do any of the following:
(a) Borrow on behalf of the Company during any one fiscal year an
amount in excess of $100,000.
(b) Purchase capital equipment for amounts in excess of the amounts
budgeted for expenditure by the Board of Directors;
(c) Sell any single capital asset of the Company having a market value
in excess of $10,000 or a total of capital assets during a fiscal year having a
market value in excess of $50,000.
Section 2.03. Best Efforts Covenant. Executive will, to the best of
his ability, devote his full professional and business time and best efforts to
the performance of his duties for the Company and its subsidiaries and
affiliates.
Section 2.04 Competitive Activities. During the term of this contract,
Executive shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director
or in any other individual or representative capacity, engage or participate in
any business that is in competition in any manner whatsoever with the business
of the Company. In furtherance, and not in limitation of the generality of the
preceding sentence, Executive shall not, for himself or on behalf of any person
or organization, directly or indirectly, compete with the Company in the
development, manufacture, sale, solicitation or servicing of any then existing
product or process of, or service or business engaged in, by the Company, or any
other product or process of, or service or business engaged in, or under
development by, the Company. The provisions of this Section 2.04 shall not be
construed as preventing Executive from (a) investing his personal assets in
businesses which do not compete with the Company in such form or manner as will
not require any services on the part of the Executive in the operation or the
affairs of the companies in which such investments are made and in which his
participation us solely that of an investor, (b) purchasing securities in any
corporation whose securities are regularly traded provided that such purchase
shall not result in his collectively owning beneficially at any time ten (10%)
percent or more of the equity securities of any corporation engaged in a
business competitive to that of the Company, and (c) participating in
conferences, preparing or publishing papers or books or teaching so long as the
Board of Directors approves of such activities prior to the Executive's engaging
in them. Prior to commencing any activity described in clause (c) above, the
Executive shall inform the Board of Directors of the Company, in writing of any
such activity.
Section 2.05. Uniqueness of Executive's Services: Equitable Relief.
Executive hereby represents and agrees that the services to be performed under
the terms of this contract are of a special, unique, unusual, extraordinary and
intellectual character that gives them a peculiar value, the loss of which
2
<PAGE>
cannot be reasonably or adequately compensated in damages in an action at law.
Executive, therefore, expressly agrees that the Company, in addition to any
other rights or remedies that the Company may possess shall be entitled to
injunctive and other equitable relief to prevent or remedy a breach of this
contract by Executive.
Section 2.06. Hired to Invent. Executive agrees that every improvement,
invention, process, apparatus, method, design and any other creation that
Executive may invent, discover, conceive or originate by himself or in
conjunction with any other person, especially during the term of Executive's
employment under this Agreement, that relates to the business carried on by the
Company, especially during the term of Executive's employment under this
Agreement, shall be the exclusive property of the Company. Executive agrees to
disclose to the Company every patent application, notice of copyright or other
action taken by Executive or any affiliate or assignee to protect intellectual
property during the twelve (12) months following Executive's termination of
employment at the Company, for whatever reason, so that the Company may
determine whether to assert a claim under this section or any other provision of
this Agreement.
Section 2.07. Confidential Information.
-------------------------
(a) Executive recognizes and acknowledges that the Company's trade
secrets and proprietary knowledge, information, processes and know-how and
property belonging to third parties which the Company shall be under obligation
to protect and keep confidential ("Customer Confidential Information"), as they
may exist from time to time ("Confidential Information"), are valuable, special
and unique assets of the Company's business, access to and knowledge of which
are essential to the performance of Executive's duties hereunder. Accordingly,
Executive agrees to execute and deliver concurrently with the execution and
delivery of this Agreement, an Employee's Agreement Re: Inventions and
Confidential Information, substantially in the form attached hereto as Exhibit
A.
(b) Executive shall use his best efforts to prevent the removal of any
Confidential Information from the premises of the Company, except as required in
his normal course of employment by the Company. Executive shall use his best
efforts to cause all persons or entities to whom any Confidential Information
shall be disclosed by him hereunder to observe the terms and conditions set
forth herein as though each such person or entity was bound hereby.
(c) Executive acknowledges and agrees that during the course of and in
connection with his employment with the Company, he will have access to a third
persons Customer Confidential Information. Executive agrees that if requested by
any such third person he will execute and deliver all documents and agreements
that may be reasonably requested by such third person as necessary to protect
such third person's rights in and to its Customer Confidential Information, and
approved by the Company.
(d) Under Section 2.05 of this Agreement, the Company shall be entitled
to injunctive relief to restrain any violation, actual or threatened, by
Executive of the provisions of this Agreement.
3
<PAGE>
ARTICLE 3
COMPENSATION
Section 3.01. Annual Salary: Adjustment:
-------------------------
(a) For all services rendered under this Agreement, subject to any
adjustment as provided in this Section 3.01, the Company shall pay an annual
salary of one-hundred and thirty thousand Dollars ($130,000) payable in equal
weekly installments.
(b) Commencing with January, 1999, and each January thereafter during
the term of this Agreement, the annual salary in effect on December 31 of the
immediately preceding year shall be adjusted for any change in the Consumer
Price Index from the then last preceding January through the then last preceding
December. As used in this Agreement, "Consumer Price Index" shall mean the
United States Department of Labor's Bureau of Labor Statistics' Consumer Price
Index, All Urban Consumers, All Items, Sacramento Metropolitan Area, California
(1967=100), or the successor of such index. If such index is discontinued or
revised, the index designated the successor or substitute index by the
government of the United States shall be substituted. If such index is changed
so that a year other than 1967 shall equal 100, then such index shall be
converted in accordance with the conversion fact published by the United States
Bureau of Labor Statistics.
(c) In addition to any adjustments to the annual salary pursuant to
sub-section 3.01(b), there shall be an annual review for merit by the Company's
Board of Directors and an increase in the annual salary and/or bonus as may be
deemed appropriate to reflect the value of the services of the Executive.
Section 3.02. Executive's Benefits.
--------------------
(a) The Executive shall be entitled to participate in or receive
benefits under any employee benefit plan or arrangement made available by the
Company in the future to its officers and key management employees, subject to
and on a basis consistent with the terms, conditions and overall administration
of such plans and arrangements. Without in any way limiting the foregoing, such
benefits shall include the following:
(i) The Company, in order to retain its valued employees, will
establish a contributory Internal Revenue Code Section 401(k) plan by September
30, 1998. Contributions of the participating employees, including Executive, may
be matched by contributions from the Company at the discretion of the Board of
Directors of the Company.
(ii) Executive shall be entitled to all paid legal holidays
made available by the Company to its employees, such holidays to include,
without limitation, New Years Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
(iii) In addition to such paid holidays, Executive shall be
entitled to twenty (20) vacation days each calendar year, during which time
Executive's compensation shall be paid in full. Vacation time not taken in the
calendar year will be accumulated and added to the vacation time for subsequent
years; provided, however, Executive shall not take vacations in excess of
fifteen (15) consecutive business days without at least four (4) weeks' prior
notice to the Chairman and Chief Executive Officer of the Company.
(iv) The Company shall provide Executive fully-paid insurance
benefits as described in Exhibit B hereto.
4
<PAGE>
(b) Nothing paid to the Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the annual salary payable to Executive pursuant to Section 3.02
hereinabove. Any payments or benefits payable to the Executive hereunder in
respect of any calendar year during which the Executive is employed by the
Company for less than the entire such year shall, unless otherwise provided in
the applicable plan or arrangement, be prorated in accordance with the number of
days in such calendar year during which he is so employed.
(c) In recognition of the necessity of the use of an automobile to the
efficient and expeditious performance of Executive's services, duties and
obligations to and on behalf of the Company, the Company shall provide to
Executive, at the Company's sole cost and expense, a car to be chosen by
Executive with an aggregate leasing cost to the Company of not more than $500per
month. In addition thereto, the Company shall bear the expense of insurance,
fuel and maintenance therefor.
Section 3.03 Reimbursement of Business Expenses. The Company shall
promptly reimburse Executive for all reasonable business expenses incurred by
Executive in promoting the business of the Company, including expenditures for
entertainment, gifts and travel. Each such expenditure shall be reimbursable
only if it is of a nature qualifying it as a proper deduction on the federal and
state income tax return of the Company. Each such expenditure shall be
reimbursable only if Executive furnishes to the Company adequate records and
other documentary evidence required by federal and state statutes and
regulations issued by the appropriate taxing authorities for the substantiation
of that expenditure as an income tax deduction.
ARTICLE 4
TERMINATION OF EMPLOYMENT
Section 4.01. Termination for Cause. The Company reserves the right to
terminate this Agreement if Executive (1) willfully breaches or habitually
neglects the duties which he is required to perform under the terms of this
Agreement; or (2) commits such acts of dishonesty, fraud, misrepresentation or
other acts of moral turpitude, that would prevent the effective performance of
his duties. The Company may in its opinion terminate this Agreement for the
reasons stated in this section by giving written notice of termination to
Executive without prejudice to any other remedy to which the Company may be
entitled, either at law, in equity or under this Agreement. The notice of
termination required by this section shall specify the ground for the
termination and shall be supported by a statement of relevant facts. Termination
under this section shall be considered "for cause" for the purposes of this
Agreement.
5
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Section 4.02. Termination Without Cause. The employment of Executive
under this Agreement shall cease and this Agreement, other than the provisions
if Section 2.07, shall terminate:
(a) Upon the death of Executive;
(b) If during the term of this Agreement, Executive shall sustain a
Disability, as hereinafter defined, Executive shall be entitled to receive only
the benefits, if any, as may be provided by any insurance to which he may become
entitled to pursuant to Section 3.02 hereinafter. "Disability" as used herein
means the complete and total disability of Executive resulting from, injury,
sickness, disease or infirmity due to age, whereby Executive, for a period of
sixty (60) consecutive days, is unable to perform his usual services for the
Company.
ARTICLE 5
MISCELLANEOUS
Section 5.01. Option Grant. It is the understanding of the Company and
Executive that PTC Group shall grant to Executive, an option to acquire shares
of the common stock of PTC Group, the number of shares subject to terms of a
separate memorandum of understanding between Dr. Rocco Guarnaccia, Joseph
Maceda, and Employee.
Section 5.02. Club Memberships Executive holds membership in one social
club which the Company recognizes to bring potential benefit to the Company when
employed by the Executive as a means of networking. The Company will pay normal
annual dues to Players Club, together with expenses of meals, lodging and
entertainment directly attributed to development of the Company. Such expenses
will be budget and approved by the Board of Directors as part of the normal
budget approval process.
Section 5.03. Assignment. This Agreement may not be assigned by any
party hereto, provided that the Company may assign this Agreement: (a) to an
affiliate so long as such affiliate assumes the Company's obligations hereunder,
provided that no such assignment shall discharge the Company of its obligations
herein, or (b) in connection with a merger or consolidation involving the
Company or a sale of substantially all its assets to the surviving corporation
or purchaser as the case may be, so long as such assignee assumes the Company's
obligations thereunder.
Section 5.04. Governing Law. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
California.
Section 5.05. Interpretation. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions in this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
Section 5.06. Notice. Any notice required or permitted to be given
hereunder shall be effective when received and shall be sufficient if in writing
and if personally delivered or sent by prepaid cable, telex or registered air
mail, return receipt requested, to the party to receive such notice at its
address set forth at the end of this Agreement or at such other address as a
party may by notice specify to the other.
6
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Section 5.07. Amendment and Waiver. This Agreement may not be amended,
supplemented or waived except by a writing signed by the party against which
amendment or waiver is to be enforced. The waiver by any party of a breach of
any provision of this Agreement shall not operate to, or be construed as a
waiver of, any breach of that provision nor as a waiver of any breach of another
provision.
Section 5.08. Survival of Rights and Obligations. All rights and
obligations of the Executive or the Company arising during the term of this
Agreement shall continue to have full force and effect after the termination of
this Agreement unless otherwise provided herein.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the date first above written.
COMPANY: EXECUTIVE:
PTC Holdings, Inc.
By:/s/Rocco Guarnaccia By:/s/ J. Michael Hopper
--------------------- ------------------
Dr. Rocco Guarnaccia J. Michael Hopper
Chairman 2303 Regis Drive
8008 Sacramento Street Davis , CA 95616
Fair Oaks, CA 95628
7
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Exhibit A
EMPLOYEE'S AGREEMENT RE:
------------------------
INVENTIONS AND CONFIDENTIAL INFORMATION
---------------------------------------
THIS AGREEMENT CREATES IMPORTANT OBLIGATIONS WHICH ARE
BINDING . PLEASE READ IT IN FULL BEFORE YOU SIGN IT.
THIS AGREEMENT is made by and between Integrated Water & Power, a
Delaware corporation (the "Company") and J. Michael Hopper ("Employee").
PREAMBLE
1. The Company desires to preserve the goodwill of its business and
business relationships and to protect the details of its business and affairs
from disclosure and unauthorized use and to ensure ownership of certain
property.
2. Employee recognizes that the Company is engaged in a continuous
program of design and manufacture of proprietary infrastructure products and
understands that it is part of his responsibility as an employee to assist the
Company in such endeavors.
3. Employee recognizes and acknowledges that he shall have access to a
variety of knowledge, information and property related to the Company's business
or affairs and may have contact with the Company's customers, suppliers, or
other employees and similar persons and may assist in the creation and/or
development of certain property.
4. Employee recognizes the importance of protecting the Company's
rights to inventions, discoveries, ideas and confidential information, and any
similar or related rights.
NOW, THEREFORE, in consideration of the terms and conditions set forth
hereinbelow, and for other good and valuable consideration, including the
material benefits and training received as a result of his employment with the
Company and the continuation thereof, the sufficiency of which is hereby
acknowledged, and in reliance upon the recitals set forth above, which are fully
made a part of this Agreement, the Company and the Employee hereby agree as
follows:
1. DEFINITIONS
For the purposes of this Agreement:
(a) As used in this Agreement, the term "Confidential Information"
means all trade secrets and proprietary knowledge, information, process
and know-how and property relating to, or used or possessed by, the
Company (including any knowledge, information or property belonging to
third persons or entities which its Company is in or an obligation to
protect and keep secret), and includes, without limitation the
following:
8
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(i) all trade secrets and secret information, whether of
technical or business nature;
(ii) all software, including without limitation, all
programs, specifications, applications, routines, subroutines,
techniques and ideas for formulae;
(iii) all concepts, data, designs and documents;
(iv) the Company's business methods and practices;
(v) compilations of data or information concerning the
Company's business, including but not limited to:
(A) financial information whether related to the Company
generally, or to particular products, services, geographical
areas, or time periods;
(B) supply and service information, such as goods and
services suppliers' names or addresses, terms of supply or
service contracts of particular transactions;
(C) marketing information, such as details about past,
present or proposed marketing programs by or on behalf of the
Company, sales forecasts or results of marketing efforts or
information about impending transactions;
(D) personnel information, such as compensation or other
terms of employment, employee lists, training methods or other
employee information;
(vi) the names of the Company's customers, the nature of the
Company's relationships with these customers, and the business of the
Company's customers;
(vii) any other information not generally known to the public
including information about the Company's operations, plans, personnel,
products or services which, if misused or disclosed, could have a
reasonable possibility of adversely affecting the business of the
Company.
(b) Employee agrees that all information possessed by him, or disclosed
to him, or to which he obtains access during the course of his employment with
the Company, shall be presumed to be Confidential Information under the terms of
this Agreement, and the burden of proving otherwise shall rest with Employee.
(c) The term "Inventions" means all discoveries, developments, designs,
improvements, inventions, formulae, processes, techniques, computer programs,
strategies, and data whether or not patentable under patent, copyright or
similar statutes. Employee agrees that all information possessed by him, or
disclosed to him, or to which he obtains access during the course of his
employment with the Company, shall be presumed to be Confidential Information
under the terms of this Agreement, the burden of proving otherwise shall rest
with the Employee.
2. CONFIDENTIAL INFORMATION
During the period of Employee's employment with the Company, and after the
termination thereof for any reason, Employee agrees that, because of the
9
<PAGE>
valuable nature of the Confidential Information, he shall use his best
efforts to maintain and protect the secrecy of Confidential Information.
Without in any manner limiting the generality of the foregoing obligation,
Employee agrees that he shall not, directly or indirectly, undertake or
attempt to undertake any of the following activities:
(a) disclose any Confidential Information to any other person or
entity;
(b) use any Confidential Information for his own purposes;
(c) make any copies, duplicates or reproductions of any
Confidential Information;
(d) authorize or permit any other person or entity to use, copy,
disclose, publish or distribute any Confidential Information; or
(e) undertake or attempt to undertake any activity the Company is
prohibited from undertaking or attempting to undertake by any of its present
or future clients, customers, suppliers, vendors, consultants, agents or
contractors.
3. RETURN OF CONFIDENTIAL INFORMATION
Upon termination of Employee's employment with the Company for any reason,
Employee agrees not to retain or remove from the Company's premises any
records, files or other documents or copies thereof or any other
Confidential Information whatsoever, and he agrees to surrender same to the
Company, wherever it is located, immediately upon termination of his
employment.
4. EMPLOYEE INVENTIONS
(a) Disclosure and Ownership of Inventions
--------------------------------------
(i) During the Employee's service as an employee of the
Company and for a period of six (6) months thereafter, Employee
will promptly and fully disclose to the Company (and to any
persons designated by it) all Inventions generated, made,
conceived or reduced to practice or leaned by Employee, either
alone or jointly with others, which, in any way, result from or
suggested by any work, which Employee may for or on behalf of
the Company, or relate to or are useful in the business of the
Company; or result from the use of premises or property owned,
leased, licensed, or contracted for by the Company. The Company
shall have the right to such Inventions, whether they are
patentable or not.
(ii) Employee understands that the Company will have no
rights pursuant to this Agreement in any Invention of Employee
made during the term of Employee's employment by the Company if
such Invention has not arisen out of or by reason of Employee's
work with the Company, and does not relate to the business or
operations of the Company, although Employee agrees to inform
the Company of any such Invention.
(b) Assignment of Inventions
------------------------
Employee agrees that Employee's services on behalf of the Company are
works made for hire and all Inventions specified in Paragraph 4 (a)(i)
shall be the sole property of the Company and its assigns, and the
10
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Company and its assigns shall be the sole owner of all patents,
copyrights, trademarks, trade secrets, and other rights and protections
in connection therewith. Employee hereby assigns to the Company any and
all rights Employee now has or may hereafter acquire in such
Inventions. Employee further agrees, as to all such Inventions, to
assist the Company in every proper way (but at the Company's expense)
to obtain, and from time to time enforce, patents, copyrights,
trademarks, trade secrets, and other rights and protections relating to
such Inventions in any and all countries, and to that end Employee will
execute all documents for use in applying for and obtaining such
patents, copyrights, trademarks, trade secrets, and other rights and
protections on, and enforcing, such Inventions, as the Company may
desire, together with any assignments thereof to the Company or persons
designated by it.
Employee's obligation to assist the Company in obtaining and enforcing
patents, copyrights, trademarks, trade secrets, and other rights and
protections relating to such Inventions in any and all countries shall
continue beyond the termination of Employee's employment by the
Company, but the Company shall compensate Employee at a reasonable rate
after termination of employment for time actually spent by Employee, at
the Company's request, on such assistance. In the event the Company is
unable, after reasonable effort, to secure Employee's signature on any
document or documents needed to apply for or prosecute any patent,
copyright, trademark, trade secret, or other right or protection
relating to an Invention, whether because of Employee's physical or
mental capacity or for any reason whatsoever, Employee hereby
irrevocably designates and appoints the Company, its duly authorized
officers and agents as Employee's agent coupled with an interest and
attorney-in-fact, to act for and in Employee's behalf and stead to
execute and file any such application or applications and to do all
other lawfully permitted acts to further the prosecution and issuance
of patents, copyrights, trademarks, trade secrets, or similar rights or
protections thereon with the same legal force and affect as if executed
by Employee.
(c) Previous Inventions
-------------------
As a matter of record, Employee has identified in Exhibit A, attached
hereto, all Inventions that have been generated or conceived or first
reduced to practice or learned by Employee, alone or jointly with
others, prior to Employee's employment by the Company, which Employee
desire to remove from the operation of this Agreement. Employee
represents and warrants that such list is complete. If Employee does
not attach a list hereto, Employee represents that Employee has made no
such Inventions at the time of signing this Agreement.
5. LIMITATION ON OTHER ACTIVITIES AND COMPETITION
Employee agrees that while Employee is employed by the Company,
Employee will not without the Company's express written consent, engage
in any consulting, employment or business that is competitive with the
Company. In furtherance and not in limitation of the generality of the
preceding sentence, Employee shall not, for itself or on behalf of any
person or organization, directly or indirectly, compete with the
Company in the development, manufacture, sale, solicitation, or
servicing of any then existing project of, or service or business
engaged in by, the Company, or any other product of, or service or
business engaged in, or under development by, the Company.
11
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6. NO CONFLICTING OBLIGATIONS
(a) During Employment
-----------------
Employee represents and warrants to the Company that Employee
has no interest or obligation which is consistent with or in
conflict with this Agreement, or which would prevent, limit or
impair Employee's performance of any part of this Agreement.
Employee agrees to notify the Company immediately if any such
interest or obligation arises.
(b) After Termination of Employment
-------------------------------
For twelve (12) months following the termination of Employee's
employment by the Company, Employee agrees that if Employee
accepts employment, whether as a consultant, employee,
director, trustee or otherwise, with any persons or
organization, or engage in any type of activity on Employee's
behalf or on behalf of any person or organization that is in
any way related to the products, services or business of the
Company, Employee shall notify the Company in writing, within
thirty (30) days thereof, of the character of each such
activity, and of the name and address of each such person or
organization by which Employee is so employed.
7. CONFIDENTIALITY OF PREVIOUS EMPLOYERS
Employee represents that Employee's performance of all the terms of
this Agreement does not and will not breach any agreement to keep in
confidence proprietary information acquired by Employee in confidence
or in trust prior to the execution of this Agreement. Employee has not
entered into, and Employee agrees that Employee will not enter into,
any agreement either written or oral, in conflict with this Agreement.
Employee represents that Employee has not brought and will not bring
with Employee to the Company, or use in the performance of Employee's
responsibilities at the Company, any materials or documents of a
present or former employer or client that are not generally available
to the public, unless Employee has obtained express written
authorization from the present or former employers and clients during
Employee's service to the Company.
8. ENFORCEMENT
Employee agrees that in the event of a breach or threatened breach of
the provisions of this Agreement, the Company's remedies at law would
be inadequate, and the Company shall be entitled to an injunction to
enforce such provisions (without any bond or other security being
required), but nothing herein shall be construed to preclude the
Company from pursuing any remedy at law or in equity for any breach or
threatened breach.
9. MISCELLANEOUS
(a) Successors
----------
The rights and obligations under this Agreement shall survive
the termination of Employee's service to the Company in any
capacity and shall inure to the benefit of and shall be binding
upon: (i) Employee's heirs and personal representatives, and
(ii) the successors and assigns of the Company.
12
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(b) Governing Law
-------------
The laws of the State of California shall govern all questions
relative to interpretation and construction of this Agreement
and to its performance.
(c) Severability
------------
If any such provision of this Agreement is wholly or partially
unenforceable for any reason, such unenforceability shall not
affect the enforceability of the balance of this Agreement, and
all provisions of this Agreement, shall if alternative
interpretations are applicable, be construed so a to preserve
the enforceability hereof.
(d) Waiver
------
The Company's waiver of any default by Employee shall not
constitute a waiver of its rights under this Agreement with
respect to any subsequent default by me.
EMPLOYEE HAS READ AND UNDERSTANDS THE FOREGOING AND AGREES TO ITS TERMS.
/s/ J. Michael Hopper
---------------------
J. Michael Hopper
2303 Regis Drive
Davis, CA 95616
6-1-98
------
Date
ACCEPTED AS A CONDITION OF EMPLOYMENT
PTC Group, Inc.
/s/ Rocco Guarnaccia
--------------------
Dr. Rocco Guarnaccia
Chairman
6-1-98
------
Date
13
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Exhibit B
EXHIBIT B TO EMPLOYMENT AGREEMENT
ARTICLE 3 SECTION 3.02(a)(liv)
The Company shall provide employee/family fully paid insurance benefits as
described herein:
1. Complete Medical Cover-- Family (100% coverage)
2. Complete Dental Cover-- Family (100% coverage)
3. Life Insurance-- For Employer ($1M Term Life)
4. Accidental Death and Dismemberment-- Employee
5. Vision Care-- Family
6. Long Term Disability--Employee
14
EMPLOYMENT AGREEMENT
Agreement made as of the first day of June, 1998, by and among Lori L.
O'Brien ("Employee") and PTC Holdings, Inc, a Delaware corporation (the
"Company").
PREAMBLE
The Board of Directors of the Company recognize Employee's potential
contribution to the growth and success of the Company and desires to assure the
Company of Employee's employment in the capacity as Director of Administration
for the Company and to therefor compensate her. Employee wants to be employed by
the Company and to commit herself to serve the Company on the terms provided
herein. Employee's duties will expressly include development of new strategic
partnerships, personnel, including the involvement with the invention of novel
items on behalf of the account of the Company.
NOW, THEREFORE, in consideration of the foregoing of the respective
covenants and agreements of the parties, the parties agree as follows:
ARTICLE 1
TERM OF EMPLOYMENT
Section 1.01. Specified Term. The Company hereby employs Employee and
Employee accepts employment with the Company for a period of four (4) years
beginning on January 1, 1998 and ending on January 1, 2002 on the terms and
conditions herein set forth.
Section 1.02. Earlier Termination. This Agreement may be terminated
earlier as provided in Article 4 hereinbelow.
Section 1.03. "Employment Term" Defined. As used herein, the phrase
"employment term" refers to the entire period of employment of Employee by the
Company hereunder, whether for the period provided above, or whether terminated
earlier as hereinafter provided, or extended by mutual agreement between the
Company and Employee.
1
<PAGE>
ARTICLE 2
DUTIES AND OBLIGATIONS OF EMPLOYEE
Section 2.01. General Duties. Employee shall serve as the Director of
Administration for the PTC subsidiary, Integrated Water and Power Corporation
(IWP). In such capacity, Employee shall do and perform all services, acts or
things necessary or advisable and fulfill the duties of the position and to
manage and conduct the business of the Company, including the hiring and firing
of subordinate employees, subject at all times to the agreement and concurrence
of the Chief Executive Officer (CEO) of the Company and to the policies set by
the Company's Board of Directors, and to the consent of the Board when required
by the terms of this contract. Additional duties shall include, but not be
limited to: assist in defining the vision of the Company, with the goal of
establishing leadership in the field of integrated water and power systems;
provide initiative in creating the business plan, and in setting the course for
the company; help in defining the philosophy and mission, with responsibility
for turning goals into operational reality; coordinate, or oversee coordination
of the work of the sub-units and sister subsidiaries; endure that the CEO is
informed of operations; represent the Company dealing with customers and with
other persons and entities; and represent the Company in public as required by
the CEO.
Section 2.02. Matters Requiring Consent of CEO. Employee shall not,
without specific approval of the Company's CEO or subsidiaries' CEO, do or
contract to do any of the following:
(a) Borrow on behalf of or cause debt to the Company during any one
fiscal year an amount in excess of $50,000.
(b) Purchase capital equipment for amounts in excess of the amounts
budgeted for expenditure by the Board of Directors;
(c) Sell any single capital asset of the Company having a market value
in excess of $10,000 or a total of capital assets during a fiscal year having a
market value in excess of $50,000
(d) Hire or fire subordinates.
2
<PAGE>
Section 2.03. Best Efforts Covenant. Employee will, to the best of her
ability, devote her full professional and business time and best efforts to the
performance of her duties for the Company and its subsidiaries and affiliates.
Section 2.04 Competitive Activities. During the term of this contract,
Employee shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director
or in any other individual or representative capacity, engage or participate in
any business that is in competition in any manner whatsoever with the business
of the Company. In furtherance, and not in limitation of the generality of the
preceding sentence, Employee shall not, for herself or on behalf of any person
or organization, directly or indirectly, compete with the Company, in the
development, manufacture, sale, solicitation or servicing of any then existing
product or process of, or service or business engaged in, by the Company, or any
other product or process of, or service or business engaged in, or under
development by, the Company. The provisions of this Section 2.04 shall not be
construed as preventing Employee from (a) investing her personal assets in
businesses which do not compete with the Company in such form or manner as will
not require any services on the part of the Employee in the operation or the
affairs of the companies in which such investments are made and in which her
participation is solely that of an investor, (b) purchasing securities in any
corporation whose securities are regularly traded provided that such purchase
shall not result in her collectively owning beneficially at any time five (5%)
percent or more of the equity securities of any corporation engaged in a
business competitive to that of the Company, and (c) participating in
conferences, preparing or publishing papers or books or teaching so long as the
CEO approves of such activities prior to the Employee's engaging in them. Prior
to commencing any activity described in clause (c) above, the Employee shall
inform the CEO of the Company, in writing of any such activity.
Section 2.05. Uniqueness of Employee's Services: Equitable Relief.
Employee hereby represents and agrees that the services to be performed under
the terms of this contract are of a special, unique, unusual, extraordinary and
intellectual character that gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in an action at law.
Employee, therefore, expressly agrees that the Company, in addition to any other
rights or remedies that the Company may possess shall be entitled to injunctive
and other equitable relief to prevent or remedy a breach of this contract by
Employee.
Section 2.06. Hired to Invent. Employee agrees that every improvement,
invention, process, apparatus, method, design and any other creation that
Employee may invent, discover, conceive or originate by herself or in
conjunction with any other person, especially during the term of Employee's
employment under this Agreement, that relates to the business carried on by the
Company, especially during the term of Employee's employment under this
3
<PAGE>
Agreement, shall be the exclusive property of the Company. Employee agrees to
disclose to the Company every patent application, notice of copyright or other
action taken by Employee or any affiliate or assignee to protect intellectual
property during the twelve (12) months following Employee's termination of
employment at the Company, for whatever reason, so that the Company may
determine whether to assert a claim under this section or any other provision of
this Agreement. Section 2.07. Confidential Information. ------------------------
(a) Employee recognizes and acknowledges that the Company's trade
secrets and proprietary knowledge, information, processes and know-how and
property belonging to third parties which the Company shall be under obligation
to protect and keep confidential ("Customer Confidential Information"), as they
may exist from time to time ("Confidential Information"), are valuable, special
and unique assets of the Company's business, access to and knowledge of which
are essential to the performance of Employee's duties hereunder. Accordingly,
Employee agrees to execute and deliver concurrently with the execution and
delivery of this Agreement, an Employee's Agreement Re: Inventions and
Confidential Information, substantially in the form attached hereto as Exhibit
A.
(b) Employee shall use her best efforts to prevent the removal of any
Confidential Information from the premises of the Company, except as required in
her normal course of employment by the Company. Employee shall use her best
efforts to cause all persons or entities to whom any Confidential Information
shall be disclosed by her hereunder to observe the terms and conditions set
forth herein as though each such person or entity was bound hereby.
(c) Employee acknowledges and agrees that during the course of and in
connection with her employment with the Company, she will have access to a third
persons Customer Confidential Information. Employee agrees that if requested by
any such third person she will execute and deliver all documents and agreements
that may be reasonably requested by such third person as necessary to protect
such third person's rights in and to its Customer Confidential Information, and
approved by the Company.
(d) Under Section 2.05 of this Agreement,the Company shall be entitled
to injunctive relief to restrain any violation, actual or threatened, by
Employee of the provisions of this Agreement.
4
<PAGE>
ARTICLE 3
COMPENSATION
Section 3.01. Annual Salary: Adjustment:
--------------------------
(a) For all services rendered under this Agreement, subject to any
adjustment as provided in this Section 3.01, the Company shall pay an annual
salary of Fifty-five thousand dollars ($55,000.00) dollars payable in equal
weekly installments.
(b) Commencing with January, 1999, and each January thereafter during
the term of this Agreement, the annual salary in effect on December 31 of the
immediately preceding year shall be adjusted for any change in the Consumer
Price Index from the then last preceding January through the then last preceding
December. As used in this Agreement, "Consumer Price Index" shall mean the
United States Department of Labor's Bureau of Labor Statistics' Consumer Price
Index, All Urban Consumers, All Items, Sacramento Metropolitan Area, California
(1967=100), or the successor of such index. If such index is discontinued or
revised, the index designated as the successor or substitute index by the
government of the United States shall be substituted. If such index is changed
so that a year other than 1967 shall equal 100, then such index shall be
converted in accordance with the conversion fact published by the United States
Bureau of Labor Statistics.
(c) In addition to any adjustments to the annual salary pursuant to
sub-section 3.01(b), there shall be an annual review for merit by the Company's
Board of Directors and an increase in the annual salary and/or bonus as may be
deemed appropriate to reflect the value of the services of the Employee.
Section 3.02. Performance Bonus: For achieving performance goals,
subject to approval by the Board of Directors of the Company, the employee is
eligible for a percentage of annual salary bonus.
Section 3.03 Employee's Benefits.
--------------------
(a) The Employee shall be entitled to participate in or receive
benefits under any employee benefit plan or arrangement made available by the
Company in the future to its officers and key management employees, subject to
and on a basis consistent with the terms, conditions and overall administration
of such plans and arrangements. Without in any way limiting the foregoing, such
benefits shall include the following:
(i) The Company, in order to retain its valued employees, will
establish a contributory Internal Revenue Code Section 401(k) plan by September
30, 1998. Contributions of the participating employees, including Employee, may
be matched by contributions from the Company at the discretion of the Board of
Directors of the Company.
5
<PAGE>
(ii) Employee shall be entitled to all paid legal holidays made
available by the Company such holidays to include, without limitation, New Years
Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day.
(iii) In addition to such paid holidays, Employee shall be entitled
to twenty (20) vacation days each calendar year, during which time Employee's
compensation shall be paid in full. Vacation time not taken in the calendar year
will be accumulated and added to the vacation time for subsequent years;
provided, however, Employee shall not take vacations in excess of ten (10)
consecutive business days without at least four (4) weeks' prior notice to the
Chairman and Chief Executive Officer of the Company.
(iv) The Company shall provide Employee fully-paid insurance
benefits as described in Exhibit B hereto.
(b) Nothing paid to the Employee under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the annual salary payable to Employee pursuant to Section 3.01
hereinabove. Any payments or benefits payable to the Employee hereunder in
respect of any calendar year during which the Employee is employed by the
Company for less than the entire such year shall, unless otherwise provided in
the applicable plan or arrangement, be prorated in accordance with the number of
days in such calendar year during which she is so employed.
(c) In recognition of the necessity of the use of an automobile to the
efficient and expeditious performance of Employee's services, duties and
obligations to and on behalf of the Company, the Company shall bear the expense
of fuel and maintenance of the Employee's car in the form of reimbursement of
$0.31 per mile for miles driven for and documented to the Company
Section 3.04 Reimbursement of Business Expenses. The Company shall
promptly reimburse Employee for all reasonable business expenses incurred by
Employee in promoting the business of the Company, including expenditures for
entertainment, gifts and travel. Each such expenditure shall be reimbursable
only if it is of a nature qualifying it as a proper deduction on the federal and
state income tax return of the Company. Each such expenditure shall be
reimbursable only if Employee furnishes to the Company adequate records and
other documentary evidence required by federal and state statutes and
regulations issued by the appropriate taxing authorities for the substantiation
of that expenditure as an income tax deduction.
6
<PAGE>
ARTICLE 4
TERMINATION OF EMPLOYMENT
Section 4.01. Termination for Cause. The Company reserves the right to
terminate this Agreement if Employee (1) willfully breaches or habitually
neglects the duties which she is required to perform under the terms of this
Agreement; or (2) commits such acts of dishonesty, fraud, misrepresentation or
other acts of moral turpitude, that would prevent the effective performance of
her duties. The Company may in its opinion terminate this Agreement for the
reasons stated in this section by giving written notice of termination to
Employee without prejudice to any other remedy to which the Company may be
entitled, either at law, in equity or under this Agreement. The notice of
termination required by this section shall specify the ground for the
termination and shall be supported by a statement of relevant facts. Termination
under this section shall be considered "for cause" for the purposes of this
Agreement.
Section 4.02 Termination Without Cause. The employment of Employee
under this Agreement shall cease and this Agreement, other than the provisions
if Section 2.07, shall terminate:
(a) Upon the death of Employee;
(b) If during the term of this Agreement, Employee shall sustain a
Disability, as hereinafter defined, Employee shall be entitled to receive only
the benefits, if any, as may be provided by any insurance to which she may
become entitled to pursuant to Section 3.02 hereinafter. "Disability" as used
herein means the complete and total disability of Employee resulting from,
injury, sickness, disease or infirmity due to age, whereby Employee, for a
period of sixty (60) consecutive days, is unable to perform her usual services
for the Company;
(c) At the option of Employee, in the event that the Company shall have
failed to grant the Option as provided in Section 5.01 below.
ARTICLE 5
MISCELLANEOUS
Section 5.01. Option Grant. It is the understanding of the Company and
Executive that the Company shall grant to Employee, no later than September 30,
1998, an option to acquire shares of the common stock of the Company, the number
of shares subject to option, the exercise price and other terms to be as
mutually agreed by Employee and the Company. It is anticipated that such Option
shall not be a qualified stock option, as defined in Internal Revenue Code
section 421.
Section 5.02. Assignment. This Agreement may not be assigned by any
party hereto, provided that the Company may assign this Agreement: (a) to an
affiliate so long as such affiliate assumes the Company's obligations hereunder,
provided that no such assignment shall discharge the Company of its obligations
herein, or (b) in connection with a merger or consolidation involving the
Company or a sale of substantially all its assets to the surviving corporation
or purchaser as the case may be, so long as such assignee assumes the Company's
obligations thereunder.
7
<PAGE>
Section 5.03. Governing Law. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
California.
Section 5.04. Interpretation.In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions in this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
Section 5.05. Notice. Any notice required or permitted to be given
hereunder shall be effective when received and shall be sufficient if in writing
and if personally delivered or sent by prepaid cable, telex or registered air
mail, return receipt requested, to the party to receive such notice at its
address set forth at the end of this Agreement or at such other address as a
party may by notice specify to the other.
Section 5.06. Amendment and Waiver. This Agreement may not be amended,
supplemented or waived except in writing, signed by the party against which
amendment or waiver is to be enforced. The waiver by any party of a breach of
any provision of this Agreement shall not operate to, or be construed as a
waiver of, any breach of that provision nor as a waiver of any breach of another
provision.
Section 5.07. Survival of Rights and Obligations. All rights and
obligations of the Employee or the Company arising during the term of this
Agreement shall continue to have full force and effect after the termination of
this Agreement unless otherwise provided herein.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the date first above written.
COMPANY: EMPLOYEE:
PTC Holdings, Inc. By: /s/ Lori L. O'Brien
-------------------
Lori L. O'Brien
By:/s/ Rocco Guarnaccia 9232 Caspiane Way
-------------------- Sacramento CA 95826
Dr.Rocco Guarnaccia
Chairman
By:/s/ Robert l. Campbell
----------------------
Robert L. Campbell
Director
8
<PAGE>
Exhibit A
EMPLOYEE'S AGREEMENT RE:
------------------------
INVENTIONS AND CONFIDENTIAL INFORMATION
---------------------------------------
THIS AGREEMENT CREATES IMPORTANT OBLIGATIONS WHICH ARE
BINDING . PLEASE READ IT IN FULL BEFORE YOU SIGN IT.
THIS AGREEMENT is made by and between PTC Holdings, Inc., a Delaware
corporation (the "Company") and Lori L. O'Brien ("Employee").
PREAMBLE
1. The Company desires to preserve the goodwill of its business and
business relationships and to protect the details of its business and affairs
from disclosure and unauthorized use and to ensure ownership of certain
property.
2. Employee recognizes that the Company is engaged in a continuous
program of design and manufacture of proprietary infrastructure products and
understands that it is part of her responsibility as an employee to assist the
Company in such endeavors.
3. Employee recognizes and acknowledges that she shall have access to a
variety of knowledge, information and property related to the Company's business
or affairs and may have contact with the Company's customers, suppliers, or
other employees and similar persons and may assist in the creation and/or
development of certain property.
4. Employee recognizes the importance of protecting the Company's
rights to inventions, discoveries, ideas and confidential information, and any
similar or related rights.
NOW, THEREFORE, in consideration of the terms and conditions set forth
hereinbelow, and for other good and valuable consideration, including the
material benefits and training received as a result of her employment with the
Company and the continuation thereof, the sufficiency of which is hereby
acknowledged, and in reliance upon the recitals set forth above, which are fully
made a part of this Agreement, the Company and the Employee hereby agree as
follows:
9
<PAGE>
1. DEFINITIONS
For the purposes of this Agreement:
(a) As used in this Agreement, the term "Confidential
Information" means all trade secrets and proprietary knowledge,
information, process and know-how and property relating to, or used or
possessed by, the Company (including any knowledge, information or
property belonging to third persons or entities which its Company is in
or an obligation to protect and keep secret), and includes, without
limitation the following:
(i) all trade secrets and secret information, whether
of technical or business nature;
(ii) all software, including without limitation, all
programs, specifications, applications, routines, subroutines,
techniques and ideas for formulae;
(iii) all concepts, data, designs and documents;
(iv) the Company's business methods and practices;
(v) compilations of data or information concerning the
Company's business, including but not limited to:
(A) financial information whether related to the
Company generally, or to particular products, services,
geographical areas, or time periods;
(B) supply and service information, such as goods
and services suppliers' names or addresses, terms of
supply or service contracts of particular transactions;
(C) marketing information, such as details about
past, present or proposed marketing programs by or on
behalf of the Company, sales forecasts or results of
marketing efforts or information about impending
transactions;
10
<PAGE>
(D) personnel information, such as compensation or
other terms of employment, employee lists, training
methods or other employee information;
(vi) the names of the Company's customers, the nature of
the Company's relationships with these customers, and the
business of the Company's customers;
(vii) any other information not generally known to the
public including information about the Company's operations,
plans, personnel, products or services which, if misused or
disclosed, could have a reasonable possibility of adversely
affecting the business of the Company.
(b) Employee agrees that all information possessed by him, or
disclosed to him, or to which he obtains access during the course of
his employment with the Company, shall be presumed to be Confidential
Information under the terms of this Agreement, and the burden of
proving otherwise shall rest with Employee.
(c) The term "Inventions" means all discoveries,developments,
designs, improvements, inventions, formulae, processes, techniques,
computer programs, strategies, and data whether or not patentable under
patent, copyright or similar statutes. Employee agrees that all
information possessed by him, or disclosed to him, or to which he
obtains access during the course of his employment with the Company,
shall be presumed to be Confidential Information under the terms of
this Agreement, the burden of proving otherwise shall rest with the
Employee.
2. CONFIDENTIAL INFORMATION
During the period of Employee's employment with the Company, and after
the termination thereof for any reason, Employee agrees that, because
of the valuable nature of the Confidential Information, he shall use
his best efforts to maintain and protect the secrecy of Confidential
Information. Without in any manner limiting the generality of the
foregoing obligation, Employee agrees that he shall not, directly or
indirectly, undertake or attempt to undertake any of the following
activities:
(a) disclose any Confidential Information to any other person
or entity;
(b) use any Confidential Information for his own purposes;
11
<PAGE>
(c) make any copies, duplicates or reproductions of any
Confidential Information;
(d) authorize or permit any other person or entity to use,
copy, disclose, publish or distribute any Confidential Information; or
(e) undertake or attempt to undertake any activity the Company
is prohibited from undertaking or attempting to undertake by any of its
present or future clients, customers, suppliers, vendors, consultants,
agents or contractors.
3. RETURN OF CONFIDENTIAL INFORMATION
Upon termination of Employee's employment with the Company for any
reason, Employee agrees not to retain or remove from the Company's
premises any records, files or other documents or copies thereof or any
other Confidential Information whatsoever, and he agrees to surrender
same to the Company, wherever it is located, immediately upon
termination of his employment.
4. EMPLOYEE INVENTIONS
(a) Disclosure and Ownership of Inventions
--------------------------------------
(i) During the Employee's service as an employee of
the Company and for a period of six (6) months thereafter,
Employee will promptly and fully disclose to the Company (and
to any persons designated by it) all Inventions generated,
made, conceived or reduced to practice or leaned by Employee,
either alone or jointly with others, which, in any way, result
from or suggested by any work, which Employee may for or on
behalf of the Company, or relate to or are useful in the
business of the Company; or result from the use of premises or
property owned, leased, licensed, or contracted for by the
Company. The Company shall have the right to such Inventions,
whether they are patentable or not.
(ii) Employee understands that the Company will have
no rights pursuant to this Agreement in any Invention of
Employee made during the term of Employee's employment by the
Company if such Invention has not arisen out of or by reason
of Employee's work with the Company, and does not relate to
the business or operations of the Company, although Employee
agrees to inform the Company of any such Invention.
12
<PAGE>
(b) Assignment of Inventions
------------------------
Employee agrees that Employee's services on behalf of the Company are
works made for hire and all Inventions specified in Paragraph 4 (a)(i)
shall be the sole property of the Company and its assigns, and the
Company and its assigns shall be the sole owner of all patents,
copyrights, trademarks, trade secrets, and other rights and protections
in connection therewith. Employee hereby assigns to the Company any and
all rights Employee now has or may hereafter acquire in such
Inventions. Employee further agrees, as to all such Inventions, to
assist the Company in every proper way (but at the Company's expense)
to obtain, and from time to time enforce, patents, copyrights,
trademarks, trade secrets, and other rights and protections relating to
such Inventions in any and all countries, and to that end Employee will
execute all documents for use in applying for and obtaining such
patents, copyrights, trademarks, trade secrets, and other rights and
protections on, and enforcing, such Inventions, as the Company may
desire, together with any assignments thereof to the Company or persons
designated by it.
Employee's obligation to assist the Company in obtaining and enforcing
patents, copyrights, trademarks, trade secrets, and other rights and
protections relating to such Inventions in any and all countries shall
continue beyond the termination of Employee's employment by the
Company, but the Company shall compensate Employee at a reasonable rate
after termination of employment for time actually spent by Employee, at
the Company's request, on such assistance. In the event the Company is
unable, after reasonable effort, to secure Employee's signature on any
document or documents needed to apply for or prosecute any patent,
copyright, trademark, trade secret, or other right or protection
relating to an Invention, whether because of Employee's physical or
mental capacity or for any reason whatsoever, Employee hereby
irrevocably designates and appoints the Company, its duly authorized
officers and agents as Employee's agent coupled with an interest and
attorney-in-fact, to act for and in Employee's behalf and stead to
execute and file any such application or applications and to do all
other lawfully permitted acts to further the prosecution and issuance
of patents, copyrights, trademarks, trade secrets, or similar rights or
protections thereon with the same legal force and affect as if executed
by Employee.
(c) Previous Inventions
-------------------
As a matter of record, Employee has identified in Exhibit A, attached
hereto, all Inventions that have been generated or conceived or first
reduced to practice or learned by Employee, alone or jointly with
others, prior to Employee's employment by the Company, which Employee
desire to remove from the operation of this Agreement. Employee
represents and warrants that such list is complete. If Employee does
not attach a list hereto, Employee represents that Employee has made no
such Inventions at the time of signing this Agreement.
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5. LIMITATION ON OTHER ACTIVITIES AND COMPETITION
Employee agrees that while Employee is employed by the Company,
Employee will not without the Company's express written consent, engage
in any consulting, employment or business that is competitive with the
Company. In furtherance and not in limitation of the generality of the
preceding sentence, Employee shall not, for itself or on behalf of any
person or organization, directly or indirectly, compete with the
Company in the development, manufacture, sale, solicitation, or
servicing of any then existing project of, or service or business
engaged in by, the Company, or any other product of, or service or
business engaged in, or under development by, the Company.
6. NO CONFLICTING OBLIGATIONS
(a) During Employment
-----------------
Employee represents and warrants to the Company that Employee
has no interest or obligation which is consistent with or in
conflict with this Agreement, or which would prevent, limit or
impair Employee's performance of any part of this Agreement.
Employee agrees to notify the Company immediately if any such
interest or obligation arises.
(b) After Termination of Employment
-------------------------------
For twelve (12) months following the termination of Employee's
employment by the Company, Employee agrees that if Employee
accepts employment, whether as a consultant, employee,
director, trustee or otherwise, with any persons or
organization, or engage in any type of activity on Employee's
behalf or on behalf of any person or organization that is in
any way related to the products, services or business of the
Company, Employee shall notify the Company in writing, within
thirty (30) days thereof, of the character of each such
activity, and of the name and address of each such person or
organization by which Employee is so employed.
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7. CONFIDENTIALITY OF PREVIOUS EMPLOYERS
Employee represents that Employee's performance of all the terms of
this Agreement does not and will not breach any agreement to keep in
confidence proprietary information acquired by Employee in confidence
or in trust prior to the execution of this Agreement. Employee has not
entered into, and Employee agrees that Employee will not enter into,
any agreement either written or oral, in conflict with this Agreement.
Employee represents that Employee has not brought and will not bring with
Employee to the Company, or use in the performance of Employee's
responsibilities at the Company, any materials or documents of a present or
former employer or client that are not generally available to the public, unless
Employee has obtained express written authorization from the present or former
employers and clients during Employee's service to the Company.
8. ENFORCEMENT
Employee agrees that in the event of a breach or threatened breach of
the provisions of this Agreement, the Company's remedies at law would
be inadequate, and the Company shall be entitled to an injunction to
enforce such provisions (without any bond or other security being
required), but nothing herein shall be construed to preclude the
Company from pursuing any remedy at law or in equity for any breach or
threatened breach.
9. MISCELLANEOUS
(a) Successors
----------
The rights and obligations under this Agreement shall survive
the termination of Employee's service to the Company in any
capacity and shall inure to the benefit of and shall be
binding upon: (i) Employee's heirs and personal
representatives, and (ii) the successors and assigns of the
Company.
(b) Governing Law
-------------
The laws of the State of California shall govern all questions
relative to interpretation and construction of this Agreement
and to its performance.
(c) Severability
------------
If any such provision of this Agreement is wholly or partially
unenforceable for any reason, such unenforceability shall not
affect the enforceability of the balance of this Agreement,
and all provisions of this Agreement, shall if alternative
interpretations are applicable, be construed so a to preserve
the enforceability hereof.
15
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(d) Waiver
------
The Company's waiver of any default by Employee shall not
constitute a waiver of its rights under this Agreement with
respect to any subsequent default by me.
EMPLOYEE HAS READ AND UNDERSTANDS THE FOREGOING AND AGREES TO ITS TERMS.
/s/ Lori L. O'Brien
-------------------
Lori L. O'Brien
9232 Caspiane Way
Sacramento, CA 95826
6-1-98
------
Date
ACCEPTED AS A CONDITION OF EMPLOYMENT
PTC Holdings, Inc.
/s/ Robert L. Campbell
----------------------
Robert L. Campbell
Director
6-3-98
------
Date
16
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Exhibit B
EXHIBIT B TO EMPLOYMENT AGREEMENT
ARTICLE 3 SECTION 3.02 (A)(LIV)
The Company shall provide employee/family fully paid insurance benefits as
described herein:
1. Complete Medical Cover
2. Complete Dental Cover
3. Life Insurance -- (One time salary (employee))
4. Accidental Death and Dismemberment
5. Vision Care
6. Long Term Disability
EMPLOYMENT AGREEMENT
Agreement made as of the first day of June, 1998, by and among Robert
L. Campbell ("Executive") and PTC Holdings, Inc., a Delaware corporation (the
"Company").
PREAMBLE
The Board of Directors of the Company recognizes Executive's potential
contribution to the growth and success of the Company and desires to assure the
Company of Executive's employment in an executive capacity. Executive wants to
be employed by the Company and to commit himself to serve the Company on the
terms provided herein. Executive's duties will expressly include research and
development of new technology, processes and products, including the invention
of novel items on behalf of the account of the Company.
NOW, THEREFORE, in consideration of the foregoing of the respective
covenants and agreements of the parties, the parties agree as follows:
ARTICLE 1
TERM OF EMPLOYMENT
Section 1.01. Specified Term. The Company hereby employees Executive
and Executive accepts employment with the Company for a period of five (5) years
beginning on January 1, 1998, and ending on January 1, 2003, on the terms and
conditions herein set forth.
Section 1.02. Earlier Termination. This Agreement may be terminated
earlier as provided in Article 4 hereinbelow.
Section 1.03. "Employment Term" Defined. As used herein, the phrase
"employment term" refers to the entire period of employment of Executive by the
Company hereunder, whether for the period provided above, or whether terminated
earlier as hereinafter provided, or extended by mutual agreement between the
Company and Executive.
ARTICLE 2
DUTIES AND OBLIGATIONS OF EMPLOYEE
Section 2.01. General Duties. Executive shall serve in various senior
executive capacities as mutually agreed to with the Board of Directors of the
Company. The initial positions held by the Executive are; Director of PTC, IWP,
APS and MTC and President and CEO of Integrated Water and Power Corporation. In
such capacities, Executive shall do and perform all services, acts or things
necessary or advisable and fulfill the duties of an Officer of the company and
to manage and conduct the business of the Company, including the hiring and
firing of all employees including the officers of the Company other than the
Chairman, subject at all times to the Agreement and concurrence of the Chairman
and to the policies set by the Company's Board of Directors, and to the consent
1
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of the Board when required by the terms of this contract. Additional duties
shall include, but not be limited to: lead in defining the vision of the
Company, with the goal of establishing leadership in the field of power and
water infrastructure products; provide the initiative in creating the business
plan, and in setting the course for the Company; help in defining the philosophy
and mission, with responsibility for turning goals into operational reality;
coordinate, or oversee coordination of the work of the subsidiaries under
respective Presidents and Officers; ensure that the Chairman and Board of
Directors are informed on strategy, and they concur on major issues and at
important turning points; represent the Company dealing with customers and with
other persons and entities; and represent the Company in public.
Section 2.02. Matters Requiring Consent of Board of Directors.
Executive shall not, without specific approval of the Company's Board of
Directors, do or contract to do any of the following:
(a) Borrow on behalf of the Company during any one fiscal year an
amount in excess of $100,000.
(b) Purchase capital equipment for amounts in excess of the amounts
budgeted for expenditure by the Board of Directors;
(c) Sell any single capital asset of the Company having a market value
in excess of $10,000 or a total of capital assets during a fiscal year having a
market value in excess of $50,000.
Section 2.03. Best Efforts Covenant. Executive will, to the best of
his ability, devote his full professional and business time and best efforts to
the performance of his duties for the Company and its subsidiaries and
affiliates.
Section 2.04 Competitive Activities. During the term of this contract,
Executive shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director
or in any other individual or representative capacity, engage or participate in
any business that is in competition in any manner whatsoever with the business
of the Company. In furtherance, and not in limitation of the generality of the
preceding sentence, Executive shall not, for himself or on behalf of any person
or organization, directly or indirectly, compete with the Company in the
development, manufacture, sale, solicitation or servicing of any then existing
product or process of, or service or business engaged in, by the Company, or any
other product or process of, or service or business engaged in, or under
development by, the Company. The provisions of this Section 2.04 shall not be
construed as preventing Executive from (a) investing his personal assets in
businesses which do not compete with the Company in such form or manner as will
not require any services on the part of the Executive in the operation or the
affairs of the companies in which such investments are made and in which his
participation us solely that of an investor, (b) purchasing securities in any
corporation whose securities are regularly traded provided that such purchase
shall not result in his collectively owning beneficially at any time ten (10%)
percent or more of the equity securities of any corporation engaged in a
business competitive to that of the Company, and (c) participating in
conferences, preparing or publishing papers or books or teaching so long as the
Board of Directors approves of such activities prior to the Executive's engaging
in them. Prior to commencing any activity described in clause (c) above, the
Executive shall inform the Board of Directors of the Company, in writing of any
such activity.
2
<PAGE>
Section 2.05. Uniqueness of Executive's Services: Equitable Relief.
Executive hereby represents and agrees that the services to be performed under
the terms of this contract are of a special, unique, unusual, extraordinary and
intellectual character that gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in an action at law.
Executive, therefore, expressly agrees that the Company, in addition to any
other rights or remedies that the Company may possess shall be entitled to
injunctive and other equitable relief to prevent or remedy a breach of this
contract by Executive.
Section 2.06. Hired to Invent.Executive agrees that every improvement,
invention, process, apparatus, method, design and any other creation that
Executive may invent, discover, conceive or originate by himself or in
conjunction with any other person, especially during the term of Executive's
employment under this Agreement, that relates to the business carried on by the
Company, especially during the term of Executive's employment under this
Agreement, shall be the exclusive property of the Company. Executive agrees to
disclose to the Company every patent application, notice of copyright or other
action taken by Executive or any affiliate or assignee to protect intellectual
property during the twelve (12) months following Executive's termination of
employment at the Company, for whatever reason, so that the Company may
determine whether to assert a claim under this section or any other provision of
this Agreement.
Section 2.07. Confidential Information.
-------------------------
(a) Executive recognizes and acknowledges that the Company's trade
secrets and proprietary knowledge, information, processes and know-how and
property belonging to third parties which the Company shall be under obligation
to protect and keep confidential ("Customer Confidential Information"), as they
may exist from time to time ("Confidential Information"), are valuable, special
and unique assets of the Company's business, access to and knowledge of which
are essential to the performance of Executive's duties hereunder. Accordingly,
Executive agrees to execute and deliver concurrently with the execution and
delivery of this Agreement, an Employee's Agreement Re: Inventions and
Confidential Information, substantially in the form attached hereto as Exhibit
A.
(b) Executive shall use his best efforts to prevent the removal of any
Confidential Information from the premises of the Company, except as required in
his normal course of employment by the Company. Executive shall use his best
efforts to cause all persons or entities to whom any Confidential Information
shall be disclosed by him hereunder to observe the terms and conditions set
forth herein as though each such person or entity was bound hereby.
(c) Executive acknowledges and agrees that during the course of and in
connection with his employment with the Company, he will have access to a third
persons Customer Confidential Information. Executive agrees that if requested by
any such third person he will execute and deliver all documents and agreements
that may be reasonably requested by such third person as necessary to protect
such third person's rights in and to its Customer Confidential Information, and
approved by the Company.
(d) Under Section 2.05 of this Agreement, the Company shall be entitled
to injunctive relief to restrain any violation, actual or threatened, by
Executive of the provisions of this Agreement.
3
<PAGE>
ARTICLE 3
COMPENSATION
Section 3.01. Annual Salary: Adjustment:
-------------------------
(a) For all services rendered under this Agreement, subject to any
adjustment as provided in this Section 3.01, the Company shall pay an annual
salary of one-hundred and eighty-two thousand Dollars ($182,000) payable in
equal weekly installments.
(b) Commencing with January, 1999, and each January thereafter during
the term of this Agreement, the annual salary in effect on December 31 of the
immediately preceding year shall be adjusted for any change in the Consumer
Price Index from the then last preceding January through the then last preceding
December. As used in this Agreement, "Consumer Price Index" shall mean the
United States Department of Labor's Bureau of Labor Statistics' Consumer Price
Index, All Urban Consumers, All Items, Sacramento Metropolitan Area, California
(1967=100), or the successor of such index. If such index is discontinued or
revised, the index designated the successor or substitute index by the
government of the United States shall be substituted. If such index is changed
so that a year other than 1967 shall equal 100, then such index shall be
converted in accordance with the conversion fact published by the United States
Bureau of Labor Statistics.
(c) In addition to any adjustments to the annual salary pursuant to
sub-section 3.01(b), there shall be an annual review for merit by the Company's
Board of Directors and an increase in the annual salary and/or bonus as may be
deemed appropriate to reflect the value of the services of the Executive.
Section 3.02. Executive's Benefits.
--------------------
(a) The Executive shall be entitled to participate in or receive
benefits under any employee benefit plan or arrangement made available by the
Company in the future to its officers and key management employees, subject to
and on a basis consistent with the terms, conditions and overall administration
of such plans and arrangements. Without in any way limiting the foregoing, such
benefits shall include the following:
(i) The Company, in order to retain its valued employees, will
establish a contributory Internal Revenue Code Section 401(k) plan by September
30, 1998. Contributions of the participating employees, including Executive, may
be matched by contributions from the Company at the discretion of the Board of
Directors of the Company.
(ii) Executive shall be entitled to all paid legal holidays made
available by the Company to its employees, such holidays to include, without
limitation, New Years Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
(iii) In addition to such paid holidays, Executive shall be
entitled to twenty-five (25) vacation days each calendar year, during which time
Executive's compensation shall be paid in full. Vacation time not taken in the
4
<PAGE>
calendar year will be accumulated and added to the vacation time for subsequent
years; provided, however, Executive shall not take vacations in excess of
fifteen (15) consecutive business days without at least four (4) weeks' prior
notice to the Chairman and Chief Executive Officer of the Company.
(iv) The Company shall provide Executive fully-paid insurance
benefits as described in Exhibit B hereto.
(b) Nothing paid to the Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the annual salary payable to Executive pursuant to Section 3.02
hereinabove. Any payments or benefits payable to the Executive hereunder in
respect of any calendar year during which the Executive is employed by the
Company for less than the entire such year shall, unless otherwise provided in
the applicable plan or arrangement, be prorated in accordance with the number of
days in such calendar year during which he is so employed.
(c) In recognition of the necessity of the use of an automobile to the
efficient and expeditious performance of Executive's services, duties and
obligations to and on behalf of the Company, the Company shall provide to
Executive, at the Company's sole cost and expense, a car to be chosen by
Executive with an aggregate leasing cost to the Company of not more than
$1,000per month. In addition thereto, the Company shall bear the expense of
insurance, fuel and maintenance therefor.
Section 3.03 Reimbursement of Business Expenses. The Company shall
promptly reimburse Executive for all reasonable business expenses incurred by
Executive in promoting the business of the Company, including expenditures for
entertainment, gifts and travel. Each such expenditure shall be reimbursable
only if it is of a nature qualifying it as a proper deduction on the federal and
state income tax return of the Company. Each such expenditure shall be
reimbursable only if Executive furnishes to the Company adequate records and
other documentary evidence required by federal and state statutes and
regulations issued by the appropriate taxing authorities for the substantiation
of that expenditure as an income tax deduction.
ARTICLE 4
TERMINATION OF EMPLOYMENT
Section 4.01. Termination for Cause. The Company reserves the right to
terminate this Agreement if Executive (1) willfully breaches or habitually
neglects the duties which he is required to perform under the terms of this
Agreement; or (2) commits such acts of dishonesty, fraud, misrepresentation or
other acts of moral turpitude, that would prevent the effective performance of
his duties. The Company may in its opinion terminate this Agreement for the
reasons stated in this section by giving written notice of termination to
Executive without prejudice to any other remedy to which the Company may be
entitled, either at law, in equity or under this Agreement. The notice of
termination required by this section shall specify the ground for the
termination and shall be supported by a statement of relevant facts. Termination
under this section shall be considered "for cause" for the purposes of this
Agreement.
5
<PAGE>
Section 4.02. Termination Without Cause. The employment of Executive
under this Agreement shall cease and this Agreement, other than the provisions
if Section 2.07, shall terminate:
(a) Upon the death of Executive;
(b) If during the term of this Agreement, Executive shall sustain a
Disability, as hereinafter defined, Executive shall be entitled to receive only
the benefits, if any, as may be provided by any insurance to which he may become
entitled to pursuant to Section 3.02 hereinafter. "Disability" as used herein
means the complete and total disability of Executive resulting from, injury,
sickness, disease or infirmity due to age, whereby Executive, for a period of
sixty (60) consecutive days, is unable to perform his usual services for the
Company.
ARTICLE 5
MISCELLANEOUS
Section 5.01. Option Grant. It is the understanding of the Company and
Executive that PTC Group shall grant to Executive, an option to acquire shares
of the common stock of PTC Group, the number of shares subject to terms of a
separate memorandum of understanding between Dr. Rocco Guarnaccia, Joseph
Maceda, and Employee.
Section 5.02. Travel with Spouse. For up to four weeks per year, the
Executive's spouse or other family member may accompany the Executive while on
business related travel, at the expense of the Company, such expenses to
include: double room hotel accommodations with Executive, air travel at same
class as Executives, meals with Executive, and normal incidental travel
expenses.
Section 5.03. Special Travel Requirements. Company recognizes that due
to certain pervious and ongoing obligations of the Executive to various Agencies
and Departments of the government of the United States, the specific air carrier
or travel route may be dictated by current desires of those certain Agencies or
Departments, and that the Executive has an ongoing obligation to inform such
governmental agencies of his travel plans prior to travel. From time to time, a
few countries may be excluded from access to the Executive.
Section 5.04. Club Memberships Executive holds membership in two
professional and social clubs which the Company recognizes to bring potential
benefit to the Company when employed by the Executive as a means of networking.
The Company will pay normal annual dues to the University Club of San Francisco
and the Rancho Murieta Country Club, together with expenses of meals, lodging
and entertainment directly attributed to development of the Company. Such
expenses will be budget and approved by the Board of Directors as part of the
normal budget approval process.
Section 5.05. Assignment. This Agreement may not be assigned by any
party hereto, provided that the Company may assign this Agreement: (a) to an
affiliate so long as such affiliate assumes the Company's obligations hereunder,
provided that no such assignment shall discharge the Company of its obligations
6
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herein, or (b) in connection with a merger or consolidation involving the
Company or a sale of substantially all its assets to the surviving corporation
or purchaser as the case may be, so long as such assignee assumes the Company's
obligations thereunder.
Section 5.06. Governing Law. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
California.
Section 5.07. Interpretation.In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions in this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
Section 5.08. Notice. Any notice required or permitted to be given
hereunder shall be effective when received and shall be sufficient if in writing
and if personally delivered or sent by prepaid cable, telex or registered air
mail, return receipt requested, to the party to receive such notice at its
address set forth at the end of this Agreement or at such other address as a
party may by notice specify to the other.
Section 5.09. Amendment and Waiver. This Agreement may not be amended,
supplemented or waived except by a writing signed by the party against which
amendment or waiver is to be enforced. The waiver by any party of a breach of
any provision of this Agreement shall not operate to, or be construed as a
waiver of, any breach of that provision nor as a waiver of any breach of another
provision.
Section 5.10. Survival of Rights and Obligations. All rights and
obligations of the Executive or the Company arising during the term of this
Agreement shall continue to have full force and effect after the termination of
this Agreement unless otherwise provided herein.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the date first above written.
COMPANY: EXECUTIVE:
PTC Holdings, Inc.
/s/ Rocco Guarnaccia /s/ Robert L. Campbell
- -------------------- ----------------------
Dr. Rocco Guarnaccia Robert L. Campbell
Chairman 15009 Rio Circle
8008 Sacramento Street Rancho Murieta, CA 95683
Fair Oaks, CA 95628
7
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Exhibit A
EMPLOYEE'S AGREEMENT RE:
------------------------
INVENTIONS AND CONFIDENTIAL INFORMATION
---------------------------------------
THIS AGREEMENT CREATES IMPORTANT OBLIGATIONS WHICH ARE BINDING . PLEASE READ
IT IN FULL BEFORE YOU SIGN IT.
THIS AGREEMENT is made by and between Integrated Water & Power, a
Delaware corporation (the "Company") and Robert L. Campbell ("Employee").
PREAMBLE
1. The Company desires to preserve the goodwill of its business and
business relationships and to protect the details of its business and affairs
from disclosure and unauthorized use and to ensure ownership of certain
property.
2. Employee recognizes that the Company is engaged in a continuous
program of design and manufacture of proprietary infrastructure products and
understands that it is part of his responsibility as an employee to assist the
Company in such endeavors.
3. Employee recognizes and acknowledges that he shall have access to a
variety of knowledge, information and property related to the Company's business
or affairs and may have contact with the Company's customers, suppliers, or
other employees and similar persons and may assist in the creation and/or
development of certain property.
4. Employee recognizes the importance of protecting the Company's
rights to inventions, discoveries, ideas and confidential information, and any
similar or related rights.
NOW, THEREFORE, in consideration of the terms and conditions set forth
hereinbelow, and for other good and valuable consideration, including the
material benefits and training received as a result of his employment with the
Company and the continuation thereof, the sufficiency of which is hereby
acknowledged, and in reliance upon the recitals set forth above, which are fully
made a part of this Agreement, the Company and the Employee hereby agree as
follows:
1. DEFINITIONS
For the purposes of this Agreement:
(a) As used in this Agreement, the term "Confidential
Information" means all trade secrets and proprietary knowledge,
information, process and know-how and property relating to, or used or
possessed by, the Company (including any knowledge, information or
property belonging to third persons or entities which its Company is in
or an obligation to protect and keep secret), and includes, without
limitation the following:
(i) all trade secrets and secret information, whether
of technical or business nature;
8
<PAGE>
(ii) all software, including without limitation, all
programs, specifications, applications, routines, subroutines,
techniques and ideas for formulae;
(iii) all concepts, data, designs and documents;
(iv) the Company's business methods and practices;
(v) compilations of data or information concerning the
Company's business, including but not limited to:
(A) financial information whether related to the
Company generally, or to particular products, services,
geographical areas, or time periods;
(B) supply and service information, such as goods
and services suppliers' names or addresses, terms of
supply or service contracts of particular transactions;
(C) marketing information, such as details about
past, present or proposed marketing programs by or on
behalf of the Company, sales forecasts or results of
marketing efforts or information about impending
transactions;
(D) personnel information, such as compensation or
other terms of employment, employee lists, training
methods or other employee information;
(vi) the names of the Company's customers, the nature of
the Company's relationships with these customers, and the
business of the Company's customers;
(vii) any other information not generally known to the
public including information about the Company's operations,
plans, personnel, products or services which, if misused or
disclosed, could have a reasonable possibility of adversely
affecting the business of the Company.
(b) Employee agrees that all information possessed by him, or
disclosed to him, or to which he obtains access during the course of
his employment with the Company, shall be presumed to be Confidential
Information under the terms of this Agreement, and the burden of
proving otherwise shall rest with Employee.
(c) The term "Inventions" means all discoveries, developments,
designs, improvements, inventions, formulae, processes, techniques,
computer programs, strategies, and data whether or not patentable under
patent, copyright or similar statutes. Employee agrees that all
information possessed by him, or disclosed to him, or to which he
obtains access during the course of his employment with the Company,
shall be presumed to be Confidential Information under the terms of
this Agreement, the burden of proving otherwise shall rest with the
Employee.
2. CONFIDENTIAL INFORMATION
During the period of Employee's employment with the Company, and after
the termination thereof for any reason, Employee agrees that, because
9
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of the valuable nature of the Confidential Information, he shall use
his best efforts to maintain and protect the secrecy of Confidential
Information. Without in any manner limiting the generality of the
foregoing obligation, Employee agrees that he shall not, directly or
indirectly, undertake or attempt to undertake any of the following
activities:
(a) disclose any Confidential Information to any other person
or entity;
(b) use any Confidential Information for his own purposes;
(c) make any copies, duplicates or reproductions of any
Confidential Information;
(d) authorize or permit any other person or entity to use,
copy, disclose, publish or distribute any Confidential Information; or
(e) undertake or attempt to undertake any activity the Company
is prohibited from undertaking or attempting to undertake by any of its
present or future clients, customers, suppliers, vendors, consultants,
agents or contractors.
3. RETURN OF CONFIDENTIAL INFORMATION
Upon termination of Employee's employment with the Company for any
reason, Employee agrees not to retain or remove from the Company's
premises any records, files or other documents or copies thereof or any
other Confidential Information whatsoever, and he agrees to surrender
same to the Company, wherever it is located, immediately upon
termination of his employment.
4. EMPLOYEE INVENTIONS
(a) Disclosure and Ownership of Inventions
--------------------------------------
(i) During the Employee's service as an employee of
the Company and for a period of six (6) months thereafter,
Employee will promptly and fully disclose to the Company (and
to any persons designated by it) all Inventions generated,
made, conceived or reduced to practice or leaned by Employee,
either alone or jointly with others, which, in any way, result
from or suggested by any work, which Employee may for or on
behalf of the Company, or relate to or are useful in the
business of the Company; or result from the use of premises or
property owned, leased, licensed, or contracted for by the
Company. The Company shall have the right to such Inventions,
whether they are patentable or not.
(ii) Employee understands that the Company will have
no rights pursuant to this Agreement in any Invention of
Employee made during the term of Employee's employment by the
Company if such Invention has not arisen out of or by reason
of Employee's work with the Company, and does not relate to
the business or operations of the Company, although Employee
agrees to inform the Company of any such Invention.
(b) Assignment of Inventions
------------------------
Employee agrees that Employee's services on behalf of the Company are
works made for hire and all Inventions specified in Paragraph 4 (a)(i)
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shall be the sole property of the Company and its assigns, and the
Company and its assigns shall be the sole owner of all patents,
copyrights, trademarks, trade secrets, and other rights and protections
in connection therewith. Employee hereby assigns to the Company any and
all rights Employee now has or may hereafter acquire in such
Inventions. Employee further agrees, as to all such Inventions, to
assist the Company in every proper way (but at the Company's expense)
to obtain, and from time to time enforce, patents, copyrights,
trademarks, trade secrets, and other rights and protections relating to
such Inventions in any and all countries, and to that end Employee will
execute all documents for use in applying for and obtaining such
patents, copyrights, trademarks, trade secrets, and other rights and
protections on, and enforcing, such Inventions, as the Company may
desire, together with any assignments thereof to the Company or persons
designated by it.
Employee's obligation to assist the Company in obtaining and enforcing
patents, copyrights, trademarks, trade secrets, and other rights and
protections relating to such Inventions in any and all countries shall
continue beyond the termination of Employee's employment by the
Company, but the Company shall compensate Employee at a reasonable rate
after termination of employment for time actually spent by Employee, at
the Company's request, on such assistance. In the event the Company is
unable, after reasonable effort, to secure Employee's signature on any
document or documents needed to apply for or prosecute any patent,
copyright, trademark, trade secret, or other right or protection
relating to an Invention, whether because of Employee's physical or
mental capacity or for any reason whatsoever, Employee hereby
irrevocably designates and appoints the Company, its duly authorized
officers and agents as Employee's agent coupled with an interest and
attorney-in-fact, to act for and in Employee's behalf and stead to
execute and file any such application or applications and to do all
other lawfully permitted acts to further the prosecution and issuance
of patents, copyrights, trademarks, trade secrets, or similar rights or
protections thereon with the same legal force and affect as if executed
by Employee.
(c) Previous Inventions
-------------------
As a matter of record, Employee has identified in Exhibit A, attached
hereto, all Inventions that have been generated or conceived or first
reduced to practice or learned by Employee, alone or jointly with
others, prior to Employee's employment by the Company, which Employee
desire to remove from the operation of this Agreement. Employee
represents and warrants that such list is complete. If Employee does
not attach a list hereto, Employee represents that Employee has made no
such Inventions at the time of signing this Agreement.
5. LIMITATION ON OTHER ACTIVITIES AND COMPETITION
Employee agrees that while Employee is employed by the Company,
Employee will not without the Company's express written consent, engage
in any consulting, employment or business that is competitive with the
Company. In furtherance and not in limitation of the generality of the
preceding sentence, Employee shall not, for itself or on behalf of any
person or organization, directly or indirectly, compete with the
Company in the development, manufacture, sale, solicitation, or
servicing of any then existing project of, or service or business
engaged in by, the Company, or any other product of, or service or
business engaged in, or under development by, the Company.
6. NO CONFLICTING OBLIGATIONS
(a) During Employment
-----------------
Employee represents and warrants to the Company that Employee
has no interest or obligation which is consistent with or in
conflict with this Agreement, or which would prevent, limit or
impair Employee's performance of any part of this Agreement.
Employee agrees to notify the Company immediately if any such
interest or obligation arises.
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(b) After Termination of Employment
-------------------------------
For twelve (12) months following the termination of Employee's
employment by the Company, Employee agrees that if Employee
accepts employment, whether as a consultant, employee,
director, trustee or otherwise, with any persons or
organization, or engage in any type of activity on Employee's
behalf or on behalf of any person or organization that is in
any way related to the products, services or business of the
Company, Employee shall notify the Company in writing, within
thirty (30) days thereof, of the character of each such
activity, and of the name and address of each such person or
organization by which Employee is so employed.
7. CONFIDENTIALITY OF PREVIOUS EMPLOYERS
Employee represents that Employee's performance of all the terms of
this Agreement does not and will not breach any agreement to keep in
confidence proprietary information acquired by Employee in confidence
or in trust prior to the execution of this Agreement. Employee has not
entered into, and Employee agrees that Employee will not enter into,
any agreement either written or oral, in conflict with this Agreement.
Employee represents that Employee has not brought and will not bring
with Employee to the Company, or use in the performance of Employee's
responsibilities at the Company, any materials or documents of a
present or former employer or client that are not generally available
to the public, unless Employee has obtained express written
authorization from the present or former employers and clients during
Employee's service to the Company.
8. ENFORCEMENT
Employee agrees that in the event of a breach or threatened breach of
the provisions of this Agreement, the Company's remedies at law would
be inadequate, and the Company shall be entitled to an injunction to
enforce such provisions (without any bond or other security being
required), but nothing herein shall be construed to preclude the
Company from pursuing any remedy at law or in equity for any breach or
threatened breach.
9. MISCELLANEOUS
(a) Successors
----------
The rights and obligations under this Agreement shall survive
the termination of Employee's service to the Company in any
capacity and shall inure to the benefit of and shall be
binding upon: (i) Employee's heirs and personal
representatives, and (ii) the successors and assigns of the
Company.
(b) Governing Law
-------------
The laws of the State of California shall govern all questions
relative to interpretation and construction of this Agreement
and to its performance.
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(c) Severability
------------
If any such provision of this Agreement is wholly or partially
unenforceable for any reason, such unenforceability shall not
affect the enforceability of the balance of this Agreement,
and all provisions of this Agreement, shall if alternative
interpretations are applicable, be construed so a to preserve
the enforceability hereof.
(d) Waiver
------
The Company's waiver of any default by Employee shall not
constitute a waiver of its rights under this Agreement with
respect to any subsequent default by me.
EMPLOYEE HAS READ AND UNDERSTANDS THE FOREGOING AND AGREES TO ITS TERMS.
/s/ Robert l. Campbell
----------------------
Robert L. Campbell
15009 Rio Circle
Rancho Murieta, CA 95683
6-3-98
------
Date
ACCEPTED AS A CONDITION OF EMPLOYMENT
PTC Holdings, Inc.
/s/ Rocco Guarnaccia
--------------------
Dr. Rocco Guarnaccia
Chairman
6-3-98
------
Date
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Exhibit B
EXHIBIT B TO EMPLOYMENT AGREEMENT
ARTICLE 3 SECTION 3.02(a)(liv)
The Company shall provide employee/family fully paid insurance benefits as
described herein:
1. Complete Medical Cover-- Family (100% coverage)
2. Complete Dental Cover-- Family (100% coverage)
3. Life Insurance-- For Employer ($1M Term Life)
4. Accidental Death and Dismemberment-- Employee
5. Vision Care-- Family
6. Long Term Disability--Employee
