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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1996
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[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to ______________________
Commission file number 0-22630
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Seiler Pollution Control Systems, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware 22-2448906
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
555 Metro Place North, Dublin, Ohio 43017
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(Address of principal executive Offices) (Zip Code)
Registrant's telephone number, including area code 614/791-3272
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.0001 per share.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[x] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
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APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.[ ] Yes [ ] No
Not Applicable
The number of shares outstanding of each of the Registrant's classes of
Common Stock, as of June 1, 1996 is 18,805,569 shares, all of one class of
$.0001 par value Common Stock. Of this number a total of 15,535,569 shares
having a market value of $89,329,521, based on the closing price of the
Registrant's common stock of $5.75 on June 13, 1996 as quoted on the NASDAQ
SmallCap market, were held by nonaffiliates of the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
None
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SEILER POLLUTION CONTROL SYSTEMS, INC.
Form 10-K
Fiscal Year Ended March 31, 1996
TABLE OF CONTENTS
Page No.
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PART I
Item 1. Business 1
Item 2. Properties 10
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security-Holders 10
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 10
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure 13
PART III
Item 10. Directors and Executive Officers of the Registrant 13
Item 11. Executive Compensation 17
Item 12. Security Ownership of Certain Beneficial Owners
and Management 20
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Item 13. Certain Relationships and Related Transactions 22
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 23
SIGNATURES 25
SUPPLEMENTAL INFORMATION 26
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Part I
Item 1. Business
Business Overview
Seiler Pollution Control Systems, Inc. (hereafter, "Seiler," the
"Company," or the "Registrant") is an international environmental service and
equipment company. The Company began as an import/export firm incorporated in
1983 in the State of Delaware, under the name of World Imports - USA, Inc. and
was operational until 1989. The Company was inactive during the fiscal years
ended March 31, 1990 through 1993.
Following a change in control in June 1993, World Imports changed its name
to Seiler Pollution Control Systems, Inc. and commenced operations in the
environmental field. The Company is currently publicly traded in the NASDAQ
Small Capitalization Market under the stock symbol SEPC.
In July 1993, the Company formed a wholly-owned subsidiary, under the laws
of the State of Delaware, known as Seiler Pollution Control Systems
International, Inc. ("Seiler International"). This subsidiary holds the
exclusive European rights to a High Temperature Vitrification System ("HTV
System" or "System"). The HTV System was initially developed in Switzerland by
Seiler High Temperature Separating Systems Ltd. ("Seiler HTSS"), a company
controlled by Niklaus Seiler, currently a director of the Company, and his
family. The System was patented in 1992 in Switzerland. Seiler HTSS subsequently
transferred the European rights and worldwide rights to the System to Maxon
Finance & Trade Ltd. S.A. ("Maxon"), which, in turn, transferred the European
rights to Seiler International. The remaining exclusive worldwide rights to the
HTV System were acquired directly by the Company from Maxon under a separate
license agreement in July 1993.
In November 1993, the Company established a subsidiary, Seiler SEPC AG
("SEPC AG"), under the laws of Switzerland. SEPC AG was formed to conduct and
oversee all of the Company's European and Asian environmental operations and
sales as a wholly-owned subsidiary of the Company. Also in November of that
year, the Company opened an office in the United States in Dayton, Ohio, to
oversee North American operations and sales. In April 1994, the North American
office moved to Dublin, Ohio.
In February 1995, SEPC AG formed a subsidiary, Seiler Trenn Schmelzanlagen
Betreibs GmbH ("STSB"), under the laws of Germany. STSB was established to
conduct and oversee all of Seiler's German environmental operations and sales.
SEPC AG owns 90% of STSB. The remaining 10% is owned by Dr. Gerold Weser,
Seiler's current Vice President of European operations and President of STSB.
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Unless specifically identified by their individual names, Seiler Pollution
Control Systems, Inc. and its three subsidiaries will hereafter be referred to
as the "Company," "Seiler," or the "Registrant."
Licensing Agreements
In July 1993, the Company entered into two separate licensing agreements
with Maxon, a corporation organized under the laws of Panama with offices in
Fribourg, Switzerland. Maxon was a principal shareholder of the Company when the
agreements were executed. As of June 1, 1996, Maxon owned 1.60% of Seiler's
outstanding stock. The licensing agreements, as amended, require the Company to
pay Maxon a licensing fee of $2.5 million for the European rights to the HTV
System and $2.5 million for the remaining worldwide rights. To date, $3,022,751
has been paid. The remaining sums due and owing are to be paid on a schedule as
reflected in Note 5 of the Company's financial statements (see Part IV).
These licensing agreements run for an indefinite term or until all of the
proprietary information becomes public knowledge and the patent rights expire.
The Technology
The HTV System is a high temperature vitrification process which
effectively processes and recycles a broad range of wastes including hazardous
wastes into non-toxic glass ceramics and other usable products. The HTV System
handles wastes generated by both government and industry. Processed materials
can be recycled back to the commercial marketplace or disposed in a
non-hazardous solid waste landfill.
The heart of the HTV System is a patented high temperature converter
melter. This component operates at approximately 2700 degrees F (1500 degrees C)
and supplies the energy necessary to provide the final chemical and physical
reactions that convert hazardous chemical compounds into inert nonhazardous
glass ceramics, metal oxides, and salts.
The HTV System operates with natural gas and air or oxygen as a primary
fuel source. In countries where natural gas is impractical to use, the System
can be operated with either fuel oil or propane. The dryer and preheater
components of the System enable processing of both wet and dry waste feedstocks.
Thus, the System can handle dry incinerator ash and asbestos as well as various
wet sludges, metal hydroxide filter cake, and wastewater treatment residues. The
System can also process organic/inorganic and mixed organic/inorganic waste
feedstocks. The organic residues are used to supplement the energy requirements
of the System and the inorganic residues are the primary components needed for
producing glass ceramic products and metal oxides.
The HTV System is adjustable and controllable and can process waste
feedstocks to reclaim metal oxides and salts and/or generate commercial grade
glass ceramics. Treatability tests have been conducted in Switzerland and the
United States on different waste streams to generate various types of glass
ceramics, metal oxides, and salts to evaluate product
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characteristics and commercial viability. Factors that affect commercial
feasibility of the glass ceramics generated by the System include: types of
wastes recycled, quality of materials available, system location, and quality of
the glass ceramics produced.
Commercial grade non-toxic glass ceramics are produced in the System by
binding the metal components in the waste feed into a glass ceramic matrix on a
molecular level. The metals provide color, hardness, toughness, structures and
other significant properties. If the waste feedstocks do not provide the proper
ratio needed to form the desired product characteristics, silica and other glass
ceramic forming materials may be added to the process. Glass ceramics generated
from the System are formulated to be inert, nonhazardous, and reusable. These
materials pass standardized governmental leachate tests such as the United
States Toxic Characteristic Leaching Procedure (TCLP) and its equivalent
European eluent test, with leaching characteristics that are orders of magnitude
below legal requirements.
Due to the System's unique exit mechanism, the glass ceramics generated
can be formed into many sizes and shapes. Depending on the waste feed and
additives used, the glass product characteristics can be altered to develop
different types of products.
The Pilot And High Temperature Vitrification Systems
The HTV Pilot System
Two HTV Pilot Systems have been constructed in the Zurich, Switzerland
area. One HTV pilot plant was initially constructed in 1988 by Niklaus Seiler in
Leibstadt, Switzerland and has been operational for many years. The second HTV
pilot plant, still under construction, is a redesigned System and is more than
40% complete. The Leibstadt operating pilot plant was designed as a test
facility with a capacity to process up to 600 tons of waste feedstocks per year
at a rate of 50-100 Kg of input waste per hour. Significant engineering and
structural changes were made in the Leibstadt System in the first four years;
electronics, linings, and controls were all replaced. Then in 1992, initial
waste testing began for different customers using waste feedstocks such as
incinerator ash, paint sludges, hydroxide sludges, sandblast residues, asbestos
and other transition metal laden residues.
Tests using the HTV Pilot System are ongoing. In February-March of 1996,
the Pilot System tested incinerator flyash and bottom ash for Martin Incinerator
Company, a large incinerator manufacturer and operator. In June 1996, the Pilot
System tested five different waste streams for the United States Air Force.
The HTV Pilot System is a significant step between the Company's
laboratory analysis and developing workable commercial systems. Through pilot
testing, the Company gathers important mass balance information which it uses to
design specific commercial scale systems for industrial and governmental
customers. Vital data such as mass balance show both customers and regulators
where all of the waste components go. This information is critical not only to
the Company's customers and governmental regulators, but also the community
where
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the System operates whose environmental concerns must be addressed. By
identifying and tracking all of the wastes constituents, the Company
demonstrates its commitment to resolve any potential pollution problems that
might arise. The Pilot System provides the Company with energy use data to
determine fuel consumption. Additionally, sufficient samples are produced by the
HTV Pilot System for product testing. Using this test data, the Company can then
formulate for commercial processing and accurately predict product
characteristics such as hardness, color and crystal structure. The Pilot System
also enables the Company to conduct air pollution control testing to determine
what air pollution control equipment is needed for commercial operations.
Preliminary air testing data is also used to facilitate permitting.
The HTV Commercial System
The HTV Commercial System has an input processing capacity of 2,000 -
4,000 tons of waste feedstocks per year. This equates to processing
approximately 250 - 500 Kg per hour. This commercial System will operate 24
hours per day, 7 days per week and will shut down only for scheduled or
emergency maintenance, or if waste feedstocks are unavailable. The HTV
Commercial System incorporates system refinements that are not incorporated in
the HTV Pilot System. Some of these refinements include extensive process
controls, a combustion air heat exchanger, a new flue gas quench system, and a
refined glass ceramic exit system that is easily maintained. Sophisticated air
pollution control components are also available with the Commercial System and
include a triple baghouse collector to capture particulates that may fume from
the vitrification converter or preheater; a catalytic denitrification system to
reduce or eliminate any potential nitrous oxide (Nox) emissions; an acid/gas wet
scrubber to reduce and/or eliminate sulfur dioxide (SO2), Hydrochloric Acid
(Hcl), and Hydrofluoric Acid (HF) emissions; an activated carbon filtration
system which will capture any potential remaining dioxins, furans, or other
volatile organics that may get through the system as well as any Mercury (Hg).
The Company promotes installation of the HTV commercial System at the site
where the waste feedstocks are generated. Since the generator no longer needs to
transport hazardous or other toxic wastes off-site for treatment/disposal, the
potential for costly and dangerous spills is eliminated. On-site treatment also
makes System permitting easier because the community is already aware of the
industrial or governmental facility located in their locale and the wastes they
may generate. These factors do not, however, preclude setting up HTV commercial
systems at regional centers to provide shared recycling services so smaller
generators could achieve economies of scale.
The HTV commercial system will require operating permits from the local,
state, and federal environmental regulators. Most of the permitting can be done
simultaneously. Because the HTV commercial system is a recycling process,
hazardous waste treatment permitting can be expedited and, in some cases,
avoided entirely. Permitting that could normally take two years or more to
accomplish can take less than six months to obtain. The Company will continue to
work very closely with the regulatory community to maintain the recycling
exemption. The HTV commercial system will require an air discharge permit (which
is standard industrial permitting) because of the air pollution control
equipment associated with the process.
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The Company's first operational HTV Commercial System is currently located
at Company warehouse facilities in Dottingen, Switzerland (near Zurich). The
System is undergoing a comprehensive review that entails examining and testing
each individual component and making any refinements necessary to maximize
complete system performance. The Company expects the review to be completed by
July-August of 1996. Then, the EMPA, an independent Swiss engineering testing
organization, in cooperation with the Swiss Institute Of Technology (ETH), will
test the HTV Commercial System for processing hazardous incinerator ash. The
EMPA and ETH have been contracted by and are acting on behalf of the Swiss BUVAL
(the Swiss federal environmental regulatory authority). The Swiss incinerator
ash test is expected to take approximately thirty days and cost approximately
$50,000 (US). Thereafter, the Company intends to disassemble the Dottingen HTV
Commercial System for shipment to and reassembly in Freiberg, Germany which will
be its permanent home.
Market Strategies and Business Development
The Company's strategy is to position Seiler's vitrification system as the
foremost technology for recycling hazardous wastes. The System's unique
recycling capability offers customers a viable alternative to traditional costly
methods of disposal and effectively solves environmental problems associated
with hazardous waste management. Besides the obvious environmental benefits of
Seiler vitrification, on-site hazardous waste processing also provides certain
economic advantages; transportation and storage costs are significantly reduced
as a result of the hazardous waste material being rendered nonhazardous. Further
savings are achieved with the sale of byproduct recyclables.
Primary markets for Seiler's HTV System are governmental and industrial
waste generators. Seiler intends to strengthen its customer base by implementing
a two-fold marketing approach emphasizing the System's environmental and
economic benefits. Specifically, the Company will (1) focus attention on the
successful bench scale tests and pilot demonstrations performed during the past
year and (2) build and operate new commercial systems (on-site or off-site) for
waste generators.
The Company markets the HTV System in a variety of ways. Seiler offers a
full turnkey approach, whereby the Company plans and builds a full-scale
operating System to the customer's specifications from concept to start-up.
When operations begin, the Company receives a fee (price per ton) for all waste
processed through the System. The fee is based on amortized capital costs,
labor, utilities, materials, maintenance and profit.
The Company also can build and sell the System outright, then will charge
the customer separately for training, supervision, operation and maintenance.
Another option Seiler offers is to construct the System, then contract out to
third parties to provide services. In both cases, contracts are structured on a
take or pay basis over a five to seven year period. As a multinational company,
Seiler anticipates forming joint ventures.
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The final step in the HTV System produces a separate marketing opportunity
for Seiler. After vitrification, hazardous waste is converted into an inert,
usable recycled material. Seiler anticipates becoming more aggressive in
developing consumer markets for glass ceramics, metal oxides and metal salts
which result from the System.
Proposed Recycled Product Application Overview
Processed toxic waste materials tested are rendered inert, nontoxic, and
reusable. Results confirm that the glass ceramic products generated from the HTV
Pilot System met or exceeded United States Toxic Characteristic Leaching
Procedure standards (TCLP) as well as similar European eluent (leaching)
standards. Consistent glass ceramics produced from the pilot plant had
substantive hardness, toughness, color, and insulating properties for the
commercial marketplace. Other reclaimable products were also generated such as
metal oxides and salts. Flyash from incinerators tested were reduced in volume
30-40% and paint sludges processed in the Pilot System were reduced in volume
75%.
Ceramic and glass products are the recyclables created by the Seiler HTV
System. Ceramics include any of a class of inorganic, non-metallic products
which are subject to high temperatures during manufacturing or use. Silica-based
ceramics have a variety of applications and uses, for example as construction
materials. Glass products are part of the ceramic industry because they share
many of the same raw materials, unit operations, processes and technologies as
other ceramics. Some differences do exist, however, between ceramics and glass
products due to variances in heat treatment sequences.
The Company has initially targeted three commercial glass ceramic product
areas: (1) Architectural Applications, where the important product
characteristics are color and crystal structure. Products include wall tile,
floor tile, sinks, bathtubs, patio stone, mosaics, bricks, vanities and counter
tops; (2) Abrasive Applications, where the important product characteristics are
hardness, toughness, and crystal structure. Products include sandpaper, grinding
media, shot blast media, grinding wheels, glass beads, buffing compounds and
polishing compounds; and (3) Refractory Applications, where the important
product characteristics are insulating properties and crystal structure.
Products include fireproof wallboard, roofing media, filtration media, high
temperature specialty products and insulation.
Current Projects
Freiberg, Germany Project
The first Commercial HTV system, situated at Dottingen, Switzerland, will
be disassembled and moved from Dottingen to Freiberg, Germany. The Company
expects to complete this task in August or September 1996. Thereafter, it is
expected to take approximately 30-60 days to reassemble the System and begin
formal operations. The Freiberg System will be operated by the Company's German
subsidiary, STSB, as a regional recycling center which will handle a variety of
waste streams from both German industrial and
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governmental facilities. The Freiberg system is currently designed to handle
industrial paint and hydroxide sludges, industrial wastewater treatment sludges,
electroplating sludges, contaminated chemicals, petrochemicals, spent solvents,
oils, and pesticides, asbestos containing residuals, and mixed organic/inorganic
residuals.
The current Freiberg project calls for the construction and installation
of three dryers, two complete vitrification lines, and an air pollution control
system that will handle full operational production from both lines under
regulatory guidelines. To date, the three dryers, one vitrification line, and
the air pollution control system have been constructed. The second vitrification
line, which has already been engineered, is scheduled to be completed next year.
Services for the first Freiberg HTV System have already been completely sold,
and services for the second System have been partially sold. The Company expects
to have the working capacities of both systems sold prior to the second line
being completed.
Financing for the Freiberg Project comes from various sources. The German
Federal Ministry and the Ministry of Economics from the German State of Saxony
have provided this project with financial support through a combination of
grants and subsidies. The Dresdner Bank provided this project with a secured
long term letter of credit. The total financial package for this project exceeds
$12,000,000 U.S. Financing for this project was based on two conditions. The
first was a positive independent market and feasibility study commissioned by
the Dresdner Bank, and the second was the obtaining of an operational permit by
the German government. The Dresdner Bank hired DOWC Ost-West-Consult GmbH to
perform the independent market and feasibility study. The study determined
that the Seiler business concept represents a technically sophisticated
method of hazardous waste processing. A substantive list of industrial and other
generators who intend to use the System is also provided in the study. The
Company is presently going through the German operating permit process. All
application data has been timely submitted, and the Company has already
successfully gone through the public comment period. The German regulatory
authorities have indicated that the finalized operating permit will be issued
within eight to twelve weeks from the middle of June 1996.
The United States Air Force Project
The Company has been working on a project on behalf of the United States
Air Force since September 1995. This project is divided into three phases and
encompasses the evaluation and processing of five different waste streams
generated from Tinker and McClellan Air Force Bases. The first phase of this
project was laboratory testing, where the waste streams were analyzed,
characterized, and evaluated for their commercial product properties. Formulas
were generated to produce both abrasive and architectural product feedstocks. A
substantive report was generated detailing the laboratory findings. After Air
Force review, the Company was directed to commence Phase 2 operations. Phase 2
provided for representative samples of the five waste streams to be shipped to
the Seiler pilot facility in Leibstadt, Switzerland for pilot scale evaluation.
These field tests were successfully completed on June 13, 1996. The Company
expects results from the test data to be available by July or August 1996.
Thereafter
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a formal report will be written for the Air Force. Preliminary negotiations have
already begun for Phase 3, which encompasses the placement of a commercial
vitrification system at both Tinker and McCellan Air Force Bases. The Company
anticipates that the commercial system Air Force contracts will be long term
operational agreements with guaranteed minimum tonnage provided. Contracts for
providing both commercial systems to the Air Force are anticipated to be
completed by the end of 1996. The Company will maintain ownership of the
equipment. Phases 1 and 2 are valued at $100,000 in the aggregate. The projected
value of Phase 3 is a minimum of $4,000,000. Radian International Corporation is
acting as the general contractor for this project.
The Edison Materials Technology Center (EMTEC) Project
The EMTEC project officially commenced on October 1, 1995. EMTEC is funded
by the State of Ohio and has placed this project under their candidate core
technology program. The purpose of this project is to study and develop higher
end-use glass ceramics from waste feedstocks. Joining the Company in this effort
is a comprehensive team which includes The Ohio State University Department of
Materials Science and Engineering, General Motors Delphi Chassis Division,
Radian International Corporation, Armco Steel, Duriron, Columbia Gas Company,
East Ohio Gas Company, Allis Mineral Systems, Epro Tile Company, Cleveland Fluid
Systems, and the Orton Ceramic Foundation. Phase 1 laboratory work for this
project has been successful and has generated architectural feedstock media,
roofing granules, medium abrasives, and hard abrasives from different waste
formula combinations. Samples are currently being prepared for commercial
testing. Some of the waste feedstocks used include wastewater treatment sludges,
electric arc furnace dust, spent foundry sand, and electroplating sludges.
Toughness tests showed the products produced met or exceeded garnet and aluminum
oxide applications.
Phase 2 of the EMTEC project will begin in October 1996. The Company plans
to expand its testing and development on processing additional waste feeds and
their resultant products. The Company also plans on optimizing all of the Phase
1 work. Phase 2 will also encompass siting and permitting a pilot facility for
United States generator use, and funding preliminary engineering for this pilot
system. Phase 1 is currently valued at $100,000. Phase 2 is currently valued at
$200,000. The Company expects the parameters and funding for Phase 2 will be
expanded in July.
Future Projects
The Company anticipates, but cannot assure, constructing fifteen HTV
Systems within the next two years. These Systems are expected to be placed in
both North America and Europe including projects in Austria, France, Germany,
Italy, Mexico, Spain, Switzerland, and the United States. Some of these projects
include the following:
Austria. The Company is actively negotiating with an Austrian concern to
develop a joint venture. Seiler will control a majority interest of this joint
venture. It is anticipated that the first Austrian HTV System will be placed in
the city of Graz. This facility will operate as a
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regional center and will initially handle industrial wastewater sludges and
surface treatment residues. The Company believes that joint venture negotiations
will be complete by August or September 1996. It is anticipated also that
permitting will not be a problem for the Graz site.
Switzerland. Negotiations are ongoing with Vetrotherm. The Company intends
to form a joint venture and have majority control. Two sites have been
identified for this joint venture, one in Linthal and the other in Reichenburg.
Both of these sites already carry permits. In Linthal, the joint venture intends
to set up a regional center HTV System consisting of two converter lines and
three dryers. This regional processing center will be constructed to receive
hydroxide sludges, wastewater treatment sludges, paint sludges, incinerator ash,
and mixed organic and inorganic residues. The Reichenberg facility will
preliminarily consist of one converter and two dryers and will primarily be used
for incinerator flyash and slag. Both of these projects are tentatively expected
to begin by the beginning of 1997.
In July 1995 the Company announced that it entered into a joint venture in
Switzerland with Revalor AG (a wholly owned subsidiary of HCB Holderbank Cement)
and Amstutz Altoel AG, a Swiss waste management company. Due to differences in
strategic and economic issues, the Company has withdrawn from this joint
venture. Since the Company's withdrawal, Amstutz was acquired by Holderbank.
Holderbank has asked the Company if the Company would consider negotiating a new
agreement based on new conditions. The Company has agreed to consider this
potential new joint venture and has begun to negotiate. The Company anticipates
that these negotiations will not be complete before August or September 1996.
France. Negotiations with a French governmental agency and a leading
French conglomerate have continued over the past year. The Company is confident
that it will close these negotiations in the near future. Finishing the
commercial HTV System and showing its operational capabilities will speed French
negotiations considerably.
Mexico. The Company's vice president of North American operations, Mr.
Sarko, was invited to Monterey, Mexico for a series of meetings with potential
waste generators and joint venture partners. One group has presented the Company
with a joint venture offer to place two commercial HTV Systems in Monterey. The
Company is currently reviewing this offer.
United States. The Company is working on developing a regional center for
handling drums of electroplating residuals, wastewater treatment sludges, and
mixed organic and inorganic residues in the Pittsburgh, Pennsylvania area. This
is a joint venture negotiation with a waste handler which already has a
permitted site. Developing generators for this system and some preliminary
engineering for the Pittsburgh site is currently being evaluated. This
evaluation will be the basis for structuring the joint venture.
There are other United States projects that are being pursued, including
additional Department of Defense projects, Department of Energy projects, as
well as other private industrial projects. Glass ceramic product marketing is
also being actively pursued. Several
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new abrasive and architectural glass ceramic manufacturers and distributors have
begun testing the glass ceramics generated by the system.
Employees
Currently, the Company employs 17 full time and 12 part time personnel.
Seiler SEPC AG (Switzerland facility) has 11 full time and 6 part time staff
members. The Company's North American operations (U.S.A. executive offices)
employ 4 full time, 5 part time and 5 contract staff members. STSB GmbH (Germany
facility) has 2 full time and 1 part time staff. As needed, additional
technical, engineering, environmental and support staff are hired on a contract
basis.
The Company's intention is to continue hiring contract employees as and
when needed on a project based on the project's requirements.
Item 2. Properties
The Company currently maintains its executive offices at 555 Metro Place
North, Dublin, Ohio 43017 pursuant to a one-year lease. The Company's
wholly-owned Swiss subsidiary, Seiler SEPC AG, maintains its offices at
Bahnhofstr, 311, CH-4353, Leibstadt, Switzerland pursuant to a one-year lease,
while its 90% owned German subsidiary, STSB, maintains its offices at Am St.
Niclas, Schacht 13, D-09599, Freiberg, Germany, pursuant to a one-year lease.
Item 3. Legal Proceedings
The Company is not presently a party to any material litigation nor, to
the knowledge of management, is any material litigation threatened.
Item 4. Submission of Matters to a Vote of Security Holders
This Item is omitted since no matters were submitted to a vote of
security-holders during the Company's fourth quarter.
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
(a) Marketing Information. The Company's Common Stock is listed on the
Nasdaq SmallCap Market and its securities are traded under the symbol SEPC. The
following table sets forth for the periods indicated the range of high and low
bid prices on the dates indicated for the Company's Common Stock for each full
quarterly period within the two most recent fiscal years and any subsequent
interim period for which financial statements are included and/or required to be
included.
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Fiscal Year Ended March 31, 1995 Quarterly Common Stock Price
By Quarter Ranges(1)
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Quarter Date High Low
- ------- ---- ---- ---
1st June 30, 1994 $4.25 $2.25
2nd September 30, 1994 $4.00 $1.00
3rd December 31, 1994 $3.96875 $2.9375
4th March 31, 1995 $3.375 $1.125
Fiscal Year Ended March 31, 1996 Quarterly Common Stock Price
By Quarter Ranges(1)
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Quarter Date High Low
- ------- ---- ---- ---
1st June 30, 1995 $3.50 $1.1875
2nd September 30, 1995 3.28125 1.3125
3rd December 31, 1995 2.4375 1.40625
4th March 31, 1996 5.6875 1.625
Fiscal Year Ending March 31, 1997 Quarterly Common Stock Price
By Quarter Ranges(1)
- --------------------------------- ----------------------------
Quarter Date High Low
- ------- ---- ---- ---
1st through June 14, 1996 $6.5625 $4.75
- ------------------
(1) The over-the-counter market quotations indicated above reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not necessarily
represent actual transactions.
(b) Holders. As of June 1, 1996 the approximate number of stockholders of
the Company's Common Stock was 435.
(c) Dividends. The Company has not paid or declared any cash dividends
upon its Common Stock since its inception and does not anticipate paying any
cash dividends in the foreseeable future. The payment by the Company of cash
dividends in the future rests within the discretion of its Board of Directors
and will depend, among other things, upon the Company's earnings, its capital
requirements and its financial condition, as well as other relevant factors.
- 11 -
<PAGE>
Item 6. Selected Financial Data
The selected financial information set forth below is derived from the
Company's audited consolidated financial statements included herein in Item 8
hereof. The information set forth below should be read in conjunction with such
financial statements and notes thereto.
For the fiscal years
ended March 31,
---------------------------------------
1996 1995 1994
---------------------------------------
Statement of Operations
Revenue $ -0- $ -0- $ -0-
Net Loss (1,796,727) (1,967,813) (2,899,707)
Net Loss Per Share (.11) (.15) (.36)
For the fiscal years
ended March 31,
------------------------------------
1996 1995
------------------------------------
Balance Sheet
Total Assets $15,045,626 $ 11,053,587
Total Liabilities 3,639,769 2,734,833
Working Capital (114,882) 6,500,005
Accumulated Deficit (7,349,683) (5,552,955)
Total Stockholders' Equity 11,405,857 8,318,754
No dividends have been declared in any of the periods presented. See also
Item 5(c) Dividends.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations - March 31, 1996 v. March 31, 1995
The Company's net loss for the year ended March 31, 1996 was $1,796,727 as
compared to $1,967,813 for the year ended March 31, 1995. The decrease in the
net loss is the result of decreases in professional and consulting fees and
salaries, wages and related fringe benefits. Increases in research and
development expenses mitigated the effects of the expense reductions.
The Company has made payments aggregating $3,226,377 for completion of its
High Temperature Vitrification (HTV) Systems during the year ended March 31,
1996. In addition, $261,048 was expended for the acquisition of property and
equipment. The Company has funded these capital expenditures and operating
losses through the issuance of additional equity securities and loans from
stockholders aggregating $5,163,600 and $827,098, respectively.
The Company expects to incur substantial expenditures to complete the HTV
Systems, including operational start-up costs, and to develop and market
additional Systems. Management's plans to generate additional resources include
consideration of the sale of additional equity securities, alliances or joint
venture agreements with entities interested in the Company's HTV Systems,
project financing agreements or other business transactions which would generate
sufficient resources to assure continuation of the Company's operations.
Results of Operations - March 31, 1995 v. March 31, 1994
- --------------------------------------------------------
The Company has not had any revenues from operations in each of its
fiscal years ended March 31, 1995 and 1994. Customer deposits amounting
to $5,079,000 were utilized as advances to suppliers for and on its
behalf to the manufacturer/supplier of the System (referred to above in
Item 1). Such deposits were refunded in the year ended March 31, 1995.
The receipt of customer deposits (which are cash flow items) were not
revenues since the Company has not sold or delivered the System.
Net loss for the fiscal year ended March 31, 1995 was $2,098,031 as
compared to a net loss of $2,901,877 for the preceding fiscal year.
The principal differences between such losses (a decrease of $803,846)
relate to the facts that while the Company incurred increases of (a)
officers' salaries ($290,563), (b) advertising, promotional and selling
expenses ($200,141), (c) professional fees ($168,702) and (d)
amortization cost ($91,287), it had a considerable reduction in fiscal
1995 of consulting fees of $1,701,083. Additionally, employee welfare,
insurance, office expenses, rent, taxes and certain miscellaneous
expenses increased by an aggregate of $187,971 from the previous fiscal
year while travel and entertainment expenses were reduced by $18,393.
Further, while interest expense was reduced by $123,709, foreign
currency losses increased by $147,623.
Consulting fees ($2,007,936) for the fiscal year ended March 31, 1994
primarily related to services rendered regarding location of a corporate
shell and the subsequent revival of the Company as a business entity
engaged in its current activities. Such fees also included payments
made to the Studdert Companies ("SC"), whose president served on the
Company's Board of Directors until March 17, 1995. SC no longer had any
consulting agreements with the Company as of June 30, 1995. Management
of the Company does not currently anticipate that additional consulting
fees in the magnitude heretofore encountered will be incurred within the
foreseeable future; the Company has been able to reduce consulting fees
by approximately 85% for the fiscal year ended March 31, 1995. Monies
expended for professional services relate primarily to legal and
accounting services.
Item 8. Financial Statements and Supplementary Data
The following financial statements have been prepared in accordance with
the requirements of Regulation S-X and supplementary financial information
included herein, if any, has been prepared in accordance with Item 302 of
Regulation S-K.
- 12 -
SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
Dublin, Ohio
Report on Audit of Consolidated Financial Statements
For the year ended March 31, 1996
<PAGE>
CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 1
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet, March 31, 1996 2
Consolidated Statements for the year ended March 31, 1996:
Operations 3
Changes in Stockholders' Equity 4
Cash Flows 5
Notes to Consolidated Financial Statements 6 - 13
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Seiler Pollution Control Systems, Inc.
Dublin, Ohio
We have audited the accompanying consolidated balance sheet of Seiler Pollution
Control Systems, Inc. and Subsidiaries as of March 31, 1996 and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. We did
not audit the financial statements of Seiler SEPC AG, a wholly owned subsidiary,
and Seiler AG's ninety percent owned subsidiary, Seiler Trenn-Schmeizanlagen
Betriebs GmbH, which statements reflect total assets of $11,039,195 and
operating expenses of $835,072. Those statements were audited by other auditors
whose report has been furnished to us and our opinion, in so far as it relates
to the amounts included for Seiler SEPC AG and its Subsidiary, is based solely
on the report of the other auditors.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Seiler Pollution Control Systems,
Inc. and Subsidiaries at March 31, 1996 and the results of its operations and
its cash flows for the year then ended, in conformity with generally accepted
accounting principles.
The accompanying financial statements for 1996 have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's recurring losses from operations and limited
capital resources raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Schneider Downs & Co., Inc.
Columbus, Ohio
July 9, 1996
- 1 -
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
ASSETS
CURRENT ASSETS
Cash $ 200,351
Prepaid expenses and sundry receivables 109,152
-----------
Total Current Assets 309,503
HIGH TEMPERATURE VITRIFICATION SYSTEMS (Note 4) 9,720,132
OTHER ASSETS
Licensing agreements, less accumulated amortization of
$860,712 (Note 5) 3,899,288
Advances to related party (Note 3) 624,902
Vetrotherm option (Note 10) 167,920
Deposits 36,103
-----------
4,728,213
PROPERTY AND EQUIPMENT - AT COST (net of
accumulated depreciation of $8,403) 287,778
-----------
$15,045,626
===========
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 316,450
Accrued expenses 107,935
-----------
Total Current Liabilities 424,385
LONG-TERM DEBT
Licensing agreements payable (Note 5) 1,977,250
Loans payable - stockholders (Note 6) 1,238,134
-----------
3,215,384
STOCKHOLDERS' EQUITY
COMMON STOCK
Common stock, $.0001 par value; authorized 25,000,000
shares, issued and outstanding 18,525,569 shares 1,853
ADDITIONAL PAID IN CAPITAL 17,897,081
ACCUMULATED DEFICIT (7,349,683)
FOREIGN CURRENCY TRANSLATION ADJUSTMENT 856,606
-----------
11,405,857
-----------
$15,045,626
===========
See notes to consolidated financial statements.
- 2 -
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1996
OPERATING EXPENSES
Professional and other consulting fees $ 546,835
Salaries, wages and related fringe benefits 371,980
General and administrative 325,600
Depreciation and amortization (Note 5) 323,146
Research and development (Note 4) 181,281
-------------
LOSS FROM OPERATIONS 1,748,842
Interest income (2,573)
Interest expense (Note 5) 56,153
LOSS BEFORE MINORITY INTEREST 1,802,422
Minority interest (5,695)
-------------
NET LOSS $ 1,796,727
=============
LOSS PER COMMON SHARE
$ 0.11
=============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 16,927,652
=============
See notes to consolidated financial statements.
- 3 -
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
Foreign
Additional Currency
Common Stock Paid-in Accumulated Translation
Shares Amount Capital Deficit Adjustment Total
------ ------ ------- ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1995 14,250,569 $1,425 $12,733,909 $(5,552,956) $1,136,375 $ 8,318,753
Exercise of stock options under the
1993 Non-Statutory Stock Option Plan 25,000 3 46,097 - - 46,100
Exercise of stock options under the
1994 Non-Statutory Stock Option Plan 25,000 3 31,872 - - 31,875
Issuance of common stock for cash 4,225,000 422 5,085,203 - - 5,085,625
Foreign currency translation adjustment - - - - (279,769) (279,769)
Net loss
- - - (1,796,727) - (1,796,727)
---------- ------ ----------- ----------- ----------- -----------
BALANCE, MARCH 31, 1996 18,525,569 $1,853 $17,897,081 $(7,349,683) $ 856,606 $11,405,857
========== ====== =========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements
4
SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED MARCH 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,796,727)
Adjustments to reconcile net loss to net
cash provided from operating activities:
Depreciation and amortization 323,146
Foreign currency translation (245,028)
Minority interest (10,171)
Changes in assets and liabilities:
Prepaid expenses and sundry receivables (73,637)
Deposits (18,090)
Accounts payable 236,504
Accrued expenses (9,439)
-------------
Net Cash Used In Operating Activities (1,593,442)
CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of property and equipment (261,048)
Advances for High Temperature Vitrification Systems (3,226,377)
-------------
Net Cash Used In Investing Activities (3,487,425)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 5,163,600
Proceeds on loans payable - stockholder 827,098
Payments on loans payable - stockholder (139,057)
Advances to related party (624,902)
-------------
Net Cash Provided By Financing Activities 5,226,739
EFFECT OF EXCHANGE RATE CHANGES ON CASH (34,741)
-------------
Net Increase In Cash 111,131
CASH - BEGINNING OF YEAR 89,220
-------------
CASH - END OF YEAR $ 200,351
=============
See notes to consolidated financial statements.
- 5 -
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 1 - NATURE OF BUSINESS AND LIQUIDITY
Seiler Pollution Control Systems, Inc. (the Company) was incorporated
under the laws of the State of Delaware in 1983 as World Imports - USA, Inc. The
Company's initial business plans were unsuccessful and the Company was inactive
during the fiscal years ended March 31, 1990 through 1993. Following a change of
control in 1993, World Imports changed its name to Seiler Pollution Control
Systems, Inc. (SPCS). The Company presently is an environmental service and
equipment company which acquired the rights to a technology called High
Temperature Vitrification (HTV) which treats a potentially wide variety of waste
products. The Vitrification process transforms hazardous waste into non-toxic
substances which can either be stored in a non-hazardous waste landfill or be
recycled.
The Company's financial statements for the year ended March 31, 1996
have been prepared on a going concern basis which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course
of business. The Company incurred a net loss of $1,796,727 for the year ended
March 31, 1996, and as of March 31, 1996 had an accumulated deficit of
$7,349,683. The Company expects to incur substantial expenditures to complete
the first commercial HTV Systems (including operational start up costs) and to
develop and market additional systems. The Company's financial position at March
31, 1996 plus limited revenue will not be sufficient to meet such objectives as
presently structured. Management recognizes that the Company must generate
additional resources to enable it to continue operations with available
resources. Management's plans include consideration of the sale of additional
equity securities, alliances or joint venture agreements with entities
interested in the Company's HTV Systems, project financing, or other business
transactions which would generate sufficient resources to assure continuation of
the Company's operations.
On April 29, 1996 the Company issued 150,000 shares at $3.75 per share
under the terms of a private placement distribution agreement. Management
expects to raise additional equity resources and/or borrow additional funds to
support operations. Although management expects that these efforts will result
in additional resources for the Company, no assurances can be given that the
Company will be successful in raising additional capital. Furthermore, there can
be no assurance assuming the Company successfully raises additional funds, that
the Company's first commercial HTV system will be economically viable and that
the Company will achieve overall profitability and positive cash flows.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include Seiler Pollution Control
Systems, Inc., and its wholly owned subsidiaries, Seiler Pollution Control
Systems International, Inc., (SPCSI) (incorporated in Delaware),and Seiler SEPC
AG (Seiler AG) (incorporated in Switzerland), and Seiler AG's majority, (90%),
owned subsidiary, Seiler Trenn-Schmeizanlagen Betriebs GmbH (Seiler TSB)
(incorporated in Germany). The statements reflect the financial position,
results of operations and cash flows of SPCS and its wholly owned and majority
owned subsidiaries as a single entity. All significant intercompany accounts and
transactions have been eliminated in consolidation.
- 6 -
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Property and equipment are recorded at cost. Depreciation is provided
for on the straight line method over estimated useful lives. Repairs and
maintenance which do not extend the lives of the applicable assets are charged
to expense as incurred. Profit or loss resulting from the retirement or other
disposition of assets is included in operations.
Licensing agreements are stated at cost, less accumulated amortization.
Amortization is computed by the straight-line method over an estimated life of
fifteen years based upon management's expectations relating to the life of the
technology and current competitive market conditions. The estimated life is
reevaluated each year based upon changes in these factors.
Loss per common share is computed by dividing the net loss for the year
by the weighted average number of shares of common stock outstanding during the
year.
All costs incurred in connection with the sale of the Company's common
stock have been recorded as a reduction of additional paid in capital.
For subsidiaries whose functional currency is the local foreign
currency, balance sheet accounts are translated at exchange rates in effect at
the end of the year and the statement of operations is translated at average
exchange rates for the year. Translation gains and losses are included as a
separate component of stockholders' equity. Net foreign currency transaction
gains and losses are included in operations.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company acquired two licensing agreements from Maxon Finance and
Trade, Ltd., S.A. who owns 300,000 shares of the Company's outstanding shares of
common stock, representing an approximate 1.6% ownership interest. (See Note 5.)
The Company has a note payable to PTI Management AG, a stockholder
owning 3,480,000 shares of the Company's outstanding common stock, representing
an approximate 18.8% ownership interest. (See Note 6.)
The Company has advanced $624,902 to Seiler Hochtemperatur Trennanlagen AG
(Seiler HT). A majority of the outstanding shares of Seiler HT is owned by a
director of the Company. The advances have been presented as non-current in the
accompanying balance sheet. Realization of the advances is dependent upon the
successful completion of the Company's first commercial HTV system. (See Note
1.)
- 7 -
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 3 - RELATED PARTY TRANSACTIONS (Continued)
The Company charged $96,000 to legal expense for legal services
rendered by a stockholder in the year ended March 31, 1996.
NOTE 4 -HIGH TEMPERATURE VITRIFICATION SYSTEM
The Company's wholly owned subsidiary, Seiler AG, entered into three
contracts with Seiler HT to develop HTV Systems.
The HTV system is a patented high temperature converter melter which
supplies the energy necessary to provide final chemical and physical reactions
that convert hazardous chemical compounds into inert nonhazardous glass
ceramics, metal oxides, and salts. Contract number one is for the construction
of a full scale commercial system, contract number two is for a second
production line for the system and contract number three is for the construction
of a pilot system that will ultimately be used in the United States for purposes
of testing and developing commercial systems.
The systems have been under construction since 1993 and have been
undergoing air pollution control testing to evaluate product characteristics and
commercial viability.
The following summarizes the activity under the contracts through March
31, 1996:
[GRAPHIC OMITTED]
Contract Contract Contract
One Two Three Total
---------- ---------- ---------- ----------
Contract Price $7,623,711 $5,420,248 $2,698,055 $15,742,014
Payment on Contracts
(Years ended March 31)
1994 2,079,941 1,554,578 - 3,634,519
1995 1,449,150 827,006 220,647 2,496,802
1996 3,012,485 - 576,326 3,588,811
---------- ---------- ---------- ----------
Total Payments 6,541,576 2,381,584 796,973 9,720,133
---------- ---------- ---------- ----------
Remaining Amounts Due $1,082,134 $3,038,664 $1,901,082 $6,021,880
========== ========== ========== ==========
- 8 -
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 4 -HIGH TEMPERATURE VITRIFICATION SYSTEM (Continued)
The system has been classified as long term in the accompanying
financial statements since it is management's intention, upon completion,
testing and permitting, to own and operate these systems to process waste on a
commercial basis in Germany. Amortization of the cost of these systems has not
been provided for in the accompanying financial statements since the systems are
still under construction and are not yet operating commercially.
Research and development costs associated with the development of these
systems amounted to $181,281 in the year ended March 31, 1996.
NOTE 5 - LICENSING AGREEMENTS
The Company entered into two separate licensing agreements in 1993 with
Maxon Finance and Trade Ltd., S.A., a stockholder of the Company, and a
corporation organized under the laws of Panama. The agreements, as amended in
March of 1994, are for an exclusive field-of-use license to use the proprietary
information, including the patent rights, worldwide for the High Temperature
Vitrification System. Licensing fees aggregating $5,000,000 are to be paid under
the terms of the agreements. These fees have been discounted at 7%, resulting in
a net capitalized cost of $4,760,000. These agreements are for an indefinite
term or until all of the proprietary information becomes public knowledge and
the patent rights expire. Amortization expense for the year ended March 31, 1996
was $317,334.
Maxon Finance and Trade Ltd., S.A. modified its note agreement terms
with the Company in February 1995 by extending the payment terms to December 31,
2000. Subsequent to March 31, 1996, the Company modified the terms of the
agreement again to begin payments in June 1998 extending through December 31,
2002. These modifications reduced the effective interest rate from 7%, per the
original agreement, to approximately 1%.
The aggregate annual principal payments due in years subsequent to
March 31, 1996 are payable as follows:
[GRAPHIC OMITTED]
Year Ended
March 31,
---------
1999 $ 312,880
2000 374,787
2001 380,826
2002 386,962
2003 521,795
------------
$ 1,977,250
============
- 9 -
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 6 - LOAN PAYABLE - STOCKHOLDERS
Werner Heim, President, Chairman of the Board of Directors and
stockholder, has made unsecured, non-interest bearing advances to the Company
which are payable upon future mutual agreement of the parties. The advances have
been presented as a long term liability in the accompanying balance sheet based
upon the parties intent to not repay the advances currently. The balance at
March 31, 1996 was $1,149,049. Interest expense paid to the stockholder was
$56,614 for the year ended March 31, 1996.
PTI Management AG, advanced $105,000 to the Company. The advances are
unsecured, non-interest bearing and due on December 31, 1997. The balance due to
PTI at March 31, 1996 is $89,085.
NOTE 7 - INCOME TAXES
For the year ended March 31, 1996 there was no provision for
current and deferred federal, state or foreign income taxes.
Deferred income taxes reflect the tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
Deferred income taxes recorded in the balance sheet at March 31, 1996
includes a deferred tax asset related to federal net operating loss
carryforwards of approximately $4,593,000 which have been fully offset by a
valuation allowance. The valuation allowance has been established equal to the
full amount of the deferred tax asset, as the Company is not assured that it is
more likely than not that these benefits will be realized. The loss
carryforwards expire through March 31, 2011 if not fully utilized.
A reconciliation between the statutory federal income tax rate and the
effective income tax rates based on continuing operations for the year ended
March 31, 1996 is as follows:
[GRAPHIC OMITTED]
Amount Percent
------ -------
Net Loss $ (1,796,727) 100.0%
============ =====
Statutory U.S. federal income tax benefit $ (611,000) 34.0%
Operating losses with no current tax benefits 327,600 18.2
Effect of foreign operations 283,400 15.8
------------ -----
Provision for Income Taxes $ - - %
============ =====
- 10 -
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 8 - PENSION PLAN
The Company adopted a Simplified Employee Pension Plan (SEP) for the
benefit of its eligible employees. The plan enables the employee to contribute
up to a maximum of 10% of their base salary through a salary reduction and
requires the Company to make a 5% contribution. For the year ended March 31,
1996, the Company charged $6,000 to operations for plan contributions.
NOTE 9 - STOCK OPTIONS
The Board of Directors has adopted Non-Statutory Stock Option Plans and
reserved 4,500,000 shares, for issuance to eligible full and part-time
employees, directors and consultants. Options are nontransferable and are
exercisable during a term of not more than ten (10) years from the grant date.
The options are issuable in such amounts and at such prices as determined by the
Board of Directors, except that each option price of each grant will not be less
than eighty-five percent of the fair market value of such shares on the date the
options are granted.
The following table summarizes Common Stock options outstanding as of
March 31, 1996:
[GRAPHIC OMITTED]
Price Per Shares Shares Shares
Date Granted Share Granted Exercised Outstanding
- ----------------------- --------- --------- ----------- -------------
1993 Stock Option Plan:
- -----------------------
June 14, 1993 $ 2.00 345,000 338,000 7,000
June 30, 1993 $ 1.70 55,000 40,000 15,000
September 30, 1993 $ 3.61 600,000 - 600,000
--------- ---------- -------------
Total outstanding 1,000,000 378,000 622,000
========= ========== =============
1994 Stock Option Plan:
- -----------------------
February 22, 1995 $1.275 175,000 - 175,000
March 29, 1995 $1.275 150,000 25,000 125,000
February 1, 1996 $ 2.10 100,000 - 100,000
--------- ---------- -------------
Total outstanding 425,000 25,000 400,000
========= ========== =============
1995 Stock Option Plan:
- -----------------------
December 1, 1995 $1.65 200,000 - 200,000
February 1, 1996 $2.10 800,000 - 800,000
--------- ---------- -------------
Total outstanding 1,000,000 - 1,000,000
========= ========== =============
- 11 -
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 9 - STOCK OPTIONS (Continued)
Subsequent to March 31, 1996, the Company granted 650,000 shares of the
Company's common stock under the 1996 Non-Statutory Stock Option Plan with an
exercise price of $1.70 per share.
NOTE 10 - COMMITMENTS
On February 27, 1996, the Company obtained a credit line commitment
from the Dresdner Bank approximating $1,422,000 and a long term investment loan
in the amount of $6,703,000 for the fabrication, construction and installation
of a high temperature separating and melting facility on land located in Germany
acquired by the Company from the German State of Saxony. The commitments require
that the German government provide the Dresdner Bank with a surety bond covering
eighty-percent of the commitment, obtain the necessary approvals and permits and
meet certain financial covenants relating to working capital requirements and
debt to equity ratios. In connection with this financing package, the Company
will receive certain German governmental grants of approximately $4,469,000. The
grants do not have to be repaid and will be utilized by the Company to install
an HTV system in Freiberg, Germany.
The Company entered into a $100,000 contract with Radian Corporation on
September 27, 1995 to provide laboratory and pilot testing services. Radian's
prime contract with the United States Air Force is for the evaluation for the
construction of two Very High Temperature Vitrification Technology Systems. The
estimated period of performance was from September 5, 1995 through December 31,
1996.
The Company entered into a contract with the Edison Materials
Technology Center to produce and evaluate new glass and ceramic products
generated from waste materials from Ohio industry. Phase I of the contract in
the amount $100,000 provides for laboratory studies. Phase II of the contract in
the amount of $200,000 provides for continued evaluation, product optimization
and pilot studies.
The Company entered into written employment agreements with Werner
Heim, Alan B. Sarko (Vice President), Gerold Weser (Vice President) and Niklaus
Seiler. The agreements commenced January 1, 1996 and expire five years
thereafter and provide for base salaries of $150,000 per year as well as certain
additional bonuses based upon the Company reaching certain levels which have not
yet been attained. Mr. Heim, Mr. Sarko, Mr. Weser, and Mr. Seiler have also been
granted options to purchase up to 615,000; 300,000; 200,000 and 300,000 shares,
respectively of the Company's common stock in accordance with the terms and
conditions of the Company's Non-Statutory Stock Option Plans.
The Company purchased an option to acquire 100% of the registered
shares of Vetrotherm AG, Netstal. The option price of $167,920 was paid in 1994
and will be applied toward the final purchase price. The actual purchase of the
registered shares and related price is contingent upon a final valuation of the
shares and receipt of certain approvals by regulatory authorities.
The Company entered into management consulting agreements with the
three principals of the Studdert Companies, Messrs. Studdert, Murdock, and
Dudley. The agreements were to be for the period from April 1, 1995 through
March 31, 1996 (unless terminated on 30 day written notice) and provided for
aggregate annual compensation of $18,000 ($6,000 each) and further provided that
Messrs. Studdert, Murdock and Dudley be granted 70,000, 52,500 and 52,500
options, respectively, to purchase Company common stock in accordance with the
Company's 1994 Non-Statutory Stock Option Plan. The agreements were terminated
in June 1995 and the Company paid $1,500 through that date to each of the
individuals resulting in consulting fee expense of $4,500 for the year ended
March 31, 1996.
- 12 -
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 10 - COMMITMENTS (Continued)
The Company entered into a financial advisory services agreement with
Sands Brothers and Company, Ltd. whereby the Company issued five year warrants,
with certain registration rights, to purchase shares of the Company's common
stock. The demand to register the warrants cannot be requested prior to November
1, 1996.
The Company entered into a financial advisory service contract with
Ladenburg, Thalmann & Co., Inc. in February 1994 which expired January 31, 1995.
The Company was required to pay $5,000 towards out-of-pocket expenses and is
required to issue warrants to purchase 400,000 shares of the Company's common
stock at $6.50 per share which expire January 31, 1999.
The Company leases various office space in the United States,
Switzerland and Germany, all on a month-to-month basis. The total charges to
operations for the year ended March 31, 1996 was $35,446.
NOTE 11 - SEGMENT INFORMATION
The following table summarizes segment information by geographic area:
[GRAPHIC OMITTED]
United
States Switzerland Germany Consolidated
------ ----------- ------- ------------
Operating Loss for the
year ended March 31,
1996 $ 961,655 $ 706,210 $128,862 $ 1,796,727
========== =========== ======== ===========
Identifiable Assets as of
March 31, 1996 $4,006,431 $10,686,524 $352,671 $15,045,626
========== =========== ======== ===========
General corporate expenses, miscellaneous income and expense have not
been allocated in arriving at operating losses.
Identifiable assets are those assets of the Company which can be
identified with the operations of each geographic area.
- 13 -
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995 AND 1994
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
MARCH 31, 1995 AND 1994
CONTENTS
Page
Independent Auditors' Report 1
Consolidated Balance Sheets 2 - 3
Consolidated Statements of Operations 4
Consolidated Statements of Stockholders' Equity
(Deficiency) 5
Consolidated Statements of Cash Flows 6 - 7
Notes to Consolidated Financial Statements 8 - 17
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Seiler Pollution Control Systems, Inc.
Dublin, Ohio
We have audited the accompanying consolidated balance sheets of
Seiler Pollution Control Systems, Inc. as of March 31, 1995 and
1994, and the related consolidated statements of operations,
stockholders' equity (deficiency) and cash flows for the years then
ended. 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. The financial statements of Seiler Pollution
Control Systems, Inc. as of March 31, 1993 were audited by other
auditors who have ceased operations and whose report dated June 29,
1993 expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the 1995 and 1994 consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of Seiler Pollution Control Systems, Inc. at
March 31, 1995 and 1994 and the results of its operations and its
cash flows for the years then ended, in conformity with generally
accepted accounting principles.
BEDERSON & COMPANY
<PAGE>
June 28, 1995, except for Notes 1 and 3
to which the date is July 8, 1996
West Orange, New Jersey
(1)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND 1994
ASSETS
1995 1994
---- ----
CURRENT ASSETS:
Cash $ 89,220 $ 40,047
Advances to supplier - related party 6,661,676 7,971,197
Prepaid expenses and sundry receivables 35,514 31,797
---------- -----------
TOTAL CURRENT ASSETS 6,786,410 8,043,041
---------- -----------
PROPERTY AND EQUIPMENT, at cost:
Office furniture and equipment 35,133 11,188
Less: Accumulated depreciation 2,590 330
---------- -----------
NET PROPERTY AND EQUIPMENT 32,543 10,858
---------- -----------
OTHER ASSETS:
Licensing agreements, acquired from
stockholder, less accumulated amortization
of $543,379 (1995) and $226,046 (1994) 4,216,621 4,533,954
Deposits 18,013 -
Start up costs - 156,023
---------- -----------
TOTAL OTHER ASSETS 4,234,634 4,689,977
---------- -----------
TOTAL ASSETS $11,053,587 $12,743,876
========== ===========
The accompanying notes are an integral part of
these financial statements.
(2)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
1995 1994
---- ----
CURRENT LIABILITIES:
Current portion of licensing agreement payable -
stockholder $ - $ 1,082,614
Loan payable - stockholder 89,085 29,085
Cash overdraft 11,271 -
Accounts payable 68,675 62,467
Payroll taxes payable 1,134 4,396
Customer deposits - 5,079,000
Accrued officers' salaries - 33,038
Accrued interest - stockholder 32,611 32,611
Accrued expenses 83,629 46,483
----------- -----------
TOTAL CURRENT LIABILITIES 286,405 6,369,694
----------- -----------
LONG-TERM DEBT:
Licensing agreement payable - stockholder,
net of current portion 1,977,249 894,635
Loan payable - officer 461,008 149,359
----------- -----------
TOTAL LONG-TERM DEBT 2,438,257 1,043,994
----------- -----------
MINORITY INTEREST 10,171 -
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value;
authorized 25,000,000 shares, issued
and outstanding 14,250,569 shares
at March 31, 1995 and 11,789,723 shares
at March 31, 1994 1,425 1,179
Additional paid-in capital 12,733,909 8,778,331
Accumulated deficit (5,552,955) (3,585,142)
Foreign currency translation adjustment 1,136,375 135,820
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 8,318,754 5,330,188
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,053,587 $12,743,876
=========== ===========
The accompanying notes are an integral part of
these financial statements.
(3)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 1995, 1994 AND 1993
1995 1994 1993
---- ---- ----
REVENUE $ - $ - $ -
----------- ---------- --------
OPERATING EXPENSES:
Officers' salaries 416,056 125,493 21,250
Salaries - other - 14,546 -
Payroll taxes 15,155 4,338 -
Directors' compensation 8,000 8,000 -
Advertising, promotional and selling 206,701 6,560 -
Consulting fees 198,770 336,229 -
Consulting fees - related parties 108,083 1,671,707 -
Employee welfare 47,648 3,629 -
Insurance 26,966 501 -
Office expenses 53,551 13,582 -
Pension plan 8,415 1,875 -
Professional fees 133,073 65,494 3,000
Professional fees - related party 215,516 114,393 6,120
Public relations 22,968 74,095 -
Rent 28,354 1,848 -
Research and development cost 50,881 30,973 -
Taxes 30,809 792 -
Telephone 5,683 946 -
Travel and entertainment 36,558 54,951 -
Depreciation 2,260 330 -
Amortization 317,333 226,046 -
Miscellaneous 46,731 25,736 -
----------- ---------- --------
TOTAL OPERATING EXPENSES 1,979,511 2,782,064 30,370
----------- ---------- --------
LOSS BEFORE OTHER INCOME (EXPENSES)
AND PROVISION FOR INCOME TAXES (1,979,511) (2,782,064) (30,370)
----------- ---------- --------
OTHER INCOME (EXPENSES):
Interest income 73 6,399 -
Interest expense - related party - (123,709) -
Foreign currency loss - (333) -
----------- ---------- --------
TOTAL OTHER INCOME (EXPENSES) 73 (117,643) -
----------- ---------- --------
LOSS BEFORE PROVISION FOR INCOME TAXES
AND MINORITY INTEREST (1,979,438) (2,899,707) (30,370)
PROVISION FOR INCOME TAXES - - -
----------- ---------- --------
LOSS BEFORE MINORITY INTEREST (1,979,438) (2,899,707) (30,370)
MINORITY INTEREST 11,625 - -
----------- ---------- --------
NET LOSS $(1,967,813) $(2,899,707) $(30,370)
=========== =========== ========
LOSS PER COMMON SHARE $ (.15) $ (.36) $ (.04)
=========== =========== ========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 13,065,659 8,098,573 770,734
========== ========== ========
The accompanying notes are an integral part of
these financial statements.
(4)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED MARCH 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Foreign
Common Stock Additional Currency
------------------ Paid-in Accumulated Translation
Shares Amount Capital Deficit Adjustment Total
------ ------ ------- ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE, APRIL 1, 1992 700,023 $ 70 $12,733,909 $ (655,065) $ - $ (261,805)
YEAR ENDED MARCH 31, 1993:
Issuance of restricted shares of common stock
for accrued officer salary, rent and officer
advances 35,000 4 220,615 - - 220,619
Issuance of restricted shares of common stock
for accrued legal fees 50,000 5 24,995 - - 25,000
Issuance of restricted shares of common stock
for officer salary 35,000 3 21,247 - - 21,250
Net loss for the year - - - (30,370) - (30,370)
---------- ------ --------- ----------- ---------- ----------
BALANCE, MARCH 31, 1993 820,023 82 660,047 (685,435) - (25,306)
YEAR ENDED MARCH 31, 1994:
Issuance of restricted shares of common stock
for officers' and directors' salaries 35,000 3 27,997 - - 28,000
Issuance of restricted shares of common stock
for legal fees 40,000 4 24,302 - - 24,306
Issuance of common stock for cash 10,169,700 1,017 6,616,058 - - 6,617,075
Issuance of common shares under stock option
plan for consulting fees 315,000 32 629,968 - - 630,000
Issuance of common stock for consulting fee 410,000 41 819,959 - - 820,000
Foreign currency translation adjustment - - - - 135,820 135,820
Net loss for the year - - - (2,899,707) - (2,899,707)
---------- ------ ----------- ----------- ---------- ----------
BALANCE, MARCH 31, 1994 11,789,723 1,179 8,778,331 (3,585,142) 135,820 5,329,925
YEAR ENDED MARCH 31, 1995:
Issuance of common shares under stock
option plan for cash 38,000 4 67,896 - - 67,900
Issuance of common stock for cash 2,422,846 242 3,887,682 - - 3,887,924
Foreign currency translation adjustment - - - - 1,000,555 1,000,555
Net loss for the year - - - (1,967,813) - (1,967,813)
---------- ------ ----------- ----------- ---------- ----------
BALANCE, MARCH 31, 1995 14,250,569 $1,425 $12,733,909 $(5,552,955) $1,136,375 $8,318,754
========== ====== =========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
(5)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1995, 1994 AND 1993
1995 1994 1993
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,967,813) $(2,899,707) $ (30,370)
Adjustments to reconcile net loss to
net cash from operating activities:
Depreciation and amortization 319,593 226,376 -
Operating expenses through issuance
of restricted common stock -
related parties - 52,306 265,669
Operating expenses through issuance
of common stock - related parties - 1,450,000 -
Foreign currency translation 1,011,016 146,568 -
Minority interest 10,171 - -
(Increase) decrease in operating
assets:
Advances to supplier - related
party 1,309,521 (7,971,197) -
Prepaid expenses and sundry
receivables (3,717) (31,797) -
Deposits (18,013) - -
Start up costs 156,023 (156,023) -
Increase (decrease) in operating
liabilities:
Cash overdraft 11,271 - -
Accounts payable 6,208 37,161 (15,880)
Payroll taxes payable (3,262) 4,396 -
Customer deposits (5,079,000) 5,079,000 -
Accrued officers' salaries (33,038) 33,038 (24,425)
Accrued interest - stockholder - 32,611 -
Accrued expenses 37,146 46,483 (194,994)
---------- --------- ---------
NET CASH USED BY OPERATING
ACTIVITIES (4,243,894) (3,950,785) -
---------- --------- ---------
CASH FLOWS USED BY INVESTING
ACTIVITIES:
Acquisition of property and
equipment (23,945) (11,188) -
---------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal payments on long-term
borrowings - stockholder - (2,782,751) -
Proceeds from issuance of common
stock 3,955,824 6,617,075 -
Proceeds from stockholder loan 60,000 45,000 -
Principal payments of stockholder
loan - (15,915) -
Proceeds from officer loan 311,649 149,359 -
Decrease in related party loans - - (1,200)
Issuance of restricted common stock
for related party loan - - 1,200
---------- --------- ---------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 4,327,473 4,012,768 -
---------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH (10,461) (10,748) -
---------- --------- ---------
NET INCREASE IN CASH 49,173 40,047 -
CASH, beginning of year 40,047 - -
---------- --------- ---------
CASH, end of year $ 89,220 $ 40,047 $ -
========== ========= =========
The accompanying notes are an integral part of
these financial statements
(6)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1995, 1994 AND 1993
(Continued)
1995 1994 1993
---- ---- ----
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest - stockholder $ - $ 91,098 $ -
========== ========== ==========
Income taxes $ - $ - $ -
========== ========== ==========
NON-CASH OPERATING ACTIVITIES:
Issuance of restricted common stock
for officers and directors salaries $ - $ 28,000 $ 216,244
Issuance of restricted common stock for
rent - -
24,425
Issuance of restricted common stock
for legal fees - stockholder - 24,306 25,000
Issuance of common stock exercised
under stock option plan for
consulting fees - 630,000 -
Issuance of common stock for consulting
fees - 820,000 -
---------- ---------- ----------
TOTAL NON-CASH OPERATING ACTIVITIES $ - $1,502,306 $ 265,669
========== ========== ==========
NON-CASH FINANCING ACTIVITIES:
Issuance of restricted common stock for
related party loan $ - $ - $ 1,200
Acquisition of licensing agreements for
long-term notes payable - stockholder - 4,760,000
---------- ---------- ----------
-
----------
TOTAL NON-CASH OPERATING ACTIVITIES $ - $4,760,000 $ 1,200
========== ========== ==========
The accompanying notes are an integral part of
these financial statements.
(7)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
The Company was incorporated under the laws of the State of
Delaware on April 11, 1983 as World Imports - USA, Inc.
The Company's initial business plans were unsuccessful, and
on July 1, 1993, it changed its name to Seiler Pollution
Control Systems, Inc. The Company presently is a toxic
waste disposal concern which acquired the rights to a
technology called High Temperature Vitrification which
treats a potentially wide variety of waste products. The
Vitrification process transforms hazardous waste into non-
toxic substances which can either be stored in a non-
hazardous waste landfill or be recycled.
Principles of Consolidation
The consolidated financial statements include Seiler
Pollution Control Systems, Inc., its wholly owned
subsidiary (incorporated in Delaware), Seiler Pollution
Control Systems International, Inc., the latter's wholly
owned subsidiary (incorporated in Switzerland), Seiler SEPC
AG, and it's majority (90%) owned subsidiary (incorporated
in Germany), Seiler Trenn-Schmeizanlagen Betriebs GmbH.
The statements reflect the financial position, results of
operations and cash flows of Seiler Pollution Control
Systems, Inc. and its wholly owned and majority owned
subsidiaries as a single entity. All significant
intercompany accounts and transactions have been eliminated
in consolidation.
Basis of Accounting
The Company maintains its records on the accrual basis of
accounting. Income is recorded when earned and expenses
are recorded when incurred.
Property and Equipment
Property and equipment are recorded at cost. Depreciation
of property and equipment is provided for over the
estimated useful lives of the respective assets.
Depreciation is recorded based on the straight-line method
over estimated useful lives of five (5) years.
Maintenance, repairs, and minor renewals are charged to
earnings when they are incurred. When assets are retired
or otherwise disposed of, the assets and related allowance
for depreciation and amortization are eliminated from
accounts and any resulting gain or loss is reflected in
income.
Licensing Agreements
Licensing agreements are stated at fair value (cost less
imputed interest) less accumulated amortization.
Amortization is computed by the straight-line method over
an estimated life of fifteen (15) years.
Research and Development
Cost associated with research, new product development, and
product cost improvements are treated as expense when
incurred. Research and development cost charged to
operations for the years ended March 31, 1995, 1994 and
1993 were $50,881, $30,973 and $-0-, respectively.
(8)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loss Per Common Share
Loss per common share is computed by dividing the net loss
for the year by the weighted average number of shares of
Common Stock outstanding during the year.
Reclassifications
Certain reclassifications have been made to prior year's
financial statements to conform to the March 31, 1995
presentation.
Expenses Related to Sales and Issuance of Securities
All costs incurred in connection with the sale of the
Company's Common Stock have been capitalized and charged to
additional paid-in capital.
Foreign Currency Translation
Assets and liabilities of subsidiaries operating in foreign
countries are translated into U.S. dollars using the
exchange rate in effect at the balance sheet date. Results
of operations are translated using the average exchange
rates prevailing throughout the year. The effects of
exchange rate fluctuations on translating foreign currency
assets and liabilities into U.S. dollars are included in
stockholders' equity, while gains and losses resulting from
foreign currency transactions are included in operations.
Restatement
The 1995 and 1994 financial statements have been restated
due to a change in the Company's policy regarding
amortization of the licensing agreements, the
reclassification of certain research and development cost
and reclassification of foreign currency losses. The
Company has decided to amortize the licensing agreements
from date of acquisition rather than from the date of its
initial sale of its first system. Certain research and
development costs were previously capitalized rather than
charged to operations. Certain foreign translation
adjustments were previously charged to operations rather
than to stockholders' equity. The effect of these changes
increased the net loss by $187,115 in 1995 and $223,876 in
1994. Loss per common share increased by $.01 for 1995 and
$.03 for 1994.
NOTE 2 - ADVANCES TO SUPPLIERS
The Company has advanced, to it's sole supplier, Seiler
Hochtemperatur-Trennanlagen AG, a related party, the sum of
$5,139,084 directly and on it's behalf, $1,522,592 to other
unrelated suppliers towards the purchase of it's initial
High Temperature Vitrification System. A principal
stockholder of Seiler Hochtemperatur-Trennanlagen AG is a
member of the Company's Board of Directors.
(9)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994 AND 1993
NOTE 3 - LICENSING AGREEMENTS
The Company entered into two separate licensing agreements
in July of 1993 with Maxon Finance and Trade Ltd., S.A., a
stockholder of the Company, and a corporation organized
under the laws of Switzerland. The agreements, as amended
in March of 1994, are for an exclusive field-of-use license
to use the proprietary information, including the patent
rights, worldwide for the High Temperature Vitrification
System. The agreements required a one time licensing fee
of $5,000,000. This fee has been discounted at 7% for
imputed interest of $240,000 resulting in a net capitalized
cost of $4,760,000. These agreements are for an indefinite
term or until all of the proprietary information becomes
public knowledge and the patent rights expire.
Amortization expense for the years ended March 31, 1995 and
1994 were $317,333 and $226,046, respectively.
NOTE 4 - TROUBLED DEBT RESTRUCTURING
Maxon Finance and Trade Ltd., SA modified it's note
agreement terms with the Company in February 1995 (see
Notes 3 and 5) by extending the payment terms to December
31, 2000. This modification reduced the effective interest
rate from 7%, per the original agreement, to 1.6%.
NOTE 5 - LICENSING AGREEMENTS PAYABLE
Licensing agreements payable, Maxon Finance and Trade Ltd.,
S.A., a Swiss Corporation, due December 31, 2000 (See Notes
3 and 4), and require payments as follows:
June 30, 1996 $ 127,721
December 31, 1996 185,159
June 30, 1997 186,645
December 31, 1997 188,142
June 30, 1998 189,652
December 31, 1998 191,174
June 30, 1999 192,708
December 31, 1999 194,254
June 30, 2000 195,813
December 31, 2000 325,981
----------
TOTAL $1,977,249
==========
Annual maturities are as follows:
Year Ended
March 31,
1996 $ -
1997 312,880
1998 374,787
1999 380,826
2000 386,962
2001 521,794
----------
TOTAL $1,977,249
==========
(10)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994 AND 1993
NOTE 7 - LOAN PAYABLE - OFFICER
Werner Heim, President and Chairman of the Board of
Directors, has advanced the Company monies which are
unsecured, non-interest bearing loans payable upon future
mutual agreement of the parties. The balances at March 31,
1995 and 1994 were $461,008 and $149,359, respectively.
NOTE 8 - INCOME TAXES
The Company adopted Statement of Financial Accounting
Standard 109 ("SFAS). SFAS 109 provides for an asset and
liability approach to accounting for income taxes that
require the recognition of deferred tax assets and
liabilities for the expected future tax consequences of
events that have been recognized in the Company's financial
statements or tax returns.
In estimating future consequences, SFAS 109 generally
considers all expected future events other than proposed
changes in the tax law or rates prior to enactment.
Deferred income taxes recorded in the balance sheets at
March 31, 1995 and 1994, after adoption of SFAS 109,
includes a deferred tax asset related to net operating loss
carryforwards of approximately $4,200,000 and $2,825,000,
respectively, which have been fully offset by a valuation
allowance. The valuation allowance has been established
equal to the full amount of the deferred tax asset, as the
Company is not assured that it is more likely than not that
these benefits will be realized.
For the years ended March 31, 1995, 1994 and 1993 there was
no provision for current and deferred federal, state or
foreign income taxes.
A reconciliation between the statutory federal income tax
rate (34%) and the effective income tax rates based on
continuing operations is as follows:
1995 1994 1993
---- ---- ----
Statutory federal income tax (benefit) $(468,684) $(960,698) $ (3,100)
Benefit not recognized on operating
loss - - 3,100
Valuation allowance 468,684 960,698 -
--------- --------- ---------
TOTAL TAX PROVISION $ - $ - $ -
========= ========= =========
The Company has unused Federal net operating loss
carryforwards at March 31, 1995 of approximately
$4,200,000, which expire through March 31, 2010, if not
fully utilized.
(11)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994 AND 1993
NOTE 9 - MINORITY INTEREST
Minority interest represents a 10% interest in Seiler
Trenn-Schmeizanlagen Betriebs GmbH, a subsidiary of Seiler
SEPC AG.
NOTE 10 - COMMON STOCK
On July 8, 1993 the Company effectuated a 1 for 100
reverse stock split to its then outstanding 84,002,000
shares of Common Stock so that immediately subsequent
thereto, the number of Company shares outstanding was
840,023 shares.
The accompanying financial statements reflect the
retroactive effect of the reverse stock split, where
applicable.
NOTE 11 - CERTIFICATE OF INCORPORATION
On October 31, 1994, the Company amended it's Certificate
of Incorporation, reducing the total number of shares of
Common Stock authorized from 250,000,000 to 25,000,000
shares.
NOTE 12 - ISSUANCE OF COMMON STOCK FOR CASH
The Company issued 2,460,846 shares of Common Stock for
$4,485,327 less commissions of $529,503 during the fiscal
year ended March 31, 1995, and 10,169,700 shares of Common
Stock for $6,842,500 less commissions of $225,425 during
the fiscal year ended March 31, 1994.
NOTE 13 - PENSION PLAN
The Company, on January 1, 1994, adopted a Simplified
Employee Pension Plan (SEP) for the benefit of its
eligible employees. The plan enables the employee to
contribute up to a maximum of 10% of their base salary
through a salary reduction and requires the Company to
make a 5% contribution. For the years ended March 31,
1995 and 1994, the Company has charged to operations
$8,415 and $1,875, respectively.
NOTE 14 - STOCK OPTIONS
In 1993 and 1994, the Board of Directors adopted Non-
Statutory Stock Option Plans and reserved 1,000,000 and
500,000 shares, respectively, for issuance to key
employees or consultants. Options are non-transferrable
and are for a term of not more than ten (10) years from
the grant date. The options are issuable in such amounts
and at such prices as determined by the Board of
Directors, except that each option price will not be less
than eighty-five (85%) percent of the fair market value of
such shares on the date the options are granted.
(12)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994 AND 1993
NOTE 14 - STOCK OPTIONS (Continued)
The following table summarizes Common Stock options
outstanding as at March 31, 1995:
Price Per Shares Shares Shares
Date Granted Share Granted Exercised Outstanding
------------ ----- ------- --------- -----------
1993 Stock Option Plan:
June 14, 1993 $ 2.00 345,000 326,000 19,000
June 30, 1993 $ 1.70 55,000 27,000 28,000
September 30, 1993 $ 3.61 600,000 - 600,000
--------- ------- -------
TOTAL OUTSTANDING 1,000,000 353,000 647,000
========= ======= =======
1994 Stock Option Plan:
March 1, 1995 $1.275 325,000 - 325,000
======= ======= =======
NOTE 15 - COMMITMENTS
The Company entered into a consulting agreement with
Rolcan Finance, Ltd. for a term of one year expiring June
20, 1994. The agreement required payment for services
rendered in the amount of 460,000 shares of the Company's
Common Stock. For the years ended March 31, 1995 and
1994, -0- and 410,000 shares, respectively, were issued
for services rendered.
The Company entered into a consulting agreement with
Berkshire International Finance, Inc. ("Berkshire) for a
term of one year, expiring June 11, 1994. The Company was
required to pay $630,000 plus $10,000 per month over the
terms of the agreement. The Company issued to Berkshire
International Finance, Inc. options to purchase 315,000
shares of the Company's Common Stock at $2.00 per share.
The option price will be applied against fees due
Berkshire upon the exercising of options. Berkshire
exercised all of its options to purchase 315,000 shares.
(See Note 14). The agreement required Berkshire to
provide certain business consulting services, maintain an
office at its facility in Jersey City, New Jersey, and
provide the necessary office services until such time as
new corporate offices are established and Berkshire's
services are concluded. The terms of this agreement were
amended effective January 1994 reducing the monthly fee
from $10,000 to $5,000 per month.
(13)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994 AND 1993
NOTE 15 - COMMITMENTS (Continued)
The Company entered into a written employment agreement
with Arthur J. Helmstetter, its Chief Executive Officer
and President, which agreement commenced December 1, 1993.
The agreement provides the Company's President with a base
annual salary of $150,000 as well as a five percent annual
cost of living increase and an annual bonus of 3% of
Company pre-tax profits and a further annual bonus of one-
fourth of one percent of Company gross revenues. The
Company's President has also been granted options to
purchase up to 200,000 shares of the Company's Common
Stock in accordance with the terms and conditions of the
Company's 1993 and 1994 Non-Statutory Stock Option Plan
(See Note 14). Mr. Helmstetter resigned his office on
February 28, 1995.
The Company entered into a written employment agreement
with Alan B. Sarko, Vice President, which agreement
commenced March 1, 1995 and expires two years thereafter.
The agreement provides for a base salary of $90,000 per
year as well as certain additional bonuses based upon the
Company reaching certain levels which have not yet been
attained. The Company's Vice-President has also been
granted options to purchase up to 100,000 shares of the
Company's Common Stock in accordance with the terms and
conditions of the Company's 1994 Non-Statutory Stock
Option Plan (See Note 14).
Seiler SEPC AG, the Company's wholly owned Swiss
subsidiary, entered into a written agreement with its
President, Paul Schmidhauser, pursuant to which Mr.
Schmidhauser is to receive Sfr. 15,000 per month (each
Sfr. currently being equivalent to approximately $1.13
U.S. dollars) as well as certain bonus provisions. Mr.
Schmidhauser has also been granted options to purchase up
to 150,000 shares of the Company's Common Stock at $3.6125
per share in accordance with the terms and conditions of
the Company's Non-Statutory Stock Option Plan (See Note
14). Mr. Schmidhauser resigned his office on January 1,
1995.
On October 6, 1993 the Company entered into a consulting
agreement with Sands Brothers & Co., Ltd., a member of the
New York Stock Exchange ("Sands Brothers") which agreement
provided for the engagement of Sands Brothers as the
Company's financial advisor and consultant with respect to
corporate finance, mergers and acquisitions and financial
service matters for a period of three (3) years. In
addition to providing for certain monetary compensation,
Sands Brothers was to receive (A) transaction fees and an
equity participation in the surviving entity of any
acquisition transaction, and (B) certain financial fees in
the event of the consummation of defined financing
transactions through any third party financing source
introduced by Sands Brothers. The agreement further
provides Sands Brothers with certain rights of first
refusal with respect to the underwriting or placement of
the Company's future public or private financing of debt
or equity securities and gives Sands Brothers the right to
designate a member to the Company's Board of Directors.
Further, the
(14)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994 AND 1993
NOTE 15 - COMMITMENTS (Continued)
agreement provided Sands Brothers with the potential for
an equity participation in the Company through the
proposed issuance to Sands Brothers of five (5) year
Warrants (with certain registration rights) to purchase
restricted shares of the Company's Common Stock. As a
result of certain disputes and differences that have
arisen between the Company and Sands Brothers, the
original agreement has been amended as of December 3,
1994, as follows:
a. The financial advisory and consulting
agreements were cancelled in exchange for a
$25,000 payment to Sands Brothers for full and
complete settlement thereof and,
b. The warrant agreements were modified and
amended so that demand rights to register
shares of the Company's Common Stock, which
underlie the Warrants, cannot be demanded prior
to November 1, 1996 nor may the Warrants be
exercised prior to November 1, 1995.
The Company entered into a financial advisory service
contract with Ladenburg, Thalmann & Co., Inc. in February
1994. The effective date of this contract was February 1,
1994 and expired January 31, 1995. The Company was
required to pay $5,000 towards out-of-pocket expenses and
is required to issue Warrants to purchase 400,000 shares
of the Company's Common Stock at $6.50 per share. These
Warrants will expire January 31, 1999.
The Company leases various office space in the United
States, Switzerland and Germany, all on a month-to-month
basis. The total charges to operations for the years
ended March 31, 1995 and 1994 were $28,354 and $1,848,
respectively.
NOTE 16 - RELATED PARTY TRANSACTIONS
The Company's past President converted accrued rent,
salaries, and cash advances due him for 70,000 shares of
the Company's restricted common stock during the fiscal
year ended March 31, 1993.
Dates
May 6, 1992 December 17, 1992 Total
----------- ----------------- -----
Accrued rent $ 24,425 $ - $ 24,425
Accrued salary 194,994 21,250 216,244
Advances 1,200 - 1,200
-------- -------- --------
$220,619 $ 21,250 $241,869
======== ======== ========
The Company acquired two licensing agreements for
$5,000,000 including imputed interest (see Note 4) from
Maxon Finance and Trade Ltd., S.A. who owns 2,000,000
shares of the Company's outstanding shares of Common
Stock, representing an approximate 17% ownership interest.
The Company has paid $2,871,405 of which $121,255 has been
charged to operations, and $2,128,595 remains outstanding
at March 31, 1995 including imputed interest.
(15)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994 AND 1993
NOTE 16 - RELATED PARTY TRANSACTIONS (Continued)
Certain former officers of the Company received
restricted Common Stock in July 1993 for services rendered
as follows:
Shares Amount
------ ------
Michael Castoro 15,000 $ 12,000
John Posteraro 10,000 8,000
Kathleen Histon 10,000 8,000
------ --------
TOTAL 35,000 $ 28,000
====== ========
The former officers indicated above are/or were employees
of Berkshire International Finance, Inc. (See Note 15).
The Company has charged to operations, for the years ended
March 31, 1995 and 1994, $20,000 and $720,000,
respectively, for consulting services.
In October 1993 the Company entered into a written
management consulting agreement with the Studdert
Companies ("SC"), whose President, Stephen M. Studdert,
formerly served on the Company's Board of Directors as
Vice Chairman (resigned March 17, 1995). In accordance
with the terms of the agreement SC is required to provide
and has been providing consulting services to the Company
in the areas of marketing strategies, governmental affairs
and regulation and general corporate matters. The Company
paid SC a retainer fee upon execution of the agreement and
is obligated to pay a monthly retainer fee of $10,000. The
Company has charged to operations for the years ended
March 31, 1995 and 1994 $88,083 and $75,000, respectively,
for consulting services. The management consulting
agreement was terminated and replaced with three (3)
separate consulting agreements, each dated March 1, 1995,
with the three (3) principal's of the Studdert Companies,
Messrs. Studdert, Murdock and Dudley. Such new agreements
which were to be for the period April 1, 1995 through
March 31, 1996 (unless terminated on 30 day written
notice) provided for aggregate annual compensation of
$18,000 ($6,000 each) and further provided that Messrs.
Studdert, Murdock and Dudley be granted 70,000, 52,500 and
52,500 options, respectively, to purchase Company Common
Stock in accordance with the Company's 1994 Non-Statutory
Stock Option Plan.
The Company charged to operations $215,516, $114,393 and
$6,120 in legal fees in 1995, 1994 and 1993, respectively,
for services rendered by a stockholder.
The Company charged to operations in 1994 $123,709,
representing interest in connection with the licensing
agreement with Maxon Finance and Trade Ltd., S.A. (See
Note 3).
(16)
<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995, 1994 AND 1993
NOTE 17 - SUBSEQUENT EVENTS
On April 6, 1995, the Company sold 800,000 shares of its
Common Stock for $880,000.
On May 15, 1995, the Company sold 1,200,000 shares of its
Common Stock for $1,320,000.
In June 1995, 175,000 options were exercised under the
1994 Non-Statutory Stock Option Plan with the Company
receiving an aggregate of $230,000.
On May 11, 1995, Paul Schmidhauser (former President of
the Company's wholly-owned Swiss subsidiary, Seiler SEPC
AG) waived all rights granted to him with respect to the
Company's 1993 Non-Statutory Stock Option Plan and the
150,000 options previously granted to him, thereunder.
(17)
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Bederson & Company LLP, the Company's independent auditors for the
Company's fiscal years ended March 31, 1995 and 1994, resigned as the Company's
auditors on May 10, 1996. The report of Bederson & Company LLP on the Company's
financial statements for the fiscal years ended March 31, 1995 and 1994 did not
contain an adverse opinion or a disclaimer of opinion nor were the opinions
qualified or modified as to uncertainty, audit scope, or accounting principles.
During the Company's fiscal years ended March 31, 1996 and 1995 and the interim
period preceding the resignation of Bederson & Company LLP, there were no
disagreements between the Company and Bederson & Company LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope procedure.
The Company on May 10, 1996 retained Schneider Downs & Co., Inc. as the
Company's independent auditors for the fiscal year ended March 31, 1996.
Part III
Item 10. Directors and Executive Officers of the Company
The Directors and Executive Officers of the Company, as of March 31, 1996,
were as follows:
Name and Address Position(s) Held Age
- --------------------------------------------------------------------------------
Werner Heim Chairman of the Board, 63
Witikoenstrasse 311B President, and Secretary
CH-8053
Zurich, Switzerland
- 13 -
<PAGE>
Alan B. Sarko Vice President - North 48
Seiler Pollution Control American Operations,
Systems, Inc. Chief Accounting
555 Metro Place North Officer, Director
Dublin, Ohio 43017
Ulrich Ernst Treasurer, Chief 49
P. O. Box 13 Financial Officer
CH 8954 Geroldswil and Director
Switzerland
Niklaus Seiler Director 58
c/o Seiler Patent AG
Steiacher
CH-5316
Leuggern, Switzerland
Dr. Gerold Weser Vice President - European 50
c/o Seiler TSB GmbH Operations, President -
Dorfstrasse 12 STSB
Jersbek, Germany D-22941
Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have qualified.
Officers are appointed to serve until the meeting of the Board of Directors
following the next annual meeting of stockholders and until their successors
have been elected and have qualified.
Werner Heim has been Chairman of the Board of the Company since June 1993 and
President since March 1995. Mr. Heim currently serves as President of SEPC AG, a
position he has held since its inception in November 1993. Mr. Heim was also
Secretary of the Company from August 1994 until May 1996. Mr. Heim's experience
in international business development covers some 30 years working with high
technology industries such as computer systems, biotechnology, microfiltration
and environmental waste processing. From 1963 to 1971 Mr. Heim was Branch
Manager before becoming Vice President of Friden Computer which merged into
Singer Corporation. In 1971 Mr. Heim founded Swimex, a Swiss company engaged in
supplying building materials and consulting services. Swimex was sold to
management in 1978. That same year, Mr. Heim founded Petrotech Holding AG, a
holding company for firms engaged in enhancement of oil recovery and microbial
waste processing. During the same time period, Mr. Heim was also a principal in
MBR Bioreactor. He continued with both companies until 1988. From 1988 until
1991, Mr. Heim served as Chairman of Biopore, a United States based company
engaged in a joint venture with the French government and others involved in
- 14 -
<PAGE>
microfiltration research and development. Mr. Heim served as an Industrial
Consultant/Business Development from 1991 to 1993 for the following companies:
(1) Clearwater Ltd., a firm engaged in biological clean-up of oil spills; (2)
Seiler SHT, a firm engaged in high temperature waste vitrification; (3) Set AG,
a firm specializing in insulating, security and high temperature (bullet proof)
glass production; and (4) ASI Artificial Sensing Instruments, a firm engaged in
bioprocess control and related activities.
In May 1995, Mr. Heim became director of Swissray International, Inc., a
public company trading under the symbol SRMI and engaged (through its wholly
owned subsidiary SR-Medical, AG) in the diagnostic x-ray medical equipment
market. Mr. Heim is a Swiss national. He received a Diploma from Economic
Studies in 1956 from School of Economics, St. Gallen and engaged in
post-graduate studies in 1957 at HEC, Paris. Subsequently, Mr. Heim served as
Assistant at Institute of Economics in Switzerland, then was appointed a full
time member of the Planning Board of the University of Zurich. Mr. Heim
currently devotes a substantial portion of his business time to the ongoing
business affairs of Seiler and intends to continue active involvement on a daily
basis for the foreseeable future.
Alan B. Sarko has been Vice President of the Company in charge of North American
operations since March 1995. He also became a Director the same year. In May
1996, Mr. Sarko was named Secretary, Treasurer, and Chief Financial Officer of
Seiler. Mr. Sarko joined the Company in February 1994 in the position of
Director of Marketing. From June 1984 until he joined Seiler Mr. Sarko served as
Director of Marketing and Environmental Compliance for Inorganic Recycling
Corporation and its subsidiaries. From January 1973 until June 1984, Mr. Sarko
was Chief Executive Officer and Administrator of Sarko Equipment, Inc., a
Midwestern industrial demolition contractor. Utilizing his 20 years of
experience with hazardous waste management and recycling, Mr. Sarko directs,
manages and coordinates various environmental recycling projects for Seiler with
oversight responsibility for the Company's laboratory and pilot scale
treatability studies and analyses. Based on Mr. Sarko's vast knowledge of
environmental statutory requirements (federal, state and local) regarding
handling, managing, disposing and recycling of hazardous wastes, he is primarily
responsible for corporate regulatory oversight. Because of Mr. Sarko's expertise
in waste recycling with particular emphasis on vitrification technology, he has
been a guest lecturer at numerous symposiums and published several articles
related to hazardous waste vitrification. Mr. Sarko received his Bachelor of
Arts degree from Michigan State University in 1969 and his Juris Doctorate from
Detroit College of Law in 1972. He also obtained various Certificates of
Completion in post graduate courses related to hazardous waste management. Mr.
Sarko devotes his full time and best efforts to the Company's business
activities.
Ulrich Ernst was Treasurer and Chief Financial Officer for the fiscal year ended
March 31, 1996 and until May 1996, and is currently a director. Mr. Ernst has
had approximately 21 years of experience in international business development
in different industries with a background primarily in management consulting,
financial advisory services and rendering advice to new growth business
ventures. Mr. Ernst was a founder of the following firms in the years indicated,
each of which firms continue to occupy a portion of his business time and
efforts:
- 15 -
<PAGE>
(a) Ernst Treuhand and Unternehmensberatung (1973) engaged in financial and
management consulting services, (b) Steinhalden AG (1965) engaged as an
international property holding company, and (c) B&T Beteiligungs and
Immobilienanlagen AG (1992) a holding company. Mr. Ernst received his Diploma in
Economic Studies in 1968 from the School of Economics and received the MBA
Master degree of Business Administration in 1973 from the University of Zurich.
Mr. Ernst is fluent in four languages and is the author of Geldanlage and Europe
(Investment in Europe) published in 1993 in Germany. Since May 1995 Mr. Ernst
has served as Chairman of the Board of Directors of SWISSRAY International, Inc.
(see also biographical material as same relates to Werner Heim regarding further
summary information with respect to SWISSRAY International, Inc.). Mr. Ernst
devotes such time as he deems necessary to the Company in his capacity as its
chief financial officer and director.
Niklaus Seiler has been a Director of the Company since 1984. With over 30 years
of technical experience with mechanical and thermochemical systems, Mr. Seiler
has personally developed sludge pumping systems, contact dryers and incineration
equipment. Mr. Seiler has been associated with and served in various leadership
capacities for the following companies: (1) Seiler HT AG, founder (1993) and
Director; (2) N & H Seiler Pumpenbau, (1974-1993) founder; and (3) Seiler
Montageunternehmon (1969-1974), founder. Mr. Seiler currently serves as
president and chief executive officer of Seiler Patent AG which is actively
engaged in vitrification systems development and operations for waste
processing. As the founder of companies involved in the development and
construction of waste management processing systems to treat organic and
inorganic materials, Mr. Seiler's range of technical expertise includes (a)
production and maintenance of chemical production lines for glycerin, explosive
goods and other chemical products; (b) development of a dual piston pump for
handling hydrocarbon sludges and cement; and (c) systems development of waste
melting equipment to recycle lead from car batteries, aluminum from Bottle caps
and produce glass products from industrial wastes. Mr. Seiler holds Swiss Patent
#680656, October 15, 1992, High Temperature Vitrification System, which is the
basis for the proprietary Seiler System. Mr. Seiler currently devotes such time
as he deems reasonable and necessary to the Company's business affairs,
primarily in his capacity as a Director.
Dr. Gerold Weser has been Vice President of the Company in charge of European
Operations since January 1996. Dr. Weser's employment with Seiler began in
January 1995. From 1993 until he joined the Company, Dr. Weser served as chief
executive officer and administrator of Dr. Weser & Partner. From August 1990
until July 1993, Dr. Weser was managing director of Centralsug,
Hamburg/Stockholm, Sweden. Dr. Weser received Vordiploma (B.A.) in Chemistry and
Physics from Technical University of Karlsruhe in 1969. Subsequently, he
attended the University of Oxford, England, and the University of Marburg,
Germany, where he received Diplomas in Chemistry and Physics, respectively. In
1978, he received his Dr. Rer. natl. (Ph.D.) from the Institute for Physical
Chemistry, University of Marburg. Since then, Dr. Weser has worked for companies
in the field of environmental processing and handling and has planned,
coordinated and implemented many recycling projects, such as recycling of
refrigerators (FHC) and electronic waste. Dr. Weser has vast experience in waste
water treatment and air pollution control systems, as well. He has built a
full-scale automatic waste
- 16 -
<PAGE>
collection, transport and sorting plant and developed integrated compost plants
(aerobic and anaerobic) to recycle paper, metals and similar materials out of
household waste. Dr. Weser was involved in developing a complete waste
management program for the new Munich Airport. Additionally, Dr. Weser has
amassed expertise with major analytical laboratory equipment. Specifically, in
his scientific work, he has used Elemental Analyzers, AAS, ICP, Thermal
Analyzers, MS/GC, Infrared and UV Spectrometers, Atomic Analyzers, Absorption
Spectrophotometers. Dr. Weser is accustomed to European, German, federal and
local permitting procedures (BlmSchG, TVA, etc.). He is also familiar with the
logistics and handling of hazardous waste recycling including radioactive waste.
When Dr. Weser began working on a scientific project "The Lifetime of Packing
Materials for Radioactive Waste," he had his initial contact with vitrification
and high temperature techniques.
Item 11. Executive Compensation
Board of Directors Fees
Except as stated below, for the fiscal year ended March 31, 1996, members
of the Board of Directors did not receive any fees for attending meetings of the
Board of Directors. The Company's policy is to reimburse Board members for their
expenses incurred to attend Board meetings. Officers of the Company, who are
also Directors, do not receive any fees.
Executive Compensation
The following table sets forth information concerning the chief executive
officer of the Company and the Company's executive officers whose total annual
salary and bonus exceeded $100,000 for the fiscal year ended March 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
------------------------- ---------------------------
Securities
Name and Other Annual Underlying All Other
Principal Position Year(1) Salary Compensation(4) Options(#) Compensation(5)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Werner Heim, Chairman, CEO, 1996 $150,000 300,000 $
President(2) 1995 121,002 --
1994 23,747 315,000
Alan B. Sarko, Vice 1996 105,000 200,000 $5,250
President, Secretary(3)
</TABLE>
- ------------------
(1) For the fiscal year ended March 31 of the year listed below.
- 17 -
<PAGE>
(2) Became an executive officer in August, 1994.
(3) Joined the Company in February 1994. Became an executive officer in March
1995.
(4) Individual amounts are not material.
(5) Pension benefits.
Option Grants Information
The following table presents information concerning grants of stock
options made during the fiscal year ended March 31, 1996 to each executive
officer named in the Summary Compensation Table above.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value At Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term (2)
- --------------------------------------------------------------------------------
# of
Securities % of Total
Underlying Options Granted Exercise
Options to Employees Price Expiration
Name Granted(1) in Fiscal Year ($/Sh) Date 5% 10%
- ---- ---------- --------------- -------- ---------- -------- --------
Werner Heim 300,000 21.4% $2.10 12/31/2002 $256,473 $597,692
Alan B. Sarko 200,000 14.3% $2.10 12/31/2002 $170,982 $389,461
- ------------------
(1) Non-qualified options were granted at 85% of fair market value on the
date of grant.
(2) The potential realizable value of each grant of options, assuming that the
market price of the underlying security appreciates in value from the date
of grant to the end of the option term, is presented at the indicated
annualized rates. The assumed growth rates in price in the Company's stock
are not necessarily indicative of actual performance that may be expected.
The amounts are net of the cost by the executive to exercise such options.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table presents information concerning the exercise of stock
options during the fiscal year ended March 31, 1996 by each executive officer
named in the Summary Compensation Table above, and the value at March 31, 1996,
of unexercised options.
- 18 -
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End at FY-End(2)
---------------------- --------------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized(1) Unexercisable Unexercisable
- ---- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Werner Heim - - 615,000/-0- $1,460,672/-0-
Alan B. Sarko - - 300,000/-0- 1,013,438/-0-
</TABLE>
- ------------------
(1) Represents the difference between the fair market value of the securities
underlying the options and the exercise price of the options on the date
of exercise.
(2) Represents the difference between the fair market value of the securities
underlying the options and the exercise price of the options at March 31,
1996. The average of the high and low trading price on March 29, 1996 was
$5.203125.
Retirement Plan
On January 1, 1994 the Company adopted a Simplified Employee Pension Plan
("SEP") for the benefit of eligible employees. The SEP enables the employee to
contribute up to a maximum of 10% of base salary through a salary reduction and
requires the Company to make a contribution equal to 5% of the employee's base
salary. See the Summary Compensation Table above for amounts contributed by the
Company to officers of the Company under the SEP.
Employment Contracts, Termination of Employment, and Change in Control
Agreements
The only employment contract between the Company and any person named in
the Summary Compensation Table above is as follows. Pursuant to a two-year
employment agreement commencing March 1, 1995, Alan B. Sarko serves as vice
president with a base annual salary of $90,000 plus bonuses based upon the
Company's reaching certain performance levels. Effective January 1, 1996,
Mr. Sarko's base salary was increased to $150,000. Earned bonuses will range
from 5% to 10% of Mr. Sarko's salary with respect to each item of specified
performance criteria, including the profitability of the Company, expanding
sales of Company products to the U.S. market, and obtaining an exemption from
the U.S. Environmental Protection Agency.
Compensation Committee Interlocks and Insider Participation
The Company has no compensation committee; rather the Company's Board of
Directors performs the functions that would otherwise be performed by a
compensation committee. Mr. Heim, chairman of the board and president of the
Company, Mr. Ernst, treasurer and chief
- 19 -
<PAGE>
financial officer of the Company, Mr. Sarko, vice president and secretary of the
Company, and Mr. Seiler serve on the Company's Board of Directors. As members of
the Company's Board of Directors and in view of the fact that the Company does
not have a compensation committee, Messrs. Heim, Ernst, Sarko and Seiler
participate in deliberations concerning executive officer compensation. Mr. Heim
has loaned the Company, as of March 31, 1996, the sum of $1,149,049 on an
interest-free basis with the understanding that such amounts are to be repaid on
a mutually agreeable future date.
Stock Option Plans
The Board of Directors has adopted non-statutory stock option plans (the
1993 Non-Statutory Stock Option Plan, the 1994 Non-Statutory Stock Option Plan,
the 1995 Non-Statutory Stock Option Plan, and the 1996 Non-Statutory Stock
Option Plan) and has reserved 1,000,000, 500,000, 1,000,000, and 2,000,000
shares under the plans, respectively, for issuance to key employees, directors,
and consultants. Options are nontransferable and are exercisable during a term
of not more than ten years from the date of grant. The options are issuable in
such amounts and at such prices as determined by the Board of Directors, except
that the option price of each grant will not be less than 85% percent of the
fair market value of such shares on the date the options are granted. As of the
record date, all options under the 1993 Plan have been granted, including a
total of 315,000 options to Mr. Heim. A total of 425,000 options has been
granted pursuant to the 1994 Plan, including 100,000 to Mr. Sarko. All of the
options have been granted under the 1995 Plan, including 100,000 options to Mr.
Ernst, 300,000 to Mr. Seiler, and 200,000 options to each of Messrs. Heim,
Sarko, and Weser. A total of 650,000 options have been granted pursuant to the
1996 Plan, none to affiliates of the Company. See the Summary Compensation Table
and the accompanying stock option tables presented above.
Related Party Transactions
See Item 13 below.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners. The following persons
are known to the Company to be the beneficial owners of more than 5% of the
18,805,569 shares of the Company's outstanding $.0001 par value Common Stock as
of June 1, 1996. Each person has beneficial ownership of the shares and has sole
voting power and sole investment power with respect to the number of shares
beneficially owned.
- 20 -
<PAGE>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- --------------------------------------------------------------------
PTI Management AG (1) 3,270,000 17.39%
Witikoenstrasse 311B
CH-8053
Zurich, Switzerland
Cede & Co. (2) 14,493,336 77.07%
P.O. Box 20
Bowling Green Station
New York, New York 10004
- ------------------
(1) PTI Management AG is a Swiss corporation whose shares are issued solely in
bearer name. Mr. Heim is a control person of PTI management AG, but he
disclaims beneficial ownership of any such shares.
(2) A nominee of the Depository Trust Company, which held such shares of
record on behalf of various of its customers. The names of the beneficial
owners of the shares held by those stockholders are unknown to management.
(b) Security Ownership of Management. The number and percentage of shares
of Common Stock owned of record and beneficially by each current officer and
director of the Company and by all current officers and directors of the Company
as a group, are as follows as of June 30, 1996. Each individual has beneficial
ownership of the shares and sole voting power and sole investment power with
respect to the number of shares beneficially owned.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership(1) of Class (2)
- ------------------------------------------------------------------------
Werner Heim (3) 615,500 3.17%
Witikoenstrasse 311B
CH-8053
Zurich, Switzerland
Alan B. Sarko (2) 300,000 1.57%
Seiler Pollution Control
Systems, Inc.
555 Metro Place North
Dublin, Ohio 43017
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<PAGE>
Ulrich Ernst 100,000 0.53%
P.O. Box 13
CH-8954
Geroldswil, Switzerland
Niklaus Seiler 300,000 1.57%
c/o Seiler Patent AG
Steiacher
CH-5316
Leuggern, Switzerland
Dr. Gerold Weser 200,000 1.05%
c/o Seiler TSB GmbH
Dorfstrasse 12
D-22941
Jersbek, Germany
All Officers and Directors 1,515,500 7.46%
as a Group (4 persons)
- ------------------
(1) Except for 500 shares owned by Mr. Heim, the shares represented below are
in the form of options to purchase shares of Seiler Common Stock. The
options are presently exercisable but are not transferable. The options
were granted pursuant to the Company's 1993 Non-Statutory Stock Option
Plan, 1994 Non-Statutory Stock Option Plan, or 1995 Non-Statutory Stock
Option Plan.
(2) The percentage shown has been determined by dividing the number of option
shares held by the named person divided by the sum of the 18,805,569
outstanding shares and the option shares held by the above referenced
persons.
(3) Mr. Heim is a control person of PTI Management AG, but he disclaims
beneficial ownership of any such shares.
The Company does not know of any arrangement or pledge of its securities
by persons now considered in control of the Company that might result in a
change of control.
Item 13. Certain Relationships and Related Transactions
PTI Management AG, a principal stockholder of the Company and a firm in
which Mr. Heim, the Company's Chairman of the Board of Directors and President,
is a control person
- 22 -
<PAGE>
has, from time to time, loaned the Company sums of money on an interest-free
basis. The principal sum due and outstanding, as of March 31, 1996 was $89,085.
These monies are due and payable December 31, 1997.
Additionally, Mr. Heim has individually loaned funds to the Company; as of
March 31, 1996 the sum of $1,149,049 was outstanding on an interest-free basis
with the understanding that the loan is to be repaid to Mr. Heim on a future
mutually agreeable date.
The Company has paid during the year ended March 31, 1996, to its sole
supplier, Seiler HT AG, a total of $9,720,132 towards the purchase of its
initial High Temperature Vitrification System. Seiler HT on behalf of the
Company constructs System plants, tests the System, and performs research and
development services on an ongoing basis. Mr. Niklaus Seiler, a director of the
Company, is the founder and a director of Seiler HT AG.
Part IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on 8-K
(a) Reference is herewith made to the reports on audits of consolidated
financial statements.
(b) During the last quarter of the Company's fiscal year ended March 31, 1996,
the Company did not file any reports on Form 8-K.
(c) Exhibits.
No. Description
- --- -----------
3.1 Certificate of Incorporation of World Imports - U.S.A., Inc.
(Predecessor to Seiler), dated April 5, 1983.
3.2 Certificate for Renewal and Revival of Certificate of
Incorporation of World Imports - U.S.A., Inc., dated June 29,
1993.
3.3 Certificate of Amendment of Certificate of Incorporation of World
Imports - U.S.A., Inc., dated June 29, 1993.
3.4 Certificate of Amendment of Certificate of Incorporation of Seiler
Pollution Control Systems, Inc., dated October 13, 1994.
3.5 By-laws of World Imports - U.S.A. Inc.
- 23 -
<PAGE>
10.1 License Agreement dated July 15, 1993, between Maxon Finance
& Trade Ltd. SA and Seiler Pollution Control Systems, Inc.
10.2 License Agreement dated July 15, 1993, between Maxon Finance
& Trade Ltd. SA and Seiler Pollution Control Systems
International, Inc.
10.3 Delivery Contract dated July 16, 1993, between Seiler Pollution
Control AG ("SEPC") and Seiler H-T AG.
10.4 Delivery Contract dated July 16, 1993 between SEPC and Seiler
H-T.
10.5 Delivery Contract dated July 16, 1993 between SEPC and Seiler
H-T.
10.6 1993 Non-Statutory Stock Option Plan of World Imports - U.S.A.
10.7 1994 Non-Statutory Stock Option Plan of Seiler.
10.8 1995 Non-Statutory Stock Option Plan of Seiler.
10.9 1996 Non-Statutory Stock Option Plan of Seiler.
- 24 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SEILER POLLUTION CONTROL SYSTEMS, INC.
Dated: June 29, 1996 By /s/ Alan B. Sarko
______________________________
Alan B. Sarko, Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Werner Heim Chairman of the Dated: June 29, 1996
___________________________ Board of Directors
Werner Heim and President
/s/ Alan B. Sarko Vice President, Dated: June 29, 1996
___________________________ Treasurer, Secretary,
Alan B. Sarko Chief Financial
Officer, Director
Director
___________________________ Dated: _______, 1996
Ulrich Ernst
/s/ Niklaus Seiler Director Dated: June 29, 1996
___________________________
Niklaus Seiler
- 25 -
<PAGE>
Supplemental Information
Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act.
Not Applicable.
- 26 -
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
WORLD IMPORTS - U. S. A., INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisi 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 World Imports - U. S. A., Inc.
SECOND: The address, including street, number, city and county, of the
registered office of the Corporation in the State of Delaware is 100 West Tenth
Street, City of Wilmington, County of New Castle, and the name of the registered
agent of the Corporation in the State of Delaware at such address is The
Corporation Trust Company.
THIRD: The nature of the business and the purposes to be conducted and
promoted by the Corporation, which shall be in addition to the authority of the
Corporation to conduct any lawful business, to promote any lawful purpose, and
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware, is as follows:
(a) To carry on business in the various states, territories,
districts and insular possessions of the United States and in foreign countries
as factors, agent and commission merchants; to solicit, receive, pack, create,
ship, bill and collect for all articles of merchandise offered by domestic
manufacturers for sale and disposal in foreign markets, and to investigate, buy,
secure, pack, crate, ship, bill and collect for all machinery, goods, wares,
merchandise, and commodities of domestic manufacture desired by corporations,
associations, individuals or firms located in foreign countries, and
(b) to export from, and import into the United States of American
and its territories and possessions, and any and all foreign countries, as
principal or agent, merchandise of every kind and nature, and to purchase, sell
and deal in and with merchandise of every kind and nature for exportation from,
and importation into, the United States, to and from all countries foreign
thereto, and for exportation from, and importation into, any foreign country, to
and from any other country foreign thereto, and to purchase and sell domestic
merchandise in domestic markets and foreign merchandise in foreign markets, and
to do a general foreign and domestic exporting and importing business.
<PAGE>
To acquire by purchase, lease or otherwise, improve and develop
real property. To erect dwellings, apartment houses and other buildings,
private or public, of all kinds, and to sell or rent the same. To lay
out, grade, pave and dedicate roads, streets, avenues, highways, alleys,
courts, paths, walks, parks and playgrounds. To buy, sell, mortgage,
exchange, lease, let, hold for investment or otherwise, use and operate,
real estate of all kinds, improve or unimproved, and any right or
interest therein; and
to apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate, develop,
enjoy, turn to account, grant licenses and immunities in respect of,
manufacture under and introduce, sell assign, mortgage, pledge or
otherwise dispose of, and, in any manner deal with and contract with
reference to:
(i) inventions, devices, formula, processes or any improvements,
and modifications thereof;
(ii) letters patent, patent rights, patented processes, copyrights,
designs, and similar rights, trademarks, trade symbols and other
indications of origin and ownership granted by or recognized under the
laws of the United States of American or of any state or subdivision
thereof, or of any foreign country or subdivision thereof, and all rights
connected therewith or appertaining thereunto.
(iii) franchises, licenses, grants and concessions.
(b) To purchase, own, and hold the stock of other corporations, and to do
every act and thing covered generally by the denomination "holding
corporation", and especially to direct the operations of other
corporations through the ownership of stock therein; to purchase,
subscribe for, acquire, own, hold, sell, exchange, assign, transfer,
create security interest in, pledge, or otherwise dispose of shares or
voting trust certificates for shares of the capital stock, or any bonds,
notes, debentures, mortgages, securities or evidences of indebtedness
created by any other corporation or corporations organized under the laws
of this state or any other state or district or country, nation, or
government and also bonds or evidences of indebtedness of the United
States or of any state, district, territory, dependency or country or
subdivision or municipality thereof; to issue in exchange therefor shares
of the capital stock, bonds, notes, debentures, mortgages, or other
obligations of the Corporation and while the owner thereof to exercise
all the rights, powers and privileges of ownership including the right to
vote on any shares of stock or voting trust certificates so owned; to
promote, lend money to, and guarantee the dividends, stocks, bonds,
notes, debentures, mortgages, evidences of indebtedness, contracts, or
other obligations of, and otherwise aid in any manner which shall be
lawful, any corporation or association of which any bonds, stocks, voting
trust certificates, or other securities or evidences of indebtedness
shall be held by or for this Corporation, or in which, or in the welfare
of which, this Corporation shall have any interest, and to do any acts
and things permitted by law and designed to protect,
- 2 -
<PAGE>
preserve, improve, or enhance the value of any such bonds, stocks, or
other securities or evidences of indebtedness or the property of this
Corporation.
(c) To purchase, receive, take by grant, gift, devise, bequest or
otherwise, lease, or otherwise acquire, own, hold, improve, employ, use
and otherwise deal in and with real or personal property, or any interest
therein, wherever situated, and to sell, convey, lease, exchange transfer
or otherwise dispose of, or mortgage or pledge, all or any of its
property and assets, or any interest therein, wherever situated.
(d) To borrow money without limit as to amount and at such rates of
interest as it may determine; from time to time to issue and sell its own
securities, including its shares of stock, notes, bonds, debentures, and
other obligations, in such amounts, on such terms and conditions, for
such purposes and for such prices, now or hereafter permitted by the laws
of the State of Delaware and by this Certificate of Incorporation, as the
Board of Directors of the Corporation may determine; and to secure any of
its obligations by mortgage, pledge, or other encumbrance of all or any
of its property, franchises and income.
(e) To conduct its business, promote its purposes, carry on its
operations and exercise all or any part of the foregoing purposes and
powers in any and all parts of the world, and to conduct its business in
all or any of its branches as principal, agent, broker, factor,
contractor, and in any other lawful capacity, either alone or through or
in conjunction with any corporations, associations, partnerships, firms,
trustees, syndicates, individuals, organizations, and other entities in
any part of the world, and in conducting its business and promoting any
of its purposes, to maintain offices, branches and agencies in any part
of the world, to make and perform any contracts and to do any acts and
things, and to carry on any business, and to exercise any powers and
privileges suitable, convenient, or proper for the conduct, promotion,
and attainment of any of the business and purposes herein specified or
which at any time may be incidental thereto or may appear conducive to or
expedient for the accomplishment of any of such business and purposes and
which might be engaged in or carried on by a corporation incorporated or
organized under the General Corporation Law of the State of Delaware, and
to have and exercise all of the powers conferred by the Laws of the State
of Delaware upon corporations incorporated or organized under the General
Corporation Law of the State of Delaware.
The foregoing provisions of this Article THIRD shall be construed
both as purposes and powers and each as an independent purpose and power. The
foregoing enumeration of specific purposes and powers shall not be held to limit
or restrict in any manner the purposes and powers of the Corporation, and the
purposes and powers herein specified shall, except when otherwise provided in
this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of this
Certificate of Incorporation; provided, that the Corporation shall not conduct
any business,
- 3 -
<PAGE>
promote any purpose, or exercise any power or privilege within or without the
State of Delaware which, under the laws thereof, the Corporation may not
lawfully conduct, promote, or exercise.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is Two Hundred Fifty Million (250,000,000). The par
value of each of said shares is $.0001. All such shares are of one class and are
shares of common stock.
FIFTH: The name and mailing address of the incorporator is as follows:
Name Mailing Address
---- ---------------
Gustave T. Dotoli 245 Rutgers Place
Nutley, NJ 07110
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 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 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 the 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 pay 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
- 4 -
<PAGE>
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.
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 (c) (2) 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 Corporation shall, to the fullest extent permitted by 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 Bylaw, 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 director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
TENTH: 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 TENTH.
- 5 -
<PAGE>
ELEVENTH: The effective date of the Certificate of Incorporation of the
Corporation, and the date upon which the existence of the Corporation shall
commence, shall be its date of filing.
Signed: New York, New York
April 5, 1983
/s/ Gustave T. Dotoli
------------------------------------
Gustave T. Dotoli, Incorporator
- 6 -
<PAGE>
EXHIBIT 3.2
CERTIFICATE
FOR RENEWAL AND REVIVAL OF CERTIFICATE OF INCORPORATION
OF
WORLD IMPORTS - U. S. A., INC.
World Imports - U. S. A., Inc., a corporation organized under the laws of
Delaware, the Certificate of Incorporation of which was filed in the office of
the Secretary of State on the 11th day of April, 1983 and thereafter voided for
non-payment of taxes, now desiring to procure a revival of its Certificate of
Incorporation, hereby certifies as follows:
1. The name of the corporation is World Imports - U. S. A., Inc.
2. Its registered office in the State of Delaware is located at
Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New
Castle and the name of its registered agent at such address is The Corporation
Trust Company.
3. The date when revival of the Certificate of Incorporation of this
corporation is to commence is the 28th day of February, 1987, same being prior
to the date the Certificate of Incorporation became void. Revival of the
Certificate of Incorporation is to be perpetual.
4. This corporation was duly organized under the laws of Delaware and
carried on the business authorized by its Certificate of Incorporation until the
1st day of March, 1987, at which time its Certificate of Incorporation became
inoperative and void for non-payment of taxes and this Certificate of Renewal
and Revival is filed by authority of the duly elected directors of the
corporation in accordance with the laws of Delaware.
IN WITNESS WHEREOF, said World Imports - U. S. A., Inc. in compliance
with Section 312 of Title 8 of the Delaware Code has caused this Certificate to
be signed by Michael Castoro its last and acting President and attested by
Kathleen Histon, its last and acting Secretary, this 29th day of June, 1993.
WORLD IMPORTS - U. S. A., INC.
By /s/ Michael Castoro
-----------------------------
Michael Castoro
Last and Acting President
ATTESTED:
By /s/ Kathleen Histon
--------------------------------
Kathleen Histon
Last and Acting Secretary
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
World Imports - U. S. A., Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting duly
held, adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of World Imports -
U. S. A., Inc. be amended by changing the FIRST Article thereof so
that, as amended, said Article shall be and read as follows:
"FIRST" The name of the corporation (hereinafter called the
"Corporation") is Seiler Pollution Control Systems, Inc.
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendment in accordance with the
provisions of section 228 of the General Corporation Law of the State of
Delaware and written notice of the adoption of the amendment has been given as
provided in section 228 of the General Corporation Law of the State of Delaware
to every stockholder entitled to such notice.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of sections 242 and 229 of the General Corporation law
of the State of Delaware.
FOURTH: That this Certificate of Amendment of the Certificate of
Incorporation shall be effective immediately upon filing.
IN WITNESS WHEREOF, said World Imports - U. S. A., Inc. has caused this
certificate to be signed by Michael Castoro, its President, and attested by
Kathleen Histon, its Secretary, this 29th day of June, 1993.
WORLD IMPORTS - U. S. A., INC.
/s/ Michael Castoro
Michael Castoro, President
ATTEST:
/s/ Kathleen Histon
Kathleen Histon, Secretary
<PAGE>
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Seiler Pollution Control Systems, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting duly
held, adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of Seiler Pollution
Control Systems, Inc. be amended by adding a new Article Twelfth as hereinafter
indicated and by changing the current Fourth Article thereto so that, as
amended, said Article Fourth shall be and read as follows:
"FOURTH" The total number of shares of stock which the Corporation
shall have authority to issue is Twenty-Five Million (25,000,000). The par value
of each of said shares is $.0001. All such shares are of one class and are
shares of common stock without cumulative voting rights and without any
pre-emptive rights.
"TWELFTH" No Director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (i) for any breach of the Director's
duty of loyalty to the Corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) for the payment of unlawful dividends or unlawful stock
repurchases or redemptions under Section 174 of the Delaware General Corporation
Law; or (iv) for any transaction from which the Director derived an improper
personal benefit.
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware and written notice of the adoption of the amendment has been given as
provided in Section 228 of the General Corporation Law of the State of Delaware
to every stockholder entitled to such notice.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of sections 242 and 228 of the General Corporation Law
of the State of Delaware.
FOURTH: That this Certificate of Amendment of the Certificate of
Incorporation shall be effective immediately upon filing.
<PAGE>
IN WITNESS WHEREOF, said Seiler Pollution Control Systems, Inc. has
caused this certificate to be signed by Arthur J. Helmstetter, its President,
and attested by Werner Heim, its Secretary, this 13th day of October, 1994.
SEILER POLLUTION CONTROL SYSTEMS, INC.
/s/ Arthur J. Helmstetter
------------------------------------------
Arthur J. Helmstetter, President
ATTEST:
/s/ Werner Heim
- --------------------------------
Werner Heim, Secretary
- 2 -
<PAGE>
EXHIBIT 3.5
BY-LAWS
of
WORLD IMPORTS - U. S. A., INC.
ARTICLE I - OFFICES
SECTION 1. REGISTERED OFFICE. -- The registered office shall be
established and maintained at 100 West 10th Street, City of Wilmington, in the
County of New Castle in the State of Delaware.
SECTION 2. OTHER OFFICES. -- The corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II - MEETING OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. -- Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Delaware, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting. In the event the
Board of Directors fails to so determine the time, date and place of meeting,
the annual meeting of stockholders shall be held at the registered office of the
corporation in Delaware within 120 days of the close of its fiscal year.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
may transact such other corporate business as shall be stated in the notice of
the meeting.
SECTION 2. OTHER MEETINGS. -- Meetings of stockholders for any purpose
other than the election of directors may be held at such time and place, within
or without the State of Delaware, as shall be stated in the notice of the
meeting.
SECTION 3. VOTING. -- Each stockholder entitled to vote in accordance
with the terms and provisions of the Certificate of Incorporation and these
By-Laws shall be entitled to one vote, in person or by proxy, for each share of
stock entitled to vote held by such stockholder, but no proxy shall be voted
after three years from its date unless such proxy provides for a longer period.
Upon the demand of any stockholder, the vote for directors and upon any question
before the meeting shall be by ballot. All elections for directors shall be
decided by plurality vote; all other questions shall be decided by majority vote
except as otherwise provided by the Certificate of Incorporation or the laws of
the State of Delaware.
<PAGE>
SECTION 4. STOCKHOLDER LIST. -- The officer who has charge of the stock
ledger of the corporation shall at least 10 days before each meeting of
stockholders prepare a complete alphabetical addressed list of the stockholders
entitled to vote at the ensuing election, with the number of shares held by
each. Said list shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall be available for inspection at the meeting.
SECTION 5. QUORUM. -- Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.
SECTION 6. SPECIAL MEETINGS. -- Special meetings of the stockholders, for
any purpose, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the directors
or stockholders entitled to vote. Such request shall state the purpose of the
proposed meeting.
SECTION 7. NOTICE OF MEETINGS. -- Written notice, stating the place, date
and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat at his
address as it appears on the records of the corporation, not less than ten nor
more than fifty days before the date of the meeting.
SECTION 8. BUSINESS TRANSACTED -- No business other than that stated in
the notice shall be transacted at any meeting without the unanimous consent of
all the stockholders entitled to vote thereat.
SECTION 9. ACTION WITHOUT MEETING. -- Except as otherwise provided by the
Certificate of Incorporation, whenever the vote of stockholders at a meeting
thereof is required or permitted to be taken in connection with any corporate
action by any provisions of the statutes or the Certificate of Incorporation or
of these By-Laws, the meeting and vote of stockholders may be dispensed with, if
all the stockholders who would have been entitled by vote upon the action if
such meeting were held, shall consent in writing to such corporate action being
taken.
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ARTICLE III - DIRECTORS
SECTION 1. NUMBER AND TERM. -- The number of directors shall be 3-7. The
directors shall be elected at the annual meeting of the stockholders and each
director shall be elected to serve until his successor shall be elected and
shall qualify. The number of directors may not be less than three except that
where all the shares of the corporation are owned beneficially and of record by
either one or two stockholders, the number of directors may be less than three
but not less than the number of stockholders.
SECTION 2. RESIGNATIONS. -- Any director, member of a committee or other
officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. -- If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum by a majority vote, may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4. REMOVAL. -- Any director or directors may be removed either
for or without cause at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for the purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal, by
the affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE OF NUMBER. -- The number of directors may be
increased by amendment of these By-Laws by the affirmative vote of a majority of
the directors, though less than a quorum, or, by the affirmative vote of a
majority in interest of the stockholders, at the annual meeting or at a special
meeting called for that purpose, and by like vote the additional directors may
be chosen at such meeting to hold office until the next annual election and
until their successors are elected and qualify.
SECTION 6. COMPENSATION. -- Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the board a fixed fee and expenses of attendance may be allowed for
attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
SECTION 7. ACTION WITHOUT MEETING. -- Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting, if prior to such action a written consent
thereto is signed by all members of the board, or of such committee as the case
may be, and such written consent is filed with the minutes of proceedings of the
board or committee.
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ARTICLE IV - OFFICERS
SECTION 1. OFFICERS. -- The officers of the corporation shall consist of
a President, a Treasurer, and a Secretary, and shall be elected by the Board of
Directors and shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman, one or more
Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as it
may deem proper. None of the officers of the corporation need be directors. The
officers shall be elected at the first meeting of the Board of Directors after
each annual meeting. More than two offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. -- The Board of Directors may
appoint such officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such power and perform such duties as
shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. -- The Chairman of the Board of Directors if one be
elected, shall preside at all meetings of the Board of Directors and he shall
have and perform such other duties as from time to time may be assigned to him
by the Board of Directors.
SECTION 4. PRESIDENT. -- The President shall be the chief executive
officer of the corporation and shall have the general powers and duties of
supervision and management usually vested in the office of President of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the corporation except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer.
SECTION 5. VICE-PRESIDENT. -- Each Vice-President shall have such powers
and shall perform such duties as shall be assigned to him by the directors.
SECTION 6. TREASURER. -- The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, or the President, taking proper vouchers for
such disbursements. He shall render to the President and Board of Directors at
the regular meetings of the Board of Directors, or whenever they may request it,
an account of all his transactions as Treasurer and of the financial condition
of the corporation. If required by the Board of Directors, he shall give the
corporation
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a bond for the faithful discharge of his duties in such amount and with such
surety as the board shall prescribe.
SECTION 7. SECRETARY. -- The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the President, or by the directors, or stockholders, upon whose requisition
the meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the corporation and of directors in a book to be
kept for that purpose. He shall keep in safe custody the seal of the
corporation, and when authorized by the Board of Directors, affix the same to
any instrument requiring it, and when so affixed, it shall be attested by his
signature or by the signature of any assistant secretary.
SECTION 8. ASSISTANT TREASURERS & ASSISTANT SECRETARIES. --Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.
ARTICLE V
SECTION 1. CERTIFICATES OF STOCK. -- Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the chairman or vice-chairman of the board of directors,
or the president or a vice-president and the treasurer or an assistant
treasurer, or the secretary of the corporation, certifying the number of shares
owned by him in the corporation. If the corporation shall be authorized to issue
more than one class of stock or more than one series of any class, the
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations, or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class of series of stock, provided
that, except as otherwise provided in section 202 of the General Corporation Law
of Delaware, in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Where a
certificate is countersigned (1) by a transfer agent other than the corporation
or its employee, or (2) by a registrar other than the corporation or its
employee, the signatures of such officers may be facsimiles.
SECTION 2. LOST CERTIFICATES. -- New certificates of stock may be issued
in the place of any certificate therefore issued by the corporation, alleged to
have been lost or destroyed, and the directors may, in their discretion, require
the owner of the lost or destroyed certificate or his legal representatives, to
give the corporation a bond, in such sum as they may
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direct, not exceeding double the value of the stock, to indemnify the
corporation against it on account of the alleged loss of any such new
certificate.
SECTION 3. TRANSFER OF SHARES. -- The shares of stock of the corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the corporation by the delivery
thereof to the person in charge of the stock and transfer books and ledgers, or
to such other persons as the directors may designate, by who they shall be
cancelled, and new certificates shall thereupon be issued. A record shall be
made of each transfer and whenever a transfer shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. -- In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the day of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 5. DIVIDENDS. -- Subject to the provisions of the Certificate of
Incorporation the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and where they deem expedient. Before declaring any
dividends there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
SECTION 6. SEAL. -- The corporate seal shall be circular in form and
shall contain the name of the corporation, the year of its creation and the
words "CORPORATE SEAL DELAWARE." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or otherwise reproduced.
SECTION 7. FISCAL YEAR. -- The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS. -- All checks, drafts, or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
corporation shall be
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signed by the officer or officers, agent or agents of the corporation, and in
such manner as shall be determined from time to time by resolution of the Board
of Directors,
SECTION 9. NOTICE AND WAIVER OF NOTICE. -- Whenever any notice is
required by these By-Laws to be given, personal notice is not meant unless
expressly stated, and any notice so required shall be deemed to be sufficient if
given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his address as it appears on the
records of the corporation, and such notice shall be deemed to have been given
on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by
statute.
Whenever any notice whatever is required to be given under the provisions
of any law, or under the provisions of the Certificate of Incorporation of the
corporation or these By-Laws, a waiver thereof in writing signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed proper notice.
ARTICLE VI - CLOSE CORPORATIONS: MANAGEMENT BY SHAREHOLDERS
If the certificate of incorporation of the corporation states that the
business and affairs of the corporation shall be managed by the shareholders of
the corporation rather than by a board of directors, then, whenever the context
so requires the shareholders of the corporation shall be deemed the directors of
the corporation for purposes of applying any provision of these by-laws.
ARTICLE VII - AMENDMENTS
These By-Laws may be altered and repealed and By-Laws may be made at any
annual meeting of the stockholders or at any special meeting thereof if notice
thereof is contained in the notice of such special meeting by the affirmative
vote of a majority of the stock issued and outstanding or entitled to vote
thereat, or by the regular meeting of the Board of Directors, at any regular
meeting of the Board of Directors, or at any special meeting of the Board of
Directors, if notice thereof is contained in the notice of such special meeting.
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EXHIBIT 10.1
LICENSE AGREEMENT
THIS AGREEMENT entered into this 15th day of July, 1993, by and between
MAXON FINANCE & TRADE LTD. SA, a corporation organized and existing under the
laws of the government of Republica De Panama, having a principal place of
business at c/o Beutler Consulting SA, Chemin G Ritter 3, Ch-1701 Fribourg,
Switzerland (hereinafter referred to as "MAXON") and SEILER POLLUTION CONTROL
SYSTEMS, INC., a corporation organized and existing under the laws of the State
of Delaware, having a principal place of business at c/o Berkshire International
Finance, Inc., One Evertrust Plaza, Jersey City, New Jersey 07302 (hereinafter
referred to as "SEILER").
WITNESSETH
WHEREAS, MAXON has certain proprietary information, including patented
and patentable inventions, technical know-how and rights, business information,
consulting, supply and/or research agreements, marketing and/or financial
information all relating to high temperature vitrification system(s) developed
by SEILER HIGH TEMPERATURE SEPARATING SYSTEMS LTD. (hereinafter referred to as
"SEILER SWISS") and expects that it and its licensee(s) will develop additional
proprietary information relating thereto, and has formulated ideas and concepts
for practical commercial application of such high temperature vitrification
system (hereinafter the "HTVS" and/or "PROPRIETARY INFORMATION") in accordance
with the methods and information outlined and summarized in two brochures
prepared by and/or for SEILER SWISS which brochures are herein incorporated by
reference as if fully set forth and repeated herein and are annexed hereto, made
a part hereof and marked Exhibit A.
WHEREAS, MAXON is desirous of granting field-of-use licenses, including
exclusive field-of-use licenses, to third parties for the purpose of
establishing any number of companies with specialized purposes to more rapidly
develop and implement the use of the commercial application embodying or
generated through the use of the PROPRIETARY INFORMATION, and wishes each such
licensee to have the benefit of improvements developed by SEILER SWISS, and/or
other licensees to the extent that such improvements may be used by each
licensee in its specific field of use;
WHEREAS, SEILER wishes to obtain an exclusive license to use the
PROPRIETARY INFORMATION for all purposes associated with and/or related to
commercial application of HTVS, and wishes to use MAXON's and/or SEILER SWISS'
research and development capabilities to further develop such products,
applications and systems and/or make prototypes thereof on a reduced cost,
incentive arrangement, and also wishes to have the right to use any improvements
developed by MAXON and/or SEILER SWISS or by cooperating future licensees of
MAXON;
WHEREAS, MAXON is desirous of licensing SEILER in the field of HTVS for
the purpose of establishing SEILER in such field in exchange for a one-time
license fee of
<PAGE>
$2,500,000 for itself to be paid in accordance with payment schedule annexed
hereto as Exhibit B and is willing to assist in research and development work
for SEILER on a reduced cost, incentive arrangement, and is desirous of having
its own reputation enhanced by having certain of its trademarks associated with
quality products marketed or licensed by SEILER in its field of use; and
WHEREBY, SEILER wishes to and is willing to use certain of MAXON's
trademarks on its products, and is willing to meet the quality control standards
of MAXON.
NOW, THEREFORE, in consideration of the promises and mutual covenants of
the parties hereinafter set forth, it is agreed as follows:
1. DEFINITIONS
(a) FIELD OF USE means any and all practical applications of HTVS as
outlined in Exhibit A hereto and all apparatus utilized in connection therewith.
(b) TERRITORY means the United States, Mexico and Canada.
(c) PATENT RIGHTS means SEILER SWISS' Patent numbers as indicated and
detailed on attached Exhibit C, present technical know-how expected to be
included in any of MAXON or SEILER SWISS, additional U.S. and/or foreign patent
applications which may be filed by MAXON or SEILER SWISS during the term of this
Agreement in so far as same relate in any manner to HTVS. PATENT RIGHTS also
includes any patent rights that MAXON may acquire from licensees or otherwise
which MAXON is permitted to license to SEILER in the FIELD OF USE during the
term of this Agreement.
2. LICENSE GRANT
(a) MAXON hereby grants to SEILER an exclusive field-of-use license to
use the PROPRIETARY INFORMATION including the PATENT RIGHTS throughout the
TERRITORY during the term of this Agreement, such use being expressly limited to
the FIELD OF USE.
3. CONSIDERATION
(a) SEILER shall pay MAXON $2,500,000 in accordance with the payment
schedule annexed hereto as Exhibit B, as a non-refundable one-time licensing
fee.
(b) Royalty. SEILER shall pay MAXON royalty fee of $500,000 for each
fully constructed plant sold by SEILER within the TERRITORY covered by the
license granted herein so long as such plant utilizes the aforesaid HTVS and
PROPRIETARY INFORMATION. Such royalty payments shall be made in accordance with
Exhibit D hereto.
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(c) MAXON agrees, at its cost, to conduct research and development at the
request of SEILER toward and until production of the first production prototype
plant facility of an operative system utilizing HTVS is completed. MAXON's cost
shall include actual disbursements, direct labor, overhead costs attributable
thereto, and other normal cost items attributable thereto.
(d) SEILER's failure to make payments in accordance with the Schedule
annexed as Exhibits B (and/or D) hereto shall result in loss of exclusivity,
unless SEILER pays such license fees and/or royalty payments (if applicable)
within 30 days of receiving written notice from MAXON of such failure. Once
SEILER's exclusivity is lost, it shall be lost forever absent MAXON's written
waiver.
(e) SEILER shall keep complete, accurate and up-to-date records of all
production and sales of products or services covered by this License Agreement
with all figures necessary for accurate calculation of any payments required
hereunder, and shall make such records available for inspection during normal
business hours by a representative of MAXON upon reasonable written notice by
MAXON of its intention to conduct such inspection.
4. TRADEMARKS. SEILER shall have the exclusive right to use any MAXON
and/or SEILER SWISS TRADEMARKS with all products or services covered by this
Agreement. It is agreed that any and all of SEILER's products and services
covered by this Agreement will meet MAXON's quality standards, which standards
MAXON will make known to SEILER. MAXON will have the right to make any and all
reasonable inspections of SEILER's facilities, products, advertising literature,
packaging materials, etc. as may be necessary to ensure that its quality
standards are maintained.
5. SUBLICENSING. SEILER shall have the right to sublicense others under
the rights granted herein and under any technology it develops, but only in the
FIELD OF USE. MAXON shall have the right to approve or disapprove of a potential
licensee, but shall only exercise its right to disapprove if it has a valid
business reason to do so. No royalties from such licensees shall be paid by
SEILER to MAXON. Sublicensees of SEILER shall be made aware of and bound by all
relevant terms of this Agreement.
6. IMPROVEMENTS AND ADDITIONAL DEVELOPMENTS. In the event that SEILER or
any of its sublicensees shall, during the term of this Agreement, make or
acquire improvements or additional developments, whether patentable or
otherwise, which relate, either directly or indirectly, to the PROPRIETARY
INFORMATION, SEILER and/or its sublicensees shall use their or its best efforts
to disclose any such improvements or additional developments to MAXON in
sufficient time for a U.S. and/or foreign patent application to be prepared and
filed on same prior to its first public use, offer for sale or other public
disclosure. It is understood and agreed that such improvement or additional
developments shall be the sole property of MAXON and that SEILER and its
sublicensees agree to take whatever steps are necessary to perfect MAXON's
ownership of such improvements or additional developments. It is further
understood that any such improvements or additional developments shall be
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automatically made a part of this Agreement and, as such, subject to all of the
terms and conditions hereof. Thus, if such improvements or additional
developments are made or acquired, it is understood and agreed that SEILER shall
have the right to use and sublicense any such improvements or additional
developments in the FIELD OF USE and MAXON shall have the right to use or
license such improvements outside the FIELD OF USE. Whether SEILER's right to
use any such improvements or additional developments is exclusive or
non-exclusive shall be determined by the nature of the license granted under
Paragraph 2 hereof. Accordingly, as long as the license granted under Paragraph
2 remains exclusive, SEILER's right to use any such improvements or additional
developments shall be exclusive. If, however, the license granted under
Paragraph 2 becomes non-exclusive for any reason whatsoever, SEILER's right to
use any such improvements or additional developments shall be or become
non-exclusive also. MAXON's ownership of any improvements or additional
developments relating to the PROPRIETARY INFORMATION made or acquired by a
sublicensee of SEILER shall be made an express condition of any and all
sublicenses that may be granted by SEILER. Notwithstanding any of the foregoing,
any licensee which develops or contributes to an invention as an inventor or
co-inventor shall have the royalty-free right to use same upon termination of
this Agreement.
7. SECRECY
(a) SEILER hereby covenants and agrees that all information relating to
the PROPRIETARY INFORMATION or any of the improvements or additional
developments defined in Paragraph 6 above made known to SEILER or any of its
sublicensees pursuant to this Agreement, shall be maintained in confidence and
secret and shall be made known only to those employees, agents, servants,
representatives or sublicensees of SEILER who have signed this Agreement or have
signed a separate written agreement wherein such employees, agents, servants,
representatives or sublicensees agree that they will not disclose any of such
information to anyone except other employees, agents, servants, representatives
or sublicensees of SEILER who have agreed in writing to keep such information in
confidence. Further, all disclosure to employees, agents, servants,
representatives or sublicensees of SEILER shall be on a strictly need-to-know
basis for the sole purpose of supplying such employees, agents, servants,
representatives or sublicensees with sufficient information concerning the
PROPRIETARY INFORMATION or any of the improvements or additional developments
defined in Paragraph 6 to further the objectives of this Agreement. This
obligation to keep information in confidence shall survive termination of this
Agreement for any reason whatsoever.
(b) The provisions of the preceding subparagraph shall be applicable
except to the extent that any disclosed information has become generally
available and known to the public other than through a breach of confidentiality
by SEILER or any of its employees, agents, servants, representatives or
sublicensees.
8. Procurement of Patents. To the extent that any of the PROPRIETARY
INFORMATION or any of the improvements or additional developments defined in
Paragraph 6 above constitutes a patentable invention, MAXON, in its sole
discretion, shall have the right
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to determine whether it will file U.S. and/or foreign patents applications on
any such invention, it being understood and agreed that the costs incurred in
connection with the preparation, filing, prosecution and maintenance of any such
application or applications and any patents issuing thereon will be borne by
MAXON. In the event that MAXON decides to abandon a patent application which it
has filed or any such invention, or decides to permit a patent which has issued
thereon to lapse, MAXON will use its best efforts to provide SEILER with an
opportunity to maintain any such patent application or patent. Upon the issuance
to MAXON of a patent on any such invention, SEILER and/or its sublicensees
shall, upon receiving written notice from MAXON, mark all products and/or
machinery covered by such patent, the packages and containers in which they are
sold and shipped and all advertisements, literature and/or other promotional
materials relating thereto in such manner as MAXON may reasonably require in
conformity with the applicable patent laws of any country covered by this
Agreement in order to give notice that such products are covered by such patent.
If MAXON decides not to file a U.S. or foreign patent application on any such
invention, MAXON shall endeavor to use its best efforts to provide SEILER
sufficient notice and time within which to file a patent application in the U.S.
or any foreign country on same, in its own name, it being understood and agreed
that the costs incurred in connection with the preparation, filing, prosecution
and maintenance of any such application or applications and any patents issuing
thereon will be borne by SEILER. If SEILER decides to abandon any such patent
application which it has filed on any such invention or decides to permit a
patent which has issued thereon to lapse, SEILER will use its best efforts to
provide MAXON with an opportunity to maintain any such patent application or
patent. Upon the issuance to SEILER of any patent on any such invention, MAXON
and any of its other licensees shall, upon receiving written notice from SEILER,
mark all products and/or machinery covered by such patent, the packages and
containers in which they are sold and shipped and all advertisements, literature
and/or other promotional materials relating thereto in such manner as SEILER may
reasonably require in conformity with the applicable patent laws of any country
covered by this Agreement in order to give notice that such products are covered
by any such patent. MAXON's and its other licensee's rights in patents obtained
by SEILER in its own name shall terminate upon termination of this Agreement.
9. ENFORCEMENT OF PATENTS
(a) In the event of any infringement by a third party of any patent or
patents issuing to MAXON on the PROPRIETARY INFORMATION or on any of the
improvements or additional developments defined in Paragraph 6 above, MAXON, in
its sole discretion, shall have the right to commence an action for such
infringement, to select counsel of its own choice and to control the prosecution
of such action. It is understood and agreed that should MAXON commence any such
action for patent infringement, all legal fees and expenses associated with such
action shall be borne by MAXON and MAXON shall be entitled to receive all
damages or other recovery obtained as a result of such action. It is further
understood and agreed, however, that SEILER and/or any of its sublicensees
shall, without charge, fully cooperate with MAXON in the prosecution of any such
action to the extent of providing technical advise and testimony, if necessary,
and executing and producing any necessary documents, it being understood that
any such cooperation on the part of SEILER and/or any of its sublicensees shall
not entitle SEILER
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and/or its sublicensees to any of the damages or other recovery obtained as a
result of such action.
(b) In the event of any infringement by a third party of any patent or
patents issuing to SEILER and/or any of its sublicensees on improvements or
additional developments defined in Paragraph 6 above, SEILER and/or its
sublicensees shall have the sole right to commence an action for such
infringement, to select counsel of their own choice and to control prosecution
of such action. It is understood and agreed that should SEILER and/or any of its
sublicensees commence any such action for patent infringement, all legal fees
and expenses associated with such action will be borne by SEILER and/or its
sublicensees and SEILER and/or its sublicensees shall be entitled to receive all
damages or other recovery retained as a result of such action. It is further
understood and agreed, however, that MAXON shall, without charge, fully
cooperate with SEILER and/or its sublicensees in the prosecution of any such
action to the extent of providing technical advise and testimony, if necessary,
and executing and producing any necessary documents, it being understood and
agreed that any such cooperation on the part of MAXON shall not entitle MAXON to
any of the damages or other recovery obtained as a result of such action.
10. TERM AND TERMINATION
(a) This Agreement shall continue in perpetuity or until all of the
PROPRIETARY INFORMATION becomes public and there are no further outstanding
PATENT RIGHTS. In the event of termination for the latter reason, SEILER shall
have the option to continue to use the TRADEMARKS at no cost to it. It is
assumed that the TRADEMARKS will, over the years, acquire a valuable secondary
meaning and goodwill with the public to the extent that they will at such time
be commercially important. Thus, SEILER reserves to itself the option to
exclusively use and sublicense the TRADEMARKS for products in the FIELD OF USE
in perpetuity. It is understood that there is no obligation on the part of
SEILER to exercise its option to continue to use the TRADEMARKS. This option may
only be exercised within 60 days of termination of this Agreement by a written
notification to MAXON signed by the duly authorized officers of SEILER.
(b) This Agreement and the license granted hereunder may be terminated by
MAXON, in its sole discretion, at any time if:
(i) SEILER and/or any of its sublicensees shall fail or omit to
perform any of the terms of this Agreement including
specifically the payment of the fees and/or royalties on the
terms set forth in Paragraph 3 hereof and Exhibits B and D
hereto, and shall fail to correct any such failure or omission
within 30 days of having received written notice from MAXON
specifying the nature of the default and the basis for
termination; or
(ii) SEILER becomes insolvent, or is adjudicated bankrupt, or a
receiver of the business of SEILER is appointed, or SEILER
makes an assignment for
- 6 -
<PAGE>
the benefit of creditors, or a petition under Chapter 11 of
the Bankruptcy Act is filed on behalf of SEILER.
(c) This Agreement and the license granted hereunder may be terminated by
SEILER, in its sole discretion, at any time upon giving MAXON 90 days written
notice of its intention to terminate. If the license granted hereunder is
exclusive when such notice is given by SEILER, the license will become
non-exclusive immediately upon the giving of such notice.
(d) The termination of this Agreement shall in no way affect the
liability and obligation of SEILER to pay any sums of money in accordance with
the terms and conditions herein set forth, up to and including the date of such
termination, and shall be without prejudice to any right or rights of action or
remedies of MAXON for the recovery of any monies due or claimed to be due
hereunder. More particularly, the termination of this Agreement will not release
SEILER and/or any of it sublicensees from the obligation to pay any sum which
they may owe to MAXON for any and all sales of products or services covered by
this Agreement resulting from sales which were invoiced but not filled prior to
such termination.
(e) In the event of the termination of this Agreement for any reason
whatsoever, SEILER and/or any of its sublicensees shall promptly return to MAXON
or, if MAXON so chooses, will destroy all information in their possession
relating to the PROPRIETARY INFORMATION or any of the improvements or additional
developments defined in Paragraph 6 above, except for PROPRIETARY INFORMATION
developed by SEILER and/or any of its sublicensees. It is further understood and
agreed that upon the termination of this Agreement, SEILER and/or any of its
sublicensees shall immediately cease and desist from using the TRADEMARKS and
any of the PROPRIETARY INFORMATION or any of the improvements or additional
developments defined in Paragraph 6 above except to the extent that SEILER or
any of its sublicensees has developed such improvements or additional
developments in which event SEILER or such licensee shall retain a royalty-free
right to continue to use such PROPRIETARY INFORMATION.
11. GENERAL LEGAL
(a) Force Majeure. Notwithstanding any provision contained herein, none
of the parties hereto shall be liable for any failure or delay to perform this
Agreement on account of causes of force majeure, or shall be held responsible
for any indemnity claimed due to any and all damages and losses therefrom,
provided force majeure means acts of God.
(b) Invalid Clause. It is understood and agreed by the parties hereto
that if any of these provisions shall contravene or be invalid under the laws of
the United States or any country wherein acts are to be performed pursuant to
this Agreement, such contravention or invalidity shall not invalidate the whole
Agreement, but it shall be construed as if not containing the particular
provision or provisions held to be invalid, and the rights and obligations of
the parties shall be construed and enforced accordingly.
- 7 -
<PAGE>
(c) Enforcement. The failure of any party to insist in any one or more
instances upon a strict performance of the terms and conditions of this
Agreement, or to exercise any option herein contained, shall not be construed as
a waiver or relinquishment for the future of any of the terms, covenants and
conditions herein contained, but the same shall continue to remain in full force
and effect.
(d) Notices. Any notices given under this Agreement shall be delivered
either by hand, or sent by telegram, or by registered or certified mail, return
receipt requested, and shall be deemed to have been given on the day when
received by the other party to whom the notice is given.
(e) Modification. This Agreement and each of the Exhibits annexed hereto
constitutes the entire Agreement and understanding between the parties and
supersedes all prior agreements and understandings, whether written or oral.
Modifications of the Agreement may, from time to time, be made by mutual consent
of the parties but, in any event, no modification or claimed waiver of any of
the provisions hereof shall be valid unless in writing and signed by authorized
representatives of the party against whom such modification or waiver is sought
to be enforced.
(f) Procurement of Approvals. At the time that the first sale, lease or
other disposition of a product covered by this Agreement is to be made in a
particular country within the TERRITORY, SEILER shall be obligated to obtain
whatever approvals or licenses, if any, as are necessary from the appropriate
authorities in such country to permit any such product to be sold, leased,
distributed and/or used in such country. All expenses associated with obtaining
any necessary approvals and/or licenses shall be borne by SEILER. MAXON agrees
to cooperate fully with SEILER to obtain any necessary approvals and/or
licenses, including the furnishing of any information in the possession of MAXON
necessary to enable SEILER to obtain any necessary approvals and/or licenses.
(g) Captions and Pronouns. The captions appearing at the commencement of
the sections hereof are descriptive only and for convenience in reference to
this Agreement and in no way whatsoever define, limit or describe the scope or
intent of this Agreement, nor in any way affect this Agreement. Masculine or
feminine pronouns shall be substituted for the neuter form and vice versa, and
the plural shall be substituted for the singular form and vice versa, in any
place or places herein in which the context requires such substitution.
(h) Performance and Construction. This Agreement shall be construed and
its performance governed by the laws of the State of Delaware, but the scope and
validity of any patents issued by a specific country shall be governed by the
applicable laws of the country granting the patent in question.
(i) Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties thereto and their respective heirs, executors,
administrators, successors, and assigns.
- 8 -
<PAGE>
12. Additional Covenants, Warranties and/or Representations Which Are
an Integral Part of This Agreement.
(a) SEILER SWISS warrants and represents that MAXON has SEILER SWISS'
authority to enter into this Agreement and to license the patents and
PROPRIETARY INFORMATION developed by SEILER SWISS since SEILER SWISS has granted
to MAXON all rights necessary to abide by each of the terms and conditions of
this Agreement; MAXON having duly and properly obtained same from SEILER SWISS
for good and valuable consideration.
(b) SEILER SWISS and MAXON warrant and represent that all rights granted
hereunder are granted free and clear of any form of encumbrance whatsoever.
(c) SEILER SWISS and MAXON warrant and represent that the information
contained in Exhibits A and C hereto is wholly accurate and complete and further
acknowledge their respective understanding that they have been advised that
SEILER would not consider entering into or enter into this License Agreement
absent SEILER's ability to fully and completely rely upon all of the information
and representations contained herein and in the exhibits hereto.
(d) The following additional exhibits are herewith incorporated by
reference as if fully set forth and repeated herein and are annexed hereto and
made a part hereof as follows:
(i) Exhibit E documents indicating proof of transfer from SEILER
SWISS to MAXON of all PROPRIETARY INFORMATION and/or patent
and patent technology rights relating to HTVS (including but
not limited to certain consulting, supply and research
agreements) necessary to permit MAXON to abide by each of the
terms and conditions of this Agreement.
(ii) Exhibit F written estimates regarding approximate cost for
construction of each plant which shall utilize HTVS technology
and approximation as to expected delivery date from initial
receipt of plant order to finalized construction in a manner
ready for delivery to the U.S.
(e) With respect to the previous paragraph (d)(ii) regarding plant
construction, SEILER SWISS warrants and represents that it has the ability to
construct such plant for delivery in a timely manner so that same may be in
operational order within a relatively short period of time subsequent to receipt
and agrees that it will fully cooperate with SEILER, MAXON and/or
- 9 -
<PAGE>
such governmental agencies as may be necessary so as to effectuate the terms of
this Agreement in as expeditious and reasonable a manner as is practicable.
MAXON FINANCE & TRADE LTD, SA
By: /s/ Max Beutler
------------------------------------
Name: Max Beutler
Title: Counsel
SEILER POLLUTION CONTROL SYSTEMS, INC.
By: /s/ Werner Heim
------------------------------------
Name: Werner Heim
Title: Chairman
SEILER HIGH TEMPERATURE SEPARATING
SYSTEMS LTD.
By: /s/ Niklaus Seiler
------------------------------------
Name: Niklaus Seiler
Title: Director
Dated: July 15, 1993
- 10 -
<PAGE>
INDEX OF EXHIBITS
Exhibit A SEILER HIGH TEMPERATURE SEPARATING SYSTEMS LTD. brochures
entitled
(i) HIGH TEMPERATURE VITRIFICATIONS SYSTEM for electrostatic
filter ash, paint and enamel sludge (SYSTEM SHT) and
(ii) HIGH TEMPERATURE VITRIFICATIONS SYSTEM for filter ashes,
colour, enamel coagulation and sewage sludges (SYSTEM SHT)
Exhibit B Payment schedule regarding $2,500,000 one-time license fee
Exhibit C List of SEILER HIGH TEMPERATURE SEPARATING SYSTEMS LTD.
patents and patents pending
Exhibit D Schedule of royalty payments regarding plants utilizing HTVS
PROPRIETARY INFORMATION
Exhibit E Documents regarding transfer of HTVS PROPRIETARY INFORMATION and
related rights from SEILER HIGH TEMPERATURE SEPARATING SYSTEMS
LTD. TO MAXON FINANCE & TRADE LTD. SA
Exhibit F Cost estimates and approximations regarding delivery dates with
respect to Plant construction
<PAGE>
Exhibit A
SEILER HIGH TEMPERATURE SEPARATING SYSTEMS LTD.
brochures entitled
(i) HIGH TEMPERATURE VITRIFICATIONS SYSTEM for electrostatic
filter ash, paint and enamel sludge (SYSTEM SHT)
and
(ii) HIGH TEMPERATURE VITRIFICATIONS SYSTEM for filter ashes, colour,
enamel coagulation and sewage sludges (SYSTEM SHT)
<PAGE>
Exhibit B
Payment schedule regarding $2,500,000 one-time license fee
<PAGE>
Payment Schedule for SEPC license fee.
The payment already made should be broken up between both SEPC and SEPC
International. In addition the following payments will be made:
SEPC
12/31/93 $150,000
3/31/94 $125,000
6/30/94 $125,000
9/30/94 $125,000
12/31/94 $125,000
3/31/95 $125,000
6/30/95 $125,000
9/30/95 $125,000
12/31/95 $125,000
SEPC International
12/31/93 $150,000
3/31/94 $125,000
6/30/94 $125,000
9/30/94 $125,000
12/31/94 $125,000
3/31/95 $125,000
6/30/95 $125,000
9/30/95 $125,000
12/31/95 $125,000
<PAGE>
Exhibit C
List of SEILER HIGH TEMPERATURE SEPARATING SYSTEMS LTD.
patents and patents pending
<PAGE>
Exhibit D
Schedule of royalty payments regarding plants utilizing
HTVS PROPRIETARY INFORMATION
$500,000 per plant
<PAGE>
Exhibit E
Documents regarding transfer of HTVS PROPRIETARY INFORMATION and
related rights from SEILER HIGH TEMPERATURE SEPARATING
SYSTEMS LTD. TO MAXON FINANCE & TRADE LTD. SA
<PAGE>
Exhibit F
Cost estimates and approximations regarding delivery dates
with respect to plant construction
<PAGE>
License Agreement
Between Maxon Finance & Trade SA, Monaco
and Seiler Pollution Control Systems, Inc. U.S.A.
Territory USA, Mexico and Canada
Price US $2,500,000 over 3 years
License fee US $500,000 per plant
- --------------------------------------------------------------------------------
As of July 15, 1993, Maxon Finance & Trade Ltd. SA ("Maxon") entered into an
agreement (the "License Agreement") with Seiler Pollution Control Systems, Inc.
("Seiler") pursuant to which Maxon licensed to Seiler in perpetuity all of its
right, title and interest in and to certain patent and technology rights (the
"Intangible Assets") relating to its programs in High Temperature Vitrification
Systems, and transferred to Seiler its rights under certain consulting, supply
and research agreements (the "Agreements"). In consideration of the license and
transfer of Intangible Assets and the Agreements, the License Agreement provides
that Seiler will pay to Maxon a one time license fee of US $2,500,000 according
to a separate payment schedule. A royalty of US $500,000 has to be paid for
every plant sold by Seiler in the United States, Canada or Mexico.
Signed this 21st day of July, 1993.
Maxon Finance & Trade Ltd. SA Seiler Pollution Control Systems, Inc.
By: /s/ Max Beutler /s/ Werner Heim
---------------------------------- ----------------------------------
<PAGE>
ADDENDUM TO LICENSE AGREEMENT OF JULY 15, 1993
Notwithstanding anything to the contrary that may be contained in a
License Agreement dated July 15, 1993 by and between Maxon Finance & Trade Ltd.
SA (hereinafter "Maxon") and Seiler Pollution Control Systems, Inc. (hereinafter
"Seiler"), it is herewith agreed by and between the parties hereto that:
(a) "Territory" referred to in Section 1(b) of the aforesaid License
Agreement be and the same hereby is extended so as to include not only the
United States, Mexico and Canada but "worldwide" rights as well; and
(b) The "royalty" payments referred to in paragraph 3(b) of the aforesaid
License Agreement be and the same hereby are, for good and valuable
consideration, wholly deleted; it being the understanding that Seiler shall not
be required to pay any royalty fees whatsoever for fully constructed plants sold
by it or otherwise.
In all other respects the entire July 15, 1993 Agreement heretofore
referred to shall remain exactly "as is".
Signed this 8th day of March, 1994 as follows:
MAXON FINANCE & TRADE LTD, SA
By: /s/ Max Beutler
---------------------------------
Name: Max Beutler
Title: Counsel
SEILER POLLUTION CONTROL SYSTEMS, INC.
By: /s/ Werner Heim
---------------------------------
Name: Werner Heim
Title: Chairman
SEILER HIGH TEMPERATURE SEPARATING
SYSTEMS LTD.
By: /s/ Niklaus Seiler
---------------------------------
Name: Niklaus Seiler
Title: Director
<PAGE>
EXHIBIT 10.2
LICENSE AGREEMENT
THIS AGREEMENT entered into this 15th day of July, 1993, by and between
MAXON FINANCE & TRADE LTD. SA, a corporation organized and existing under the
laws of the government of Republica De Panama, having a principal place of
business at c/o Beutler Consulting SA, Chemin G Ritter 3, Ch-1701 Fribourg,
Switzerland (hereinafter referred to as "MAXON") and SEILER POLLUTION CONTROL
SYSTEMS INTERNATIONAL, INC., a corporation organized and existing under the laws
of the State of Delaware, having a principal place of business at c/o Berkshire
International Finance, Inc., One Evertrust Plaza, Jersey City, New Jersey 07302
(hereinafter referred to as "INTERNATIONAL").
WITNESSETH
WHEREAS, MAXON has certain proprietary information, including patented
and patentable inventions, technical know-how and rights, business information,
consulting, supply and/or research agreements, marketing and/or financial
information all relating to high temperature vitrification system(s) developed
by SEILER HIGH TEMPERATURE SEPARATING SYSTEMS LTD. (hereinafter referred to as
"SEILER SWISS") and expects that it and its licensee(s) will develop additional
proprietary information relating thereto, and has formulated ideas and concepts
for practical commercial application of such high temperature vitrification
system (hereinafter the "HTVS" and/or "PROPRIETARY INFORMATION") in accordance
with the methods and information outlined and summarized in two brochures
prepared by and/or for SEILER SWISS which brochures are herein incorporated by
reference as if fully set forth and repeated herein and are annexed hereto, made
a part hereof and marked Exhibit A.
WHEREAS, MAXON is desirous of granting field-of-use licenses, including
exclusive field-of-use licenses, to third parties for the purpose of
establishing any number of companies with specialized purposes to more rapidly
develop and implement the use of the commercial application embodying or
generated through the use of the PROPRIETARY INFORMATION, and wishes each such
licensee to have the benefit of improvements developed by SEILER SWISS, and/or
other licensees to the extent that such improvements may be used by each
licensee in its specific field of use:
WHEREAS, INTERNATIONAL wishes to obtain an exclusive license to use the
PROPRIETARY INFORMATION for all purposes associated with and/or related to
commercial application of HTVS, and wishes to use MAXON's and/or SEILER SWISS'
research and development capabilities to further develop such products,
applications and systems and/or make prototypes thereof on a reduced cost,
incentive arrangement, and also wishes to have the right to use any improvements
developed by MAXON and/or SEILER SWISS or by cooperating future licensees of
MAXON;
WHEREAS, MAXON is desirous of licensing INTERNATIONAL in the field of
HTVS for the purpose of establishing INTERNATIONAL in such field in exchange for
a one-time
<PAGE>
license fee of $2,500,000 for itself to be paid in accordance with payment
schedule annexed hereto as Exhibit B and is willing to assist in research and
development work for INTERNATIONAL on a reduced cost, incentive arrangement, and
is desirous of having its own reputation enhanced by having certain of its
trademarks associated with quality products marketed or licensed by
INTERNATIONAL in its field of use; and
WHEREBY, INTERNATIONAL wishes to and is willing to use certain of MAXON's
trademarks on its products, and is willing to meet the quality control standards
of MAXON.
NOW, THEREFORE, in consideration of the promises and mutual covenants of
the parties hereinafter set forth, it is agreed as follows:
1. DEFINITIONS
(a) FIELD OF USE means any and all practical applications of HTVS as
outlined in Exhibit A hereto and all apparatus utilized in connection therewith.
(b) TERRITORY means all European countries.
(c) PATENT RIGHTS means SEILER SWISS' Patent numbers as indicated and
detailed on attached Exhibit C, present technical know-how expected to be
included in any new patent applications of MAXON or SEILER SWISS, and any
additional U.S. and/or foreign patent applications which may be filed by MAXON
or SEILER SWISS during the term of this Agreement in so far as same relate in
any manner to HTVS. PATENT RIGHTS also includes any patent rights that MAXON may
acquire from licensees or otherwise which MAXON is permitted to license to
INTERNATIONAL in the FIELD OF USE during the term of this Agreement.
2. LICENSE GRANT
(a) MAXON hereby grants to INTERNATIONAL an exclusive field-of-use
license to use the PROPRIETARY INFORMATION including the PATENT RIGHTS
throughout the TERRITORY during the term of this Agreement, such use being
expressly limited to the FIELD OF USE.
3. CONSIDERATION
(a) INTERNATIONAL shall pay MAXON $2,500,000 in accordance with the
payment schedule annexed hereto as Exhibit B, as a non-refundable one-time
licensing fee.
(b) Royalty. INTERNATIONAL shall not be responsible for any royalty
payments to MAXON other than as may be indicated on attached Exhibit D.
- 2 -
<PAGE>
(c) MAXON agrees, at its cost, to conduct research and development at the
request of INTERNATIONAL toward and until production of the first production
prototype plant facility of an operative system utilizing HTVS is completed.
MAXON's cost shall include actual disbursements, direct labor, overhead costs
attributable thereto, and other normal cost items attributable thereto.
(d) INTERNATIONAL's failure to make payments in accordance with the
Schedule annexed as Exhibits B (and/or D) hereto shall result in loss of
exclusivity, unless INTERNATIONAL pays such license fees and/or royalty payments
(if applicable) within 30 days of receiving written notice from MAXON of such
failure. Once INTERNATIONAL's exclusivity is lost, it shall be lost forever
absent MAXON's written waiver.
(e) INTERNATIONAL shall keep complete, accurate and up-to-date records of
all production and sales of products or services covered by this License
Agreement with all figures necessary for accurate calculation of any payments
required hereunder, and shall make such records available for inspection during
normal business hours by a representative of MAXON upon reasonable written
notice by MAXON of its intention to conduct such inspection.
4. TRADEMARKS. INTERNATIONAL shall have the exclusive right to use any
MAXON and/or SEILER SWISS TRADEMARKS with all products or services covered by
this Agreement. It is agreed that any and all of INTERNATIONAL's products and
services covered by this Agreement will meet MAXON's quality standards, which
standards MAXON will make known to INTERNATIONAL. MAXON will have the right to
make any and all reasonable inspections of INTERNATIONAL's facilities, products,
advertising literature, packaging materials, etc. as may be necessary to ensure
that its quality standards are maintained.
5. SUBLICENSING. INTERNATIONAL shall have the right to sublicense others
under the rights granted herein and under any technology it develops, but only
in the FIELD OF USE. MAXON shall have the right to approve or disapprove of a
potential licensee, but shall only exercise its right to disapprove if it has a
valid business reason to do so. No royalties from such licensees shall be paid
by INTERNATIONAL to MAXON. Sublicensees of INTERNATIONAL shall be made aware of
and bound by all relevant terms of this Agreement.
6. IMPROVEMENTS AND ADDITIONAL DEVELOPMENTS. In the event that
INTERNATIONAL or any of its sublicensees shall, during the term of this
Agreement, make or acquire improvements or additional developments, whether
patentable or otherwise, which relate, either directly or indirectly, to the
PROPRIETARY INFORMATION, INTERNATIONAL and/or its sublicensees shall use their
or its best efforts to disclose any such improvements or additional developments
to MAXON in sufficient time for a U.S. and/or foreign patent application to be
prepared and filed on same prior to its first public use, offer for sale or
other public disclosure. It is understood and agreed that such improvement or
additional developments shall be the sole property of MAXON and that
INTERNATIONAL and its sublicensees agree to take whatever steps are necessary to
perfect MAXON's ownership of such improvements or additional developments. It is
further understood that any such improvements
- 3 -
<PAGE>
or additional developments shall be automatically made a part of this Agreement
and, as such, subject to all of the terms and conditions hereof. Thus, if such
improvements or additional developments are made or acquired, it is understood
and agreed that INTERNATIONAL shall have the right to use and sublicense any
such improvements or additional developments in the FIELD OF USE and MAXON shall
have the right to use or license such improvements outside the FIELD OF USE.
Whether INTERNATIONAL's right to use any such improvements or additional
developments is exclusive or non-exclusive shall be determined by the nature of
the license granted under Paragraph 2 hereof. Accordingly, as long as the
license granted under Paragraph 2 remains exclusive, INTERNATIONAL's right to
use any such improvements or additional developments shall be exclusive. If,
however, the license granted under Paragraph 2 becomes non-exclusive for any
reason whatsoever, INTERNATIONAL's right to use any such improvements or
additional developments shall be or become non-exclusive also. MAXON's ownership
of any improvements or additional developments relating to the PROPRIETARY
INFORMATION made or acquired by a sublicensee of INTERNATIONAL shall be made an
express condition of any and all sublicenses that may be granted by
INTERNATIONAL. Notwithstanding any of the foregoing, any licensee which develops
or contributes to an invention as an inventor or co-inventor shall have the
royalty-free right to use same upon termination of this Agreement.
7. SECRECY
(a) INTERNATIONAL hereby covenants and agrees that all information
relating to the PROPRIETARY INFORMATION or any of the improvements or additional
developments defined in Paragraph 6 above made known to INTERNATIONAL or any of
its sublicensees pursuant to this Agreement, shall be maintained in confidence
and secret and shall be made known only to those employees, agents, servants,
representatives or sublicensees of INTERNATIONAL who have signed this Agreement
or have signed a separate written agreement wherein such employees, agents,
servants, representatives or sublicensees agree that they will not disclose any
of such information to anyone except other employees, agents, servants,
representatives or sublicensees of INTERNATIONAL who have agreed in writing to
keep such information in confidence. Further, all disclosure to employees,
agents, servants, representatives or sublicensees of INTERNATIONAL shall be on a
strictly need-to-know basis for the sole purpose of supplying such employees,
agents, servants, representatives or sublicensees with sufficient information
concerning the PROPRIETARY INFORMATION or any of the improvements or additional
developments defined in Paragraph 6 to further the objectives of this Agreement.
This obligation to keep information in confidence shall survive termination of
this Agreement for any reason whatsoever.
(b) The provisions of the preceding subparagraph shall be applicable
except to the extent that any disclosed information has become generally
available and known to the public other than through a breach of confidentiality
by INTERNATIONAL or any of its employees, agents, servants, representatives or
sublicensees.
- 4 -
<PAGE>
8. Procurement of Patents. To the extent that any of the PROPRIETARY
INFORMATION or any of the improvements or additional developments defined in
Paragraph 6 above constitutes a patentable invention, MAXON, in its sole
discretion, shall have the right to determine whether it will file U.S. and/or
foreign patents applications on any such invention, it being understood and
agreed that the costs incurred in connection with the preparation, filing,
prosecution and maintenance of any such application or applications and any
patents issuing thereon will be borne by MAXON. In the event that MAXON decides
to abandon a patent application which it has filed or any such invention, or
decides to permit a patent which has issued thereon to lapse, MAXON will use its
best efforts to provide INTERNATIONAL with an opportunity to maintain any such
patent application or patent. Upon the issuance to MAXON of a patent on any such
invention, INTERNATIONAL and/or its sublicensees shall, upon receiving written
notice from MAXON, mark all products and/or machinery covered by such patent,
the packages and containers in which they are sold and shipped and all
advertisements, literature and/or other promotional materials relating thereto
in such manner as MAXON may reasonably require in conformity with the applicable
patent laws of any country covered by this Agreement in order to give notice
that such products are covered by such patent. If MAXON decides not to file a
U.S. or foreign patent application on any such invention, MAXON shall endeavor
to use its best efforts to provide INTERNATIONAL sufficient notice and time
within which to file a patent application in the U.S. or any foreign country on
same, in its own name, it being understood and agreed that the costs incurred in
connection with the preparation, filing, prosecution and maintenance of any such
application or applications and any patents issuing thereon will be borne by
INTERNATIONAL. If INTERNATIONAL decides to abandon any such patent application
which it has filed on any such invention or decides to permit a patent which has
issued thereon to lapse, INTERNATIONAL will use its best efforts to provide
MAXON with an opportunity to maintain any such patent application or patent.
Upon the issuance to INTERNATIONAL of any patent on any such invention, MAXON
and any of its other licensees shall, upon receiving written notice from
INTERNATIONAL, mark all products and/or machinery covered by such patent, the
packages and containers in which they are sold and shipped and all
advertisements, literature and/or other promotional materials relating thereto
in such manner as INTERNATIONAL may reasonably require in conformity with the
applicable patent laws of any country covered by this Agreement in order to give
notice that such products are covered by any such patent. MAXON's and its other
licensee's rights in patents obtained by INTERNATIONAL in its own name shall
terminate upon termination of this Agreement.
9. ENFORCEMENT OF PATENTS
(a) In the event of any infringement by a third party of any patent or
patents issuing to MAXON on the PROPRIETARY INFORMATION or on any of the
improvements or additional developments defined in Paragraph 6 above, MAXON, in
its sole discretion, shall have the right to commence an action for such
infringement, to select counsel of its own choice and to control the prosecution
of such action. It is understood and agreed that should MAXON commence any such
action for patent infringement, all legal fees and expenses associated with such
action shall be borne by MAXON and MAXON shall be entitled to receive all
damages or other recovery obtained as a result of such action. It is further
understood and agreed, however,
- 5 -
<PAGE>
that INTERNATIONAL and/or any of its sublicensees shall, without charge, fully
cooperate with MAXON in the prosecution of any such action to the extent of
providing technical advise and testimony, if necessary, and executing and
Producing any necessary documents, it being understood that any such cooperation
on the part of INTERNATIONAL and/or any of its sublicensees shall not entitle
INTERNATIONAL and/or its sublicensees to any of the damages or other recovery
obtained as a result of such action.
(b) In the event of any infringement by a third party of any patent or
patents issuing to INTERNATIONAL and/or any of its sublicensees on improvements
or additional developments defined in Paragraph 6 above, INTERNATIONAL and/or
its sublicensees shall have the sole right to commence an action for such
infringement, to select counsel of their own choice and to control prosecution
of such action. It is understood and agreed that should INTERNATIONAL and/or any
of its sublicensees commence any such action for patent infringement, all legal
fees and expenses associated with such action will be borne by INTERNATIONAL
and/or its sublicensees and INTERNATIONAL and/or its sublicensees shall be
entitled to receive all damages or other recovery retained as a result of such
action. It is further understood and agreed, however, that MAXON shall, without
charge, fully cooperate with INTERNATIONAL and/or its sublicensees in the
prosecution of any such action to the extent of providing technical advise and
testimony, if necessary, and executing and producing any necessary documents, it
being understood and agreed that any such cooperation on the part of MAXON shall
not entitle MAXON to any of the damages or other recovery obtained as a result
of such action.
10. TERM AND TERMINATION
(a) This Agreement shall continue in perpetuity or until all of the
PROPRIETARY INFORMATION becomes public and there are no further outstanding
PATENT RIGHTS. In the event of termination for the latter reason, INTERNATIONAL
shall have the option to continue to use the TRADEMARKS at no cost to it. It is
assumed that the TRADEMARKS will, over the years, acquire a valuable secondary
meaning and goodwill with the public to the extent that they will at such time
be commercially important. Thus, INTERNATIONAL reserves to itself the option to
exclusively use and sublicense the TRADEMARKS for products in the FIELD OF USE
in perpetuity. It is understood that there is no obligation on the part of
INTERNATIONAL to exercise its option to continue to use the TRADEMARKS. This
option may only be exercised within 60 days of termination of this Agreement by
a written notification to MAXON signed by the duly authorized officers of
INTERNATIONAL.
(b) This Agreement and the license granted hereunder may be terminated by
MAXON, in its sole discretion, at any time if:
(i) INTERNATIONAL and/or any of its sublicensees shall fail or
omit to perform any of the terms of this Agreement including
specifically the payment of the fees and/or royalties on the
terms set forth in Paragraph 3 hereof and Exhibits B and D
hereto, and shall fail to correct any such
- 6 -
<PAGE>
failure or omission within 30 days of having received written
notice from MAXON specifying the nature of the default and the
basis for termination; or
(ii) INTERNATIONAL becomes insolvent, or is adjudicated bankrupt,
or a receiver of the business of INTERNATIONAL is appointed,
or INTERNATIONAL makes an assignment for the benefit of
creditors, or a petition under Chapter 11 of the Bankruptcy
Act is filed on behalf of INTERNATIONAL.
(c) This Agreement and the license granted hereunder may be terminated by
INTERNATIONAL, in its sole discretion, at any time-upon giving MAXON 90 days
written notice of its intention to terminate. If the license granted hereunder
is exclusive when such notice is given by INTERNATIONAL, the license will become
non-exclusive immediately upon the giving of such notice.
(d) The termination of this Agreement shall in no way affect the
liability and obligation of INTERNATIONAL to pay any sums of money in accordance
with the terms and conditions herein set forth, up to and including the date of
such termination, and shall be without prejudice to any right or rights of
action or remedies of MAXON for the recovery of any monies due or claimed to be
due hereunder. More particularly, the termination of this Agreement will not
release INTERNATIONAL and/or any of it sublicensees from the obligation to pay
any sum which they may owe to MAXON for any and all sales of products or
services covered by this Agreement resulting from sales which were invoiced but
not filled prior to such termination.
(e) In the event of the termination of this Agreement for any reason
whatsoever, INTERNATIONAL and/or any of its sublicensees shall promptly return
to MAXON or, if MAXON so chooses, will destroy all information in their
possession relating to the PROPRIETARY INFORMATION or any of the improvements or
additional developments defined in Paragraph 6 above, except for PROPRIETARY
INFORMATION developed by INTERNATIONAL and/or any of its sublicensees. It is
further understood and agreed that upon the termination of this Agreement,
INTERNATIONAL and/or any of its sublicensees shall immediately cease and desist
from using the TRADEMARKS and any of the PROPRIETARY INFORMATION or any of the
improvements or additional developments defined in Paragraph 6 above except to
the extent that INTERNATIONAL or any of its sublicensees has developed such
improvements or additional developments in which event INTERNATIONAL or such
licensee shall retain a royalty-free right to continue to use such PROPRIETARY
INFORMATION.
11. GENERAL LEGAL
(a) Force Majeure. Notwithstanding any provision contained herein, none
of the parties hereto shall be liable for any failure or delay to perform this
Agreement on account of
- 7 -
<PAGE>
causes of force majeure, or shall be held responsible for any indemnity claimed
due to any and all damages and losses therefrom, provided force majeure means
acts of God.
(b) Invalid Clause. It is understood and agreed by the parties hereto
that if any of these provisions shall contravene or be invalid under the laws of
the United States or any country wherein acts are to be performed pursuant to
this Agreement, such contravention or invalidity shall not invalidate the whole
Agreement, but it shall be construed as if not containing the particular
provision or provisions held to be invalid, and the rights and obligations of
the parties shall be construed and enforced accordingly.
(c) Enforcement. The failure of any party to insist in any one or more
instances upon a strict performance of the terms and conditions of this
Agreement, or to exercise any option herein contained, shall not be construed as
a waiver or relinquishment for the future of any of the terms, covenants and
conditions herein contained, but the same shall continue to remain in full force
and effect.
(d) Notices. Any notices given under this Agreement shall be delivered
either by hand, or sent by telegram, or by registered or certified mail, return
receipt requested, and shall be deemed to have been given on the day when
received by the other party to whom the notice is given.
(e) Modification. This Agreement and each of the Exhibits annexed hereto
constitutes the entire Agreement and understanding between the parties and
supersedes all prior agreements and understandings, whether written or oral.
Modifications of the Agreement may, from time to time, be made by mutual consent
of the parties but, in any event, no modification or claimed waiver of any of
the provisions hereof shall be valid unless in writing and signed by authorized
representatives of the party against whom such modification or waiver is sought
to be enforced.
(f) Procurement of Approvals. At the time that the first sale, lease or
other disposition of a product covered by this Agreement is to be made in a
particular country within the TERRITORY, INTERNATIONAL shall be obligated to
obtain whatever approvals or licenses, if any, as ace necessary from the
appropriate authorities in such country to permit any such product to be sold,
leased, distributed and/or used in such country. All expenses associated with
obtaining any necessary approvals and/or licenses shall be borne by
INTERNATIONAL. MAXON agrees to cooperate fully with INTERNATIONAL to obtain any
necessary approvals and/or licenses, including the furnishing of any information
in the possession of MAXON necessary to enable INTERNATIONAL to obtain any
necessary approvals and/or licenses.
(g) Captions and Pronouns. The captions appearing at the commencement of
the sections hereof are descriptive only and for convenience in reference to
this Agreement and in no way whatsoever define, limit or describe the scope or
intent of this Agreement, nor in any way affect this Agreement. Masculine or
feminine pronouns shall be substituted for the neuter
- 8 -
<PAGE>
form and vice versa, and the plural shall be substituted for the singular form
and vice versa, in any place or places herein in which the context requires such
substitution.
(h) Performance and Construction. This Agreement shall be construed and
its performance governed by the laws of the State of Delaware, but the scope and
validity of any patents issued by a specific country shall be governed by the
applicable laws of the country granting the patent in question.
(i) Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties thereto and their respective heirs, executors,
administrators, successors, and assigns.
12. Additional Covenants, Warranties and/or Representations Which Are
an Integral Part of This Agreement.
(a) SEILER SWISS warrants and represents that MAXON has SEILER SWISS'
authority to enter into this Agreement and to license the patents and
PROPRIETARY INFORMATION developed by SEILER SWISS since SEILER SWISS has granted
to MAXON all rights necessary to abide by each of the terms and conditions of
this Agreement; MAXON having duly and properly obtained same from SEILER SWISS
for good and valuable consideration.
(b) SEILER SWISS and MAXON warrant and represent that all rights granted
hereunder are granted free and clear of any form of encumbrance whatsoever.
(c) SEILER SWISS and MAXON warrant and represent that the information
contained in Exhibits A and C hereto is wholly accurate and complete and further
acknowledge their respective understanding that they have been advised that
INTERNATIONAL would not consider entering into or enter into this License
Agreement absent INTERNATIONAL's ability to fully and completely rely upon all
of the information and representations contained herein and in the exhibits
hereto.
(d) The following additional exhibits are herewith incorporated by
reference as if fully set forth and repeated herein and are annexed hereto and
made a part hereof as follows:
(i) Exhibit E documents indicating proof of transfer from SEILER
SWISS to MAXON of all PROPRIETARY INFORMATION and/or patent
and patent technology rights relating to HTVS (including but
not limited to certain consulting, supply and research
agreements) necessary to permit MAXON to abide by each of the
terms and conditions of this Agreement.
- 9 -
<PAGE>
MAXON FINANCE & TRADE LTD, SA
By: /s/ Max Beutler
---------------------------------
Name: Max Beutler
Title: Counsel
SEILER POLLUTION CONTROL SYSTEMS
INTERNATIONAL, INC.
By: /s/ Werner Heim
---------------------------------
Name: Werner Heim
Title: Chairman
SEILER HIGH TEMPERATURE SEPARATING
SYSTEMS LTD.
By: /s/ Niklaus Seiler
---------------------------------
Name: Niklaus Seiler
Title: Director
Dated: July 15, 1993
- 10 -
<PAGE>
INDEX OF EXHIBITS
Exhibit A SEILER HIGH TEMPERATURE SEPARATING SYSTEMS LTD. brochures
entitled
(i) HIGH TEMPERATURE VITRIFICATIONS SYSTEM for electrostatic
filter ash, paint and enamel sludge (SYSTEM SHT) and
(ii) HIGH TEMPERATURE VITRIFICATIONS SYSTEM for filter ashes,
colour, enamel coagulation and sewage sludges (SYSTEM SHT)
Exhibit B Payment schedule regarding $2,500,000 one-time license fee
Exhibit C List of SEILER HIGH TEMPERATURE SEPARATING SYSTEMS LTD.
patents and patents pending
Exhibit D Schedule of royalty payments regarding plants utilizing HTVS
PROPRIETARY INFORMATION
Exhibit E Documents regarding transfer of HTVS PROPRIETARY INFORMATION and
related rights from SEILER HIGH TEMPERATURE SEPARATING SYSTEMS
LTD. TO MAXON FINANCE & TRADE LTD. SA
<PAGE>
Exhibit A
SEILER HIGH TEMPERATURE SEPARATING SYSTEMS LTD.
brochures entitled
(i) HIGH TEMPERATURE VITRIFICATIONS SYSTEM for electrostatic
filter ash, paint and enamel sludge (SYSTEM SHT)
and
(ii) HIGH TEMPERATURE VITRIFICATIONS SYSTEM for filter ashes, colour,
enamel coagulation and sewage sludges (SYSTEM SHT)
<PAGE>
Exhibit B
Payment schedule regarding $2,500,000 one-time license fee
<PAGE>
Payment Schedule for SEPC license fee.
The payment already made should be broken up between both SEPC and SEPC
International. In addition the following payments will be made:
SEPC
12/31/93 $150,000
3/31/94 $125,000
6/30/94 $125,000
9/30/94 $125,000
12/31/94 $125,000
3/31/95 $125,000
6/30/95 $125,000
9/30/95 $125,000
12/31/95 $125,000
SEPC International
13/31/93 $150,000
3/31/94 $125,000
6/30/94 $125,000
9/30/94 $125,000
12/31/94 $125,000
3/31/95 $125,000
6/30/95 $125,000
9/30/95 $125,000
12/31/95 $125,000
<PAGE>
Exhibit C
List of SEILER HIGH TEMPERATURE SEPARATING SYSTEMS LTD.
patents and patents pending
<PAGE>
Exhibit D
Schedule of royalty payments regarding plants utilizing
HTVS PROPRIETARY INFORMATION
NONE
<PAGE>
Exhibit E
Documents regarding transfer of HTVS PROPRIETARY INFORMATION and
related rights from SEILER HIGH TEMPERATURE SEPARATING
SYSTEMS LTD. TO MAXON FINANCE & TRADE LTD. SA
<PAGE>
License Agreement
Between Maxon Finance & Trade Ltd. SA Monaco
and Seiler Pollution Control Systems, Inc. U.S.A.
Territory Germany, Austria, Italy, Korea, Indonesia, Malaysia, China,
Hong Kong, Taiwan
Price US $2,500,000 over 3 years
- --------------------------------------------------------------------------------
As of July 15, 1993, Maxon Finance & Trade Ltd. SA ("Maxon") entered into an
agreement (the "License Agreement") with Seiler Pollution Control Systems, Inc.
("Seiler") pursuant to which Maxon licensed to Seiler in perpetuity all of its
right, title and interest in and to certain patent and technology rights (the
"Intangible Assets") relating to its programs in High Temperature Vitrification
Systems, and transferred to Seiler its right under certain consulting, supply
and research agreements (the "Agreements"). In consideration of the license and
transfer of Intangible Assets and the Agreements, the License Agreement provides
that Seiler will pay to Maxon a one time license fee of US $2,500,000 according
to a separate payment schedule. Maxon Finance & Trade Ltd. commits itself to
purchase US $1,500,000 of Regulation S Stock at US $7.50 per share with a period
of 6 months.
Signed this 21st day of July, 1993.
Maxon Finance & Trade Ltd. SA Seiler Pollution Control Systems, Inc.
By: /s/ Max Beutler /s/ Werner Heim
--------------------------------- ---------------------------------
<PAGE>
ADDENDUM TO LICENSE AGREEMENT OF JULY 15, 1993
Notwithstanding anything to the contrary that may be contained in a
License Agreement dated July 15, 1993 by and between Maxon Finance & Trade Ltd.
SA (hereinafter "Maxon") and Seiler Pollution Control Systems, Inc. (hereinafter
"Seiler"), it is herewith agreed by and between the parties hereto that:
(a) "Territory" referred to in Section 1(b) of the aforesaid License
Agreement be and the same hereby is extended so as to include not only the
United States, Mexico and Canada but "worldwide" rights as well excluding solely
those territories referred to in paragraph 1(b) of a separate Licensing
Agreement of July 15, 1993 entered into between Maxon and Seiler Pollution
Control Systems International, Inc. (a wholly owned subsidiary of Seiler); and
(b) The "royalty" payments referred to in paragraph 3(b) of the aforesaid
License Agreement is and the same hereby are, for good and valuable
consideration, wholly deleted; it being the understanding that Seiler shall not
be required to pay any royalty fees whatsoever for fully constructed plants sold
by it or otherwise.
In all other respects the entire July 15, 1993 Agreement heretofore
referred to shall remain exactly "as is".
Signed this 8th day of March, 1994 as follows:
MAXON FINANCE & TRADE LTD, SA
By: /s/ Max Beutler
--------------------------------
Name: Max Beutler
Title: Counsel
SEILER POLLUTION CONTROL SYSTEMS, INC.
By: /s/ Werner Heim
--------------------------------
Name: Werner Heim
Title: Chairman
<PAGE>
SEILER HIGH TEMPERATURE SEPARATING
SYSTEMS LTD.
By: /s/ Niklaus Seiler
--------------------------------
Name: Niklaus Seiler
Title: Director
SEILER POLLUTION CONTROL SYSTEMS,
INTERNATIONAL, INC.
By: /s/ Werner Heim
--------------------------------
Name: Werner Heim
Title: Chairman
- 2 -
<PAGE>
EXHIBIT 10.3
Delivery Contract
between
Seiler Pollution Control AG (SEPC)
Bahnhofstrasse
CH - 4353 Leibstadt
and
deliverer
SEILER Hochtemperatur - Trennanlagen AG
CH-5316 Leuggern, Switzerland
Tel. +41 56 245 72 45 Fax +41 56 245 73 74
for the supply of a Research and Testplant for the
Vitrification of Hazardous Wastes in a
High-Temperature Separation System
(System SHT)
<PAGE>
List of Contents
Part A Commercial
A1 Initial situation
A2 Contractual basis
A3 Price quotation
A4 Prices
A5 Terms and conditions of payment
A6 Duties and taxes
A7 Dates
A8 Validity
Part B Technical Section
B1 Technical basis for the offer
B2 Process specification
B3 Subassembly specification
B4 Design data
B5 Guarantee data
B6 Scope of supplies and services
B7 Limit of supply
B8 Supply exclusions
B9 Maintenance and servicing
B10 Confidentiality
- i -
<PAGE>
Part C Charts and Drawings
Part D General Conditions of Delivery
D1 General terms and conditions of business of Seiler HT AG
D2 General conditions of delivery for machines and systems, VSM
D3 General assembly conditions, VSM
D4 General delivery conditions for machines and replacement parts, VSM
- ii -
<PAGE>
Part A Commercial
Part A Commercial
A1 Initial situation
A2 Contractual basis
A3 Price quotation
A4 Prices
A5 Terms and conditions of payment
A6 Duties and taxes
A7 Dates
A8 Validity
A Commercial Section
A1 Initial situation
SEPC wishes to dry hazardous waste streams such as paint- and hydroxide sludges,
and to vitrify these wastes in a Seiler high-temperature separation system at
temperatures of approximately 1500 degrees C.
A2 Contractual basis
This offer is based essentially on the principles set out below. These are an
integral part of this offer. They are essentially as follows:
- - Waste: Hazardous Waste containing heavy metals like Hydroxide
-or paintsludges, water-soluble (water content of sludges
<= 50%)
- - Drying plant Nominal output 100 kg/h, dry matter content > 95%
- - Separation plant Nominal input 50 kg/h, input dry matter content > 95%
Maximum input 150 kg/h of dry matter content > 95%
<PAGE>
A3 Price quotation
Inclusive
Complete plant, delivered free to place of use, installed, including
commissioning and trial operation for four weeks, and with one of our
specialists on-site for a period of one month.
A4 Prices
process line
Project management, factory assembly and site installation, IBN; PB
Product drying, storage
Fuel supply, gas and oxygen
Product separation
Gas cooling, complete
Waste gas purification, complete (without waste water purification)
Electrical and process line engineering
Total Systemprice SFr. 3.213.500.--
The total price relates to the aforementioned plant configuration, delivered
free to the plant, installed, excluding statutory Value Added Tax, including
commissioning and trial operation for four weeks, with one of our specialists
on-site for a period of one month, without any approval fees of any kind or
costs involved in statutory output and emission measurements performed by the
TUV or Gewerbeaufsichtsamt (Factories Inspectorate).
A5 Terms and conditions of payment
1st rate SFr. 100.000 on awarding the contract at 16.7.1993
SFr. 400.000 at 31.7.1993
2nd rate 10% at 31.8.1993
3rd rate 20% at 31.10.1993
4th rate 20% at 30.10.1993
5th rate 20% when ready for shipment
6th rate 10% begin of installation
7th rate 10% after successful start up
- 2 -
<PAGE>
Conditions net, after presentation of invoice, although not later than the
commencement of commercial operation
A6 Duties and taxes
The offer price shall be understood not to include customs clearance charges,
customary duties in this country, or Value Added Tax.
A7 Dates
according agreements
A8 Validity
This offer shall remain valid as long as agreed.
Leuggern, 16.07.1993
Seiler
Hochtemperatur - Trennanlagen AG
Seiler Pollution Control AG
(SEPC)
Part B Technical Section
B1 Technical basis for the offer
B2 Process specification
B3 Subassembly specification
B4 Design data
- 3 -
<PAGE>
B5 Guarantee data
B6 Scope of supplies and services
B7 Limits of supply
B8 Supply exclusions
B9 Maintenance and servicing
B10 Confidentiality
B1 Technical basis for the offer
o The offer is based essentially on the information currently in our possession
provided by the customer.
B2 Process Specification
B2.1 Product drying, storage
Hazardous wastes like Paint and hydroxide sludges are coagulated (mineral
flocculation) by the customer, divested of adhesive, and delivered in barrels
for intermediate storage. Drying takes place on a drum-type drier with an
integral separator system for the dried material.
B2.2 Pre-heating
The dried material is taken from the daily storage silo by means of a cell wheel
and is transferred to the buffer container of the pre-heaterplant. The dried
material, which is heated indirectly by means of (gas-heated) hot air, is
gasified at about 700 degrees C under controlled conditions. Volatile fractions
are released and are introduced into the high-temperature converter at the same
time as the inert material via a product burner.
B2.3 High-temperature converter
The gaseous and solid material fractions introduced into the converter (glass
furnace) are subjected to thermal decomposition with a modulating pilot flame
(gas firing) at approx. 1 500-1600 degrees C. Volatile heavy metalcompounds,
such as from Cd and Pb are already vaporized at temperatures of 800 degrees C to
1 050 degrees C. In order to guarantee the desired high degree of oxidation of
the heavy metals, additional technical oxygen can be added with gas/oxygen
burners.
- 4 -
<PAGE>
It can be demonstrated that organic substances, such as aromatic and polycyclic
hydrocarbons, together with any dioxins and furanes that may be present, are
completely destroyed at the burner and converter temperatures.
Depending on the intended application for the glass, the purity (proportions of
heavy metals in the glass matrix) can be influenced with the oxygen burners
(oxidation of heavy metals).
Once a particular liquid glass volume is reached inside the converter, the glass
runs out continuously via a specially designed outlet and is granulated by means
of cooled belts or a water bath to form a product like medium abrasives.
B2.4 Heat recovery
The waste gas, of which the temperature is approx. 1 550 degrees C as it leaves
the converter, is cooled to around 600 degrees C in a air/flue gas heat
exchanger. The energy (hot air) released in this way can be used for drying the
sludges.
B2.5 Dioxin trap
In order to prevent the further formation of dioxins, the waste gas leaving the
heat exchanger at a temperature of 600 degrees C is cooled abruptly to approx.
300 degrees C in a further quenching stage (water).
B2.6 Separation of dust and metal oxides
The waste gas next flows through a ceramic multiple-tube dust filter. The
separated/condensed and enriched metal oxide dusts and chlorides assume the form
of a powdery/crumb-like substance (specific gravity approx. 0.1) and are filled
into tightly sealing plastic containers and sent for further processing.
B2.7 Gas purification
By mixing ammonia into the gas flow, the waste gas is conditioned and fed to the
following catalytic nitrogen removal stage.
The waste gas, which leaves the catalyst at a temperature of approx.
280 degrees C, is then divested of HCL and HF at a gas temperature of approx.
73 degrees C in a quenching and washing circuit (first stage) located ahead of
the wet gas cleaning stage, SO2 is washed out in the second stage, and aerosols
in the third step.
The outgoing water from all stages is neutralized in a compact plant and any
solids are brought into a fine filter press for dehydration. Depending on the
concentration the sludges are brought to the dryer for later vitrification.
- 5 -
<PAGE>
The exhaust air is finally discharged into the atmosphere via an active carbon
filter (a so-called police filter) at a temperature of 70 degrees C (saturated)
via an exhaust air flue.
B2.8 Service facilities
Liquid petroleum gas or natural gas is used for firing the high-temperature
converter, and technical-grade oxygen (option) is used for the reduction of
heavy metals. The tank facilities and batteries of cylinders are positioned
outside the building for safety reasons.
B3 Subassembly specification
B3.1 Container construction
The entire plant is constructed semi-mobile. The equipment is combined into
subassemblies and built into transport frames. These frames can be moved by
loading them by crane onto low-loader transport vehicles. Once at their
destination, the modular units are positioned as required, connected to the
energy supply services (electricity, gas, water, compressed air), and are then
ready to be started up. The complete plant essentially consists of the following
units:
oDrying station
oPre-silo for dry material (daily silo)
oPre-heater
oHigh-Temperature Converter
oQuenching station, heat exchanger
oFilter plant
oDenox plant
oWet gas purification, Stage 1
oWet gas purification, Stage 2
oWatertreatment Plant for neutralization, filter press for wet gas washer etc.
oActive carbon filter
oControl (central), Emergency power supply, waste gas fan
- 6 -
<PAGE>
B4 Design data
B4.1 Technical data for production plant
Operating period per process line / converter
Operating period, nominal (3-shift running) 7 500 h/year
Travelling time, approx. 3 x 2 500 h
Interim overhaul/inspection 2 x 100 h
Annual overhaul 1 x 760 h
B4.2 Plant output
Per process line / converter
Hourly Input nominal for a dry matter content of 95% 50 kg
maximum short-duration 150 kg
average 100 kg
average Input nominal 7500 h/year of dry matter (with a 750 t
per year humidity content of 95%)
average input of nominal mixture of different waste streams 1000 t
waste per year not pretreated
B4.3 Mass flows
See Process Chart
B5 Guarantee data
B5.1 Materials guarantee
We guarantee materials for a period of one year from the start of commissioning
on all commercially available components. The manufacturer's guarantees shall
apply for motors, transmissions, electrical components and fans. The supplier
will replace any defective components. However, the cost of their installation
must be met be the operator.
- 7 -
<PAGE>
B5.2 Guarantee exclusion
All wearing parts throughout the entire plant and all materials that are exposed
to high temperatures, including refractory linings in the vitrification chamber
and the gas mixing chamber, are excluded.
B6 Scope of supplies and services
B6.0 Sludge drying Charging device with mixer
Drier
Cyclone, dust discharge
Dust washer for part of gas flow
B6.1 Material storage Silo for dry material, 10 m3
B6.2 Fuel supply LPG tank (rented tank on-site)
Oxygen cylinder battery (rented cylinders on-site)
Pipework
Safety equipment
B6.3 Pre-heater / Gasifier Buffer container for dry material
Discharge equipment
Pre-heater, auxiliary burner plant
B6.4 High-temperature Converter housing, refractory linings
converter Product burner
Burner plants, support firing
Burner plants, main firing
Burner plant, oxygen
Ventilation and fans
Steel plate belt for glass discharge
Glass cooling equipment
B6.5 Flue gas cooling Air/flue gas heat exchanger
Hot air fan, pipework
Quenching, dioxin trap
B6.6 Dust separation Hot gas filter, solids discharge
Drum filling equipment for oxides
B6.7 Nitrogen removal Ammonia mixer
Denox plant
B6.8 Exhaust gas Quenching, HCL and HF separation
purification SO2, aerosols
1st. + 2nd. stages Waste water treatment (option)
Sludge dehydration (option)
B6.9 Dioxin removal Active carbon filter
B6.10 Flue gas discharge Gas lines, flue gas fan,
Flue system
B6.11 Electrical system Mimic diagram for separation plant
Process wiring, SPS Siemens
- 8 -
<PAGE>
Low-voltage switchgear, Siemens
Field wiring
Emissions measurement O2, CO2, CO, NOx
We expressly reserve the right to introduce technical changes to the component
parts of individual subassemblies.
B7 Limits of supply
o Gas Line flange after gas tank
o Drinking water Line flange after fresh water distributor
o Industrial water Line flange after industrial water distributor
o Waste water Discharge from waste gas purification
o Electrical Terminal for high-voltage distribution
o Compressed air Line flange after compressed air distributor
o Process air Induction
o Waste air Flue outlet
o Waste gas Flue outlet
o Wet sludge Hopper, drier
o Glass Discharge plate conveyor / Cooler
B8 Delivery exclusions
o Buildings and their infrastructure
o Workplace lighting and mains power supply sockets
o Internal technical services, staff areas, laboratory facilities
o Approval and authorization costs
o All necessary certificates for the authorization procedure
o Costs involved in official output measurements
- 9 -
<PAGE>
o Connections/charges for power, water and waste water, etc.
o High-voltage transformer station and distribution
o Consumables and energy of all kinds for IBN and PB
o Securing sales of valuable materials and residues
o Customary duties in this country, such as Value Added Tax or other charges
B9 Maintenance and servicing
The supplier reserves all rights and interests in technically indicated,
necessary and recurring overhaul and servicing operations for the proper
maintenance of the high-temperature separation plant.
The areas of drying, gasification, vitrification and gas cooling may only be
inspected and overhauled by the supplier exclusively, expressly and
unconditionally. The necessary replacement parts or components must be obtained
exclusively from the supplier.
B10 Confidentiality
All documents, specifications, process charts and measurements relating to or
contained in this offer, and those provided in the event of the award of the
contract, are expressly subject to confidentiality.
They may be used expressly only in conjunction with projects and plants, and
they must not be shown or made available to third parties, or copied for other
purposes. They may only be published subject to the express written agreement of
the supplier.
Part C Charts and Drawings
Part D General Conditions of Delivery
D1 General terms and conditions of business of Seiler HT AG
D2 General conditions of delivery, VSM (Verein schweizerischer
Maschinenindustrieller - Swiss Mechanical Engineering Association).
- 10 -
<PAGE>
D3 General assembly conditions, VSM (Verein schweizerischer
Maschinenindustrieller - Swiss Mechanical Engineering Association).
D4 General delivery conditions for machines and replacement parts, VSM
(Verein schweizerischer Maschinenindustrieller - Swiss Mechanical
Engineering Association).
UNTERSCHRIFTEN
Leuggern, 16.07.1993
Seiler
Hochtemperatur - Trennanlagen AG
- ------------------------------------------------------------------------------
Seiler Pollution Control AG
(SEPC)
- ------------------------------------------------------------------------------
- 11 -
<PAGE>
EXHIBIT 10.4
Delivery Contract
between
Seiler Pollution Control AG (SEPC)
Bahnhofstrasse
CH - 4353 Leibstadt
and
deliverer
SEILER Hochtemperatur - Trennanlagen AG
CH-5316 Leuggern, Switzerland
Tel. +41 56 245 72 45 Fax +41 56 245 73 74
for the supply of a drying and
High-Temperature Separation System
for the Vitrification of Hazardous Wastes
(System SHT)
<PAGE>
List of Contents
Part A Commercial
A1 Initial situation
A2 Contractual basis
A3 Price quotation
A4 Prices
A5 Terms and conditions of payment
A6 Duties and taxes
A7 Dates
A8 Validity
Part B Technical Section
B1 Technical basis for the offer
B2 Process specification
B3 Subassembly specification
B4 Design data
B5 Guarantee data
B6 Scope of supplies and services
B7 Limit of supply
B8 Supply exclusions
B9 Maintenance and servicing
B10 Confidentiality
- i -
<PAGE>
Part C Charts and Drawings
Part D General Conditions of Delivery
D1 General terms and conditions of business of Seiler HT AG
D2 General conditions of delivery for machines and systems, VSM
D3 General assembly conditions, VSM
D4 General delivery conditions for machines and replacement parts, VSM
- ii -
<PAGE>
Part A Commercial
A1 Initial situation
A2 Contractual basis
A3 Price quotation
A4 Prices
A5 Terms and conditions of payment
A6 Duties and taxes
A7 Dates
A8 Validity
A Commercial Section
A1 Initial situation
SEPC wishes to dry hazardous waste streams such as paint- and hydroxide
sludges, and to vitrify these wastes in a Seiler high-temperature separation
system at temperatures of approximately 1500 degrees C.
A2 Contractual basis
This offer is based essentially on the principles set out below. These are an
integral part of this offer. They are essentially as follows:
- - Waste: Hazardous Waste containing heavy metals like Hydroxide
-or paintsludges, water-soluble (water content of sludges
<= 50%)
- - Drying plant Nominal output 250 kg/h, dry matter content > 95%
- - Separation plant Nominal output 350 kg/h, dry matter content > 95%
Maximum output 500 kg/h of dry matter content > 95%
<PAGE>
A3 Price quotation
Inclusive
Complete plant, delivered free to place of use, installed, including
commissioning and trial operation for four weeks, and with one of our
specialists on-site for a period of one month.
Excluding
Pre-mix plant for the pre-treatment of the sludges.
A4 Prices
process line
Project management, factory assembly and site installation, IBN; PB
Product drying, storage
Fuel supply, gas and oxygen
Product separation
Gas cooling, complete
Waste gas purification, complete (without waste water purification)
Electrical and process line engineering
Total Systemprice SFr. 6.455.750.--
The total price relates to the aforementioned plant configuration, delivered
free to the plant, installed, excluding statutory Value Added Tax, including
commissioning and trial operation for four weeks, with one of our specialists
on-site for a period of one month, without any approval fees of any kind or
costs involved in statutory output and emission measurements performed by the
TUV or Gewerbeaufsichtsamt (Factories Inspectorate).
A5 Terms and conditions of payment
1st rate SFr. 100.000 on awarding the contract at 16.7.1993
SFr. 800.000 at 31.7.1993
2nd rate 10% at 31.8.1993
3rd rate 20% at 31.10.1993
4th rate 20% at 30.10.1993
5th rate 20% when ready for shipment
- 2 -
<PAGE>
6th rate 10% begin of installation
7th rate 10% after successful start up
10% 30 days after start of commissioning
Conditions net, after presentation of invoice, although not later than the
commencement of commercial operation
A6 Duties and taxes
The offer price shall be understood not to include customs clearance charges,
customary duties in this country, or Value Added Tax.
A7 Dates
according agreements
A8 Validity
This offer shall remain valid as long as agreed.
Leuggern, 16.07.1993
Seiler
Hochtemperatur - Trennanlagen AG
Seiler Pollution Control AG
(SEPC)
- 3 -
<PAGE>
Part B Technical Section
B1 Technical basis for the offer
B2 Process specification
B3 Subassembly specification
B4 Design data
B5 Guarantee data
B6 Scope of supplies and services
B7 Limits of supply
B8 Supply exclusions
B9 Maintenance and servicing
B10 Confidentiality
B1 Technical basis for the offer
o The offer is based essentially on the information currently in our possession
provided by the customer.
B2 Process Specification
B2.1 Product drying, storage
Hazardous wastes like Paint and hydroxide sludges are coagulated (mineral
flocculation) by the customer, divested of adhesive, and delivered in barrels
for intermediate storage. Drying takes place on a drum-type drier with an
integral separator system for the dried material.
B2.2 Pre-heating
The dried material is taken from the daily storage silo by means of a cell wheel
and is transferred to the buffer container of the pre-heaterplant. The dried
material, which is heated
- 4 -
<PAGE>
indirectly by means of (gas-heated) hot air, is gasified at about 700 degrees C
under controlled conditions. Volatile fractions are released and are introduced
into the high-temperature converter at the same time as the inert material via a
product burner.
B2.3 High-temperature converter
The gaseous and solid material fractions introduced into the converter (glass
furnace) are subjected to thermal decomposition with a modulating pilot flame
(gas firing) at approx. 1 500-1600 degrees C. Volatile heavy metalcompounds,
such as from Cd and Pb are already vaporized at temperatures of 800 degrees C to
1 050 degrees C. In order to guarantee the desired high degree of oxidation of
the heavy metals, additional technical oxygen can be added with gas/oxygen
burners.
It can be demonstrated that organic substances, such as aromatic and polycyclic
hydrocarbons, together with any dioxins and furanes that may be present, are
completely destroyed at the burner and converter temperatures.
Depending on the intended application for the glass, the purity (proportions of
heavy metals in the glass matrix) can be influenced with the oxygen burners
(oxidation of heavy metals).
Once a particular liquid glass volume is reached inside the converter, the glass
runs out continuously via a specially designed outlet and is granulated by means
of cooled belts or a water bath to form a product like medium abrasives.
B2.4 Heat recovery
The waste gas, of which the temperature is approx. 1 550 degrees C as it leaves
the converter, is cooled to around 600 degrees C in a air/flue gas heat
exchanger. The energy (hot air) released in this way can be used for drying the
sludges.
B2.5 Dioxin trap
In order to prevent the further formation of dioxins, the waste gas leaving the
heat exchanger at a temperature of 600 degrees C is cooled abruptly to approx
300 degrees C in a further quenching stage (water).
B2.6 Separation of dust and metal oxides
The waste gas next flows through a ceramic multiple-tube dust filter. The
separated/condensed and enriched metal oxide dusts and chlorides assume the form
of a powdery/crumb-like substance (specific gravity approx. 0.1) and are filled
into tightly sealing plastic containers and sent for further processing.
- 5 -
<PAGE>
B2.7 Gas purification
By mixing ammonia into the gas flow, the waste gas is conditioned and fed to the
following catalytic nitrogen removal stage.
The waste gas, which leaves the catalyst at a temperature of approx.
280 degrees C, is then divested of HCL and HF at a gas temperature of approx.
73 degrees C in a quenching and washing circuit (first stage) located ahead of
the wet gas cleaning stage, SO2 is washed out in the second stage, and aerosols
in the third step.
The outgoing water from all stages is neutralized in a compact plant and any
solids are brought into a fine filter press for dehydration. Depending on the
concentration the sludges are brought to the dryer for later vitrification.
The exhaust air is finally discharged into the atmosphere via an active carbon
filter (a so-called police filter) at a temperature of 70 degrees C (saturated)
via an exhaust air flue.
B2.8 Service facilities
Liquid petroleum gas or natural gas is used for firing the high-temperature
converter, and technical-grade oxygen (option) is used for the reduction of
heavy metals. The tank facilities and batteries of cylinders are positioned
outside the building for safety reasons.
B3 Subassembly specification
B3.1 Container construction
The entire plant is constructed semi-mobile. The equipment is combined into
subassemblies and built into transport frames. These frames can be moved by
loading them by crane onto low-loader transport vehicles. Once at their
destination, the modular units are positioned as required, connected to the
energy supply services (electricity, gas, water, compressed air), and are then
ready to be started up. The complete plant essentially consists of the following
units:
oDrying station
oPre-silo for dry material (daily silo)
oPre-heater
oHigh-Temperature Converter
oQuenching station, heat exchanger
oFilter plant
- 6 -
<PAGE>
oDenox plant
oWet gas purification, Stage 1
oWet gas purification, Stage 2
oWatertreatment Plant for neutralization, filter press for wet gas washer etc.
oActive carbon filter
oControl (central), Emergency power supply, waste gas fan
B4 Design data
B4.1 Technical data for production plant
Operating period per process line / converter
Operating period, nominal (3-shift running) 7 500 h/year
Travelling time, approx. 3 x 2 500 h
Interim overhaul/inspection 2 x 100 h
Annual overhaul 1 x 760 h
B4.2 Plant output
Per Process line / converter
Hourly Input nominal for a dry matter content of 95% 350 kg
maximum short-duration 700 kg
average 500 kg
average Input nominal 7500 h/year of dry matter (with a 3750 t
per year humidity content of 95%)
average input of nominal mixture of different waste streams 5-6000 t
waste per year not pretreated
- 7 -
<PAGE>
B4.3 Mass flows
See Process Chart
B5 Guarantee data
B5.1 Materials guarantee
We guarantee materials for a period of one year from the start of commissioning
on all commercially available components. The manufacturer's guarantees shall
apply for motors, transmissions, electrical components and fans. The supplier
will replace any defective components. However, the cost of their installation
must be met by the operator.
B5.2 Guarantee exclusion
All wearing parts throughout the entire plant and all materials that are exposed
to high temperatures, including refractory linings in the vitrification chamber
and the gas mixing chamber, are excluded.
B6 Scope of Supplies and services
B6.0 Sludge drying Charging device with mixer
Drier
Cyclone, dust discharge
Dust washer for part of gas flow
B6.1 Material storage Silo for dry material, 10 m3
B6.2 Fuel supply LPG tank (rented tank on-site)
Oxygen cylinder battery (rented cylinders on-site)
Pipework
Safety equipment
B6.3 Pre-heater / Gasifier Buffer container for dry material
Discharge equipment
Pre-heater, auxiliary burner plant
B6.4 High-temperature Converter housing, refractory linings
converter Product burner
Burner plants, support firing
Burner plants, main firing
Burner plant, oxygen
Ventilation and fans
Steel plate belt for glass discharge
Glass cooling equipment
B6.5 Flue gas cooling Air/flue gas heat exchanger
Hot air fan, pipework
Quenching, dioxin trap
- 8 -
<PAGE>
B6.6 Dust separation Hot gas filter, solids discharge
Drum filling equipment for oxides
B6.7 Nitrogen removal Ammonia mixer
Denox plant
B6.8 Exhaust gas Quenching, HCL and HF separation
purification SO2, aerosols
1st. + 2nd. stages Waste water treatment (option)
Sludge dehydration (option)
B6.9 Dioxin removal Active carbon filter
B6.10 Flue gas discharge Gas lines, flue gas fan,
Flue system
B6.11 Electrical System Mimic diagram for separation plant Process
wiring, SPS Siemens Low-voltage switchgear,
Siemens Field wiring Emissions
measurement O2, CO2, CO, NOx
We expressly reserve the right to introduce technical changes to the component
parts of individual subassemblies.
B7 Limits of supply
o Gas Line flange after gas tank
o Drinking water Line flange after fresh water distributor
o Industrial water Line flange after industrial water distributor
o Waste water Discharge from waste gas purification
o Electrical Terminal for high-voltage distribution
o Compressed air Line flange after compressed air distributor
o Process air Induction
o Waste air Flue outlet
o Waste gas Flue outlet
o Wet sludge Hopper, drier
o Glass Discharge plate conveyor / Cooler
- 9 -
<PAGE>
B8 Delivery exclusions
o Buildings and their infrastructure
o Workplace lighting and mains power supply sockets
o Internal technical services, staff areas, laboratory facilities
o Approval and authorization costs
o All necessary certificates for the authorization procedure
o Costs involved in official output measurements
o Connections/charges for power, water and waste water, etc.
o High-voltage transformer station and distribution
o Consumables and energy of all kinds for IBN and PB
o Securing sales of valuable materials and residues
o Customary duties in this country, such as Value Added Tax or other charges
B9 Maintenance and servicing
The supplier reserves all rights and interests in technically indicated,
necessary and recurring overhaul and servicing operations for the proper
maintenance of the high-temperature separation plant.
The areas of drying, gasification, vitrification and gas cooling may only be
inspected and overhauled by the supplier exclusively, expressly and
unconditionally. The necessary replacement parts or components must be obtained
exclusively from the supplier.
B10 Confidentiality
All documents, specifications, process charts and measurements relating to or
contained in this offer, and those provided in the event of the award of the
contract, are expressly subject to confidentiality.
They may be used expressly only in conjunction with projects and plants, and
they must not be shown or made available to third parties, or copied for other
purposes. They may only be published subject to the express written agreement of
the supplier.
- 10 -
<PAGE>
Part C Charts and Drawings
Part C Charts and Drawings
Brochure
Outline process chart
Subassembly drawings
Part D General Conditions of Delivery
Part D General Conditions of Delivery
D1 General terms and conditions of business of Seiler HT AG
D2 General conditions of delivery, VSM (Verein schweizerischer
Maschinenindustrieller - Swiss Mechanical Engineering Association).
D3 General assembly conditions, VSM (Verein schweizerischer
Maschinenindustrieller - Swiss Mechanical Engineering Association).
D4 General delivery conditions for machines and replacement parts, VSM
(Verein schweizerischer Maschinenindustrieller - Swiss Mechanical
Engineering Association).
UNTERSCHRIFTEN
Leuggern, 16.07.1993
- 11 -
<PAGE>
Seiler
Hochtemperatur - Trennanlagen AG
- ------------------------------------------------------------------------------
Seiler Pollution Control AG
(SEPC)
- ------------------------------------------------------------------------------
- 12 -
<PAGE>
EXHIBIT 10.5
Delivery Contract
between
Seiler Pollution Control AG (SEPC)
Bahnhofstrasse
CH - 4353 Leibstadt
and
deliverer
SEILER Hochtemperatur - Trennanlagen AG
CH-5316 Leuggern, Switzerland
Tel. +41 56 245 72 45 Fax +41 56 245 73 74
for the supply of a drying and
High-Temperature Separation System
for the Vitrification of Hazardous Wastes
(System SHT)
<PAGE>
List of Contents
Part A Commercial
A1 Initial situation
A2 Contractual basis
A3 Price quotation
A4 Prices
A5 Terms and conditions of payment
A6 Duties and taxes
A7 Dates
A8 Validity
Part B Technical Section
B1 Technical basis for the offer
B2 Process specification
B3 Subassembly specification
B4 Design data
B5 Guarantee data
B6 Scope of supplies and services
B7 Limit of supply
B8 Supply exclusions
B9 Maintenance and servicing
B10 Confidentiality
- i -
<PAGE>
Part C Charts and Drawings
Part D General Conditions of Delivery
D1 General terms and conditions of business of Seiler HT AG
D2 General conditions of delivery for machines and systems, VSM
D3 General assembly conditions, VSM
D4 General delivery conditions for machines and replacement parts, VSM
- ii -
<PAGE>
Part A Commercial
A1 Initial situation
A2 Contractual basis
A3 Price quotation
A4 Prices
A5 Terms and conditions of payment
A6 Duties and taxes
A7 Dates
A8 Validity
A Commercial Section
A1 Initial situation
SEPC wishes to dry hazardous waste streams such as paint- and hydroxide
sludges, and to vitrify these wastes in a Seiler high-temperature separation
system at temperatures of approximately 1500 degrees C.
A2 Contractual basis
This offer is based essentially on the principles set out below. These are an
integral part of this offer. They are essentially as follows:
- - Waste: Hazardous Waste containing heavy metals like Hydroxide
-or paintsludges, water-soluble (water content of sludges
<= 50%)
- - Handling and Handling and pretreating about 500-1000 kg/h
Pretreatmentstation
for hazardous waste
- - Drying plant Nominal output 250 kg/h, dry matter content > 95%
<PAGE>
- - Separation plant Nominal output 350 kg/h, input dry matter content > 95%
Maximum output 500 kg/h of dry matter content > 95%*
A3 Price quotation
Inclusive
Complete plant, delivered free to place of use, installed, including
commissioning and trial operation for four weeks, and with one of our
specialists on-site for a period of one month.
Excluding
Pre-mix plant for the pre-treatment of the sludges.
Waste water purification plant for the pre-mix plant and washings from the
drying stage.
Point B8, Technical Section, page 17 of our offer.
A4 Prices
process line
Project management, factory assembly and site installation, IBN; PB
Product drying, storage
Fuel supply, gas and oxygen
Product separation
Gas cooling, complete
Waste gas purification, complete (without waste water purification)
Electrical and process line engineering
Total SystemPrice SFr. 9.080.170.--
The total price relates to the aforementioned plant configuration, delivered
free to the plant, installed, excluding statutory Value Added Tax, including
commissioning and trial operation for four weeks, with one of our specialists
on-site for a period of one month, without any approval fees of any kind or
costs involved in statutory output and emission measurements performed by the
TUV or Gewerbeaufsichtsamt (Factories Inspectorate).
A5 Terms and conditions of payment
1st rate SFr. 100.000 on awarding the contract at 16.7.1993
SFr. 800.000 at 31.7.1993
- 2 -
<PAGE>
2nd rate 10% at 31.8.1993
3rd rate 20% at 31.10.1993
4th rate 20% at 30.10.1993
5th rate 20% when ready for shipment
6th rate 10% begin of installation
7th rate 10% after successful start up
10% 30 days after start of commissioning
Conditions net, after presentation of invoice, although not later than
the commencement of commercial operation
A6 Duties and taxes
The offer price shall be understood not to include customs clearance charges,
customary duties in this country, or Value Added Tax.
A7 Dates
according agreements
A8 Validity
This offer shall remain valid as long as agreed.
Leuggern, 16.07.1993
Seiler
Hochtemperatur - Trennanlagen AG
Seiler Pollution Control AG
(SEPC)
- 3 -
<PAGE>
Part B Technical Section
B1 Technical basis for the offer
B2 Process specification
B3 Subassembly specification
B4 Design data
B5 Guarantee data
B6 Scope of supplies and services
B7 Limits of supply
B8 Supply exclusions
B9 Maintenance and servicing
B10 Confidentiality
B1 Technical basis for the offer
o The offer is based essentially on the information currently in our possession
provided by the customer.
B2 Process Specification
B2.1 Product drying, storage
Hazardous wastes like Paint and hydroxide sludges are coagulated (mineral
flocculation) by the customer, divested of adhesive, and delivered in barrels
for intermediate storage. Drying takes place on a drum-type drier with an
integral separator system for the dried material.
B2.2 Pre-heating
The dried material is taken from the daily storage silo by means of a cell wheel
and is transferred to the buffer container of the pre-heaterplant. The dried
material, which is heated
- 4 -
<PAGE>
indirectly by means of (gas-heated) hot air, is gasified at about 700 degrees C
under controlled conditions. Volatile fractions are released and are introduced
into the high-temperature converter at the same time as the inert material via a
product burner.
B2.3 High-temperature converter
The gaseous and solid material fractions introduced into the converter (glass
furnace) are subjected to thermal decomposition with a modulating pilot flame
(gas firing) at approx. 1 500-1600 degrees C. Volatile heavy metalcompounds,
such as from Cd and Pb are already vaporized at temperatures of 800 degrees C to
1 050 degrees C. In order to guarantee the desired high degree of oxidation of
the heavy metals, additional technical oxygen can be added with gas/oxygen
burners.
It can be demonstrated that organic substances, such as aromatic and polycyclic
hydrocarbons, together with any dioxins and furanes that may be present, are
completely destroyed at the burner and converter temperatures.
Depending on the intended application for the glass, the purity (proportions of
heavy metals in the glass matrix) can be influenced with the oxygen burners
(oxidation of heavy metals).
Once a particular liquid glass volume is reached inside the converter, the glass
runs out continuously via a specially designed outlet and is granulated by means
of cooled belts or a water bath to form a product like medium abrasives.
B2.4 Heat recovery
The waste gas, of which the temperature is approx. 1 550 degrees C as it leaves
the converter, is cooled to around 600 degrees C in a air/flue gas heat
exchanger. The energy (hot air) released in this way can be used for drying the
sludges.
B2.5 Dioxin trap
In order to prevent the further formation of dioxins, the waste gas leaving the
heat exchanger at a temperature of 600 degrees C is cooled abruptly to approx.
300 degrees C in a further quenching stage (water).
B2.6 Separation of dust and metal oxides
The waste gas next flows through a ceramic multiple-tube dust filter. The
separated/condensed and enriched metal oxide dusts and chlorides assume the form
of a powdery/crumb-like substance (specific gravity approx 0.1) and are filled
into tightly sealing plastic containers and sent for further processing.
- 5 -
<PAGE>
B2.7 Gas purification
By mixing ammonia into the gas flow, the waste gas is conditioned and fed to the
following catalytic nitrogen removal stage.
The waste gas, which leaves the catalyst at a temperature of approx.
280 degrees C, is then divested of HCL and HF at a gas temperature of approx.
73 degrees C in a quenching and washing circuit (first stage) located ahead of
the wet gas cleaning stage, SO2 is washed out in the second stage, and aerosols
in the third step.
The outgoing water from all stages is neutralized in a compact plant and any
solids are brought into a fine filter press for dehydration. Depending on the
concentration the sludges are brought to the dryer for later vitrification.
The exhaust air is finally discharged into the atmosphere via an active carbon
filter (a so-called police filter) at a temperature of 70 degrees C (saturated)
via an exhaust air flue.
B2.8 Service facilities
Liquid petroleum gas or natural gas is used for firing the high-temperature
converter, and technical-grade oxygen (option) is used for the reduction of
heavy metals. The tank facilities and batteries of cylinders are positioned
outside the building for safety reasons.
B3 Subassembly specification
B3.1 Container construction
The entire plant is constructed semi-mobile. The equipment is combined into
subassemblies and built into transport frames. These frames can be moved by
loading them by crane onto low-loader transport vehicles. Once at their
destination, the modular units are positioned as required, connected to the
energy supply services (electricity, gas, water, compressed air), and are then
ready to be started up. The complete plant essentially consists of the following
units:
oHandling and Pretreatment of incoming hazardous wastes
odrying station
oPre-silo for dry material (daily silo)
oPre-heater
oHigh-Temperature Converter
oQuenching station, heat exchanger
- 6 -
<PAGE>
oFilter plant
oDenox plant
oWet gas purification, Stage 1
oWet gas purification, Stage 2
oWatertreatment Plant for neutralization, filter press for wet gas washer etc.
oActive carbon filter
oControl (central), Emergency power supply, waste gas fan
B4 Design data
B4.1 Technical data for production plant
Operating period per process line / converter
Operating period, nominal (3-shift running) 7 500 h/year
Travelling time, approx. 3 x 2 500 h
Interim overhaul/inspection 2 x 100 h
Annual overhaul 1 x 760 h
B4.2 Plant output
Per process line / converter
Hourly Input nominal for a dry matter content of 95% 350 kg
maximum short-duration 700 kg
average 500 kg
average Input nominal 7500 h/year of dry matter (with a 3750 t
per year humidity content of 95%)
average input of nominal mixture of different waste streams 5-6000 t
waste per year not pretreated
- 7 -
<PAGE>
B4.3 Mass flows
See Process Chart
B5 Guarantee data
B5.1 Materials guarantee
We guarantee materials for a period of one year from the start of commissioning
on all commercially available components. The manufacturer's guarantees shall
apply for motors, transmissions, electrical components and fans. The supplier
will replace any defective components. However, the cost of their installation
must be met by the operator.
B5.2 Guarantee exclusion
All wearing parts throughout the entire plant and all materials that are exposed
to high temperatures, including refractory linings in the vitrification chamber
and the gas mixing chamber, are excluded.
B6 Scope of supplies and services
B6 Pretratement Station
B6.0 Sludge drying Charging device with mixer
Drier
Cyclone, dust discharge
Dust washer for part of gas flow
B6.1 Material storage Silo for dry material, 10 m3
B6.2 Fuel supply LPG tank (rented tank on-site)
Oxygen cylinder battery (rented cylinders on-site)
Pipework
Safety equipment
B6.3 Pre-heater / Gasifier Buffer container for dry material
Discharge equipment
Pre-heater, auxiliary burner plant
B6.4 High-temperature Converter housing, refractory linings
converter Product burner
Burner plants, support firing
Burner plants, main firing
Burner plant, oxygen
Ventilation and fans
Steel plate belt for glass discharge
Glass cooling equipment
- 8 -
<PAGE>
B6.5 Flue gas cooling Air/flue gas heat exchanger
Hot air fan, pipework
Quenching, dioxin trap
B6.6 Dust separation Hot gas filter, solids discharge
Drum filling equipment for oxides
B6.7 Nitrogen removal Ammonia mixer
Denox plant
B6.8 Exhaust gas Quenching, HCL and HF separation
purification SO2, aerosols
1st. + 2nd. stages Waste water treatment (option)
Sludge dehydration (option)
B6.9 Dioxin removal Active carbon filter
B6.10 Flue gas discharge Gas lines, flue gas fan,
Flue system
B6.11 Electrical System Mimic diagram for separation plant
Process wiring, SPS Siemens
Low-voltage switchgear, Siemens
Field wiring
Emissions measurement O2, CO2, CO, NOx
We expressly reserve the right to introduce technical changes to the component
parts of individual subassemblies.
B7 Limits of supply
o Gas Line flange after gas tank
o Drinking water Line flange after fresh water distributor
o Industrial water Line flange after industrial water distributor
o Waste water Discharge from waste gas purification
o Electrical Terminal for high-voltage distribution
o Compressed air Line flange after compressed air distributor
o Process air Induction
o Waste air Flue outlet
o Waste gas Flue outlet
- 9 -
<PAGE>
o Wet sludge Hopper, drier
o Glass Discharge plate conveyor / Cooler
B8 Delivery exclusions
o Buildings and their infrastructure
o Workplace lighting and mains power supply sockets
o Internal technical services, staff areas, laboratory facilities
o Approval and authorization costs
o All necessary certificates for the authorization procedure
o Costs involved in official output measurements
o Connections/charges for power, water and waste water, etc.
o High-voltage transformer station and distribution
o Consumables and energy of all kinds for IBN and PB
o Securing sales of valuable materials and residues
o Customary duties in this country, such as Value Added Tax or other charges
B9 Maintenance and servicing
The supplier reserves all rights and interests in technically indicated,
necessary and recurring overhaul and servicing operations for the proper
maintenance of the high-temperature separation plant.
The areas of drying, gasification, vitrification and gas cooling may only be
inspected and overhauled by the supplier exclusively, expressly and
unconditionally. The necessary replacement parts or components must be obtained
exclusively from the supplier.
B10 Confidentiality
All documents, specifications, process charts and measurements relating to or
contained in this offer, and those provided in the event of the award of the
contract, are expressly subject to confidentiality.
- 10 -
<PAGE>
They may be used expressly only in conjunction with projects and plants, and
they must not be shown or made available to third parties, or copied for other
purposes. They may only be published subject to the express written agreement of
the supplier.
Part C Charts and Drawings
Part C Charts and Drawings
Brochure
Outline process chart
Subassembly drawings
Part D General Conditions of Delivery
Part D General Conditions of Delivery
D1 General terms and conditions of business of Seiler HT AG
D2 General conditions of delivery, VSM (Verein schweizerischer
Maschinenindustrieller - Swiss Mechanical Engineering Association).
D3 General assembly conditions, VSM (Verein schweizerischer
Maschinenindustrieller - Swiss Mechanical Engineering Association).
D4 General delivery conditions for machines and replacement parts, VSM
(Verein schweizerischer Maschinenindustrieller - Swiss Mechanical
Engineering Association).
UNTERSCHRIFTEN
Leuggern, 16.07.1993
- 11 -
<PAGE>
Seiler
Hochtemperatur - Trennanlagen AG
- ------------------------------------------------------------------------------
Seiler Pollution Control AG
(SEPC)
- 12 -
<PAGE>
EXHIBIT 10.6
WORLD IMPORTS - U.S.A., INC.
1993 NON-STATUTORY STOCK OPTION PLAN
1. Purpose of this Plan.
This Non-Statutory Stock Option Plan (the "Plan") is intended as an
employment incentive, to aid in attracting and retaining in the employ or
service of WORLD IMPORTS -U.S.A., INC. (the "Company"), a Delaware corporation,
and any Affiliated Corporation, persons of experience and ability and whose
services are considered valuable, to encourage the sense of proprietorship in
such persons, and to stimulate the active interest of such persons in the
development and success of the Company. This Plan provides for the issuance of
non-statutory stock options ("NSOs" or "Options") which are not intended to
qualify as "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
2. Administration of this Plan.
The Company's Board of Directors ("Board") may appoint and maintain as
administrator of this Plan the Compensation Committee (the "Committee") of the
Board which shall consist of at least three members of the Board. Until such
time as the Committee is duly constituted, the Board itself shall have and
fulfill the duties herein allocated to the Committee. The Committee shall have
full power and authority to designate Plan participants, to determine the
provisions and terms of respective NSOs (which need not be identical as to
number of shares covered by any NSO, the method of exercise as related to
exercise in whole or in installments, or otherwise), including the NSO price,
and to interpret the provisions and supervise the administration of this Plan.
The Committee may in its discretion provide that certain NSOs not vest (that is,
become exercisable) until expiration of a certain period after issuance or until
other conditions are satisfied, so long as not contrary to this Plan.
A majority of the members of the Committee shall constitute a quorum. All
decisions and selections made by the Committee pursuant to this Plan's
provisions shall be made by a majority of its members. Any decision reduced to
writing and signed by all of the members shall be fully effective as if it had
been made by a majority at a meeting duly held. The Committee shall select one
of its members as its chairman and shall hold its meetings at such times and
places as it deems advisable. If at any time the Board shall consist of seven or
more members, then the Board may amend this Plan to provide that the Committee
shall consist only of Board members who shall not have been eligible to
participate in this Plan (or similar stock or stock option plan) of the Company
or its affiliates at any time within one year prior to appointment to the
Committee.
All NSOs granted under this Plan are subject to, and may not be exercised
before, the approval of this Plan by the holders of a majority of the Company's
outstanding shares, and if
<PAGE>
such approval is not obtained, all NSOs previously granted shall be void. Each
NSO shall be evidenced by a written agreement containing terms and conditions
established by the Committee consistent with the provisions of this Plan.
3. Designation of Participants.
The persons eligible for participation in this Plan as recipients of NSOs
shall include full-time and part-time employees (as determined by the Committee)
and officers of the Company or of an Affiliated Corporation. In addition,
directors of the Company or any Affiliated Corporation who are not employees of
the Company or an Affiliated Corporation and any attorney, consultant or other
adviser to the Company or any Affiliated Corporation shall be eligible to
participate in this Plan. For all purposes of this Plan, any director who is not
also a common law employee and is granted an option under this Plan shall be
considered an "employee" until the effective date of the director's resignation
or removal from the Board of Directors, including removal due to death or
disability. The Committee shall have full power to designate, from among
eligible individuals, the persons to whom NSOs may be granted. A person who has
been granted an NSO hereunder may be granted an additional NSO or NSOs, if the
Committee shall so determine. The granting of an NSO shall not be construed as a
contract of employment or as entitling the recipient thereof to any rights of
continued employment.
4. Stock Reserved for this Plan.
Subject to adjustment as provided in Paragraph 9 below, a total of
10,000,000 shares of Common Stock, $.0001 par value per share ("Stock"), of the
Company shall be subject to this Plan. The Stock subject to this Plan shall
consist of unissued shares or previously issued shares reacquired and held by
the Company or any Affiliated Corporation, and such amount of shares shall be
and is hereby reserved for sale for such purpose. Any of such shares which may
remain unsold and which are not subject to outstanding NSOs at the termination
of this Plan shall cease to be reserved for the purpose of this Plan, but until
termination of this Plan, the Company shall at all times reserve a sufficient
number of shares to meet the requirements of this Plan. Should any NSO expire or
be canceled prior to its exercise in full, the unexercised shares theretofore
subject to such NSO may again be subjected to an NSO under this Plan.
5. Option Price.
The purchase price of each share of Stock placed under NSO shall not be
less than Eighty Five percent (85%) of the fair market value of such share on
the date the NSO is granted. The fair market value of a share on a particular
date shall be deemed to be the average of either (i) the highest and lowest
prices at which shares were sold on the date of grant, if traded on a national
securities exchange, (ii) the high and low prices reported in the consolidated
reporting system, if traded on a "last sale reported" system, such as NASDAQ,
for over the counter securities, or (iii) the high bid and high asked price for
other over-the-counter securities. If no transactions in the Stock occur on the
date of grant, the fair market value shall be
- 2 -
<PAGE>
determined as of the next earliest day for which reports or quotations are
available. If the common shares are not then quoted on any exchange or in any
quotation medium at the time the option is granted, then the Board of Directors
or Committee will use its discretion in selecting a good faith value believed to
represent fair market value based on factors then known to them. The cash
proceeds from the sale of Stock are to be added to the general funds of the
Company.
6. Exercise Period.
(a) The NSO exercise period shall be a term of not more than ten (10)
years from the date of granting of each NSO and shall automatically terminate:
(i) Upon termination of the optionee's employment with the Company
for cause;
(ii) At the expiration of twelve (12) months from the date of
termination of the optionee's employment with the Company for any reason other
than death, without cause; provided, that if the optionee dies within such
nine-month period, subclause (iii) below shall apply; or
(iii) At the expiration of fifteen (15) months after the date of
death of the optionee.
(b) "Employment with the Company" as used in this Plan shall include
employment with any Affiliated Corporation, and NSOs granted under this Plan
shall not be affected by an employee's transfer of employment among the Company
and any Parent or Subsidiary thereof. An optionee's employment with the Company
shall not be deemed interrupted or terminated by a bona fide leave of absence
(such as sabbatical leave or employment by the Government) duly approved,
military leave or sick leave.
7. Exercise of Options.
(a) The Committee, in granting NSOs, shall have discretion to determine
the terms upon which NSOs shall be exercisable, subject to applicable provisions
of this Plan. Once available for purchase, unpurchased shares of Stock shall
remain subject to purchase until the NSO expires or terminates in accordance
with Paragraph 6 above. Unless otherwise provided in the NSO, an NSO may be
exercised in whole or in part, one or more times, but no NSO may be exercised
for a fractional share of Stock.
(b) NSOs may be exercised solely by the optionee during his lifetime, or
after his death (with respect to the number of shares which the optionee could
have purchased at the time of death) by the person or persons entitled thereto
under the decedent's will or the laws of descent and distribution.
- 3 -
<PAGE>
(c) The purchase price of the shares of Stock as to which an NSO is
exercised shall be paid in full at the time of exercise and no shares of Stock
shall be issued until full payment is made therefor. Payment shall be made
either (i) in cash, represented by bank or cashier's check, certified check or
money order (ii) in lieu of payment for bona fide services rendered, and such
services were not in connection with the offer or sale of securities in a
capital-raising transaction, (iii) by delivering shares of the Company's Common
Stock which have been beneficially owned by the optionee, the optionee's spouse,
or both of them for a period of at least six (6) months prior to the time of
exercise (the "Delivered Stock") in a number equal to the number of shares of
Stock being purchased upon exercise of the NSO or (iv) by delivery of shares of
corporate stock which are freely tradable without restriction and which are part
of a class of securities which has been listed for trading on the NASDAQ system
or a national securities exchange, with an aggregate fair market value equal to
or greater than the exercise price of the shares of Stock being purchased under
the NSO, or (v) a combination of cash, services, Delivered Stock or other
corporate shares. An NSO shall be deemed exercised when written notice thereof,
accompanied by the appropriate payment in full; is received by the Company. No
holder of an NSO shall be, or have any of the rights and privileges of, a
shareholder of the Company in respect of any shares of Stock purchasable upon
exercise of any part of an NSO unless and until certificates representing such
shares shall have been issued by the Company to him or her.
8. Assignability.
No NSO shall be assignable or otherwise transferable (by the optionee or
otherwise) except by will or the laws of descent and distribution. No NSO shall
be pledged or hypothecated in any manner, whether by operation of law or
otherwise, nor be subject to execution, attachment or similar process.
9. Reorganizations and Recapitalizations of the Company
(a) The existence of this Plan and NSOs granted hereunder shall not affect
in any way the right or power of the Company or its shareholders to make or
authorize any and all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stocks ahead of or affecting the Company's Common Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any sale,
exchange or transfer of all or any part of its assets or business, or the other
corporation act or proceeding, whether of a similar character or otherwise.
(b) The shares of Stock with respect to which NSOs may be granted
hereunder are shares of the Common Stock of the Company as currently
constituted. If, and whenever, prior to delivery by the Company of all of the
shares of Stock which are subject to NSOs granted hereunder, the Company shall
effect a subdivision or consolidation of shares or other capital readjustment,
the payment of a Stock dividend, a stock split, combination of shares (reverse
stock split) or recapitalization or other increase or reduction of the number of
shares of the
- 4 -
<PAGE>
Common Stock outstanding without receiving compensation therefor in money,
services or property, then the number of shares of Stock available under this
Plan and the number of shares of Stock with respect to which NSOs granted
hereunder may thereafter be exercised shall (i) in the event of an increase in
the number of outstanding shares, be proportionately increased, and the cash
consideration payable per share shall be proportionately reduced; and (ii) in
the event of a reduction in the number of outstanding shares, be proportionately
reduced, and the cash consideration payable per share shall be proportionately
increased.
(c) If the Company is reorganized, merged, consolidated or party to a plan
of exchange with another corporation pursuant to which shareholders of the
Company receive any shares of stock or other securities, there shall be
substituted for the shares of Stock subject to the unexercised portions of
outstanding NSOs an appropriate number of shares of each class of stock or other
securities which were distributed to the shareholders of the Company in respect
of such shares of Stock in the case of a reorganization, merger, consolidation
or plan of exchange; provided, however, that all such NSOs may be canceled by
the Company as of the effective date of a reorganization, merger, consolidation,
plan of exchange, or any dissolution or liquidation of the Company, by giving
notice to each optionee or his personal representative of its intention to do so
and by permitting the purchase of all the shares subject to such outstanding
NSOs for a period of not less than thirty (30) days during the sixty (60) days
next preceding such effective date.
(d) Except as expressly provided above, the Company's issuance of shares
of Stock of any class, or securities convertible into shares of Stock of any
class, for cash or property, or for labor or services, either upon direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into shares of
Stock or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number of shares of Stock subject to NSOs
granted hereunder or the purchase price of such shares.
10. Purchase for Investment.
Unless the shares of Stock covered by this Plan have been registered under
the Securities Act of 1933, as amended, each person exercising an NSO under this
Plan may be required by the Company to give a representation in writing that he
is acquiring such shares for his own account for investment and not with a view
to, or for sale in connection with, the distribution of any part thereof.
11. Effective Date and Expiration of this Plan.
This Plan shall be effective as of June 1, 1993, the date of its adoption
by the Board, subject to the approval of the Company's shareholders, and no NSO
shall be granted pursuant to this Plan after its expiration. This Plan shall
expire on June 1, 2003 except as to NSOs then outstanding, which shall remain in
effect until they have expired or been exercised.
- 5 -
<PAGE>
12. Amendments or Termination.
The Board may amend, alter or discontinue this Plan at any time in such
respects as it shall deem advisable in order to conform to any change in any
other applicable law, or in order to comply with the provisions of any rule or
regulation of the Securities and Exchange Commission required to exempt this
Plan or any NSOs granted thereunder from the operation of Section 16(b) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), or in any other
respect not inconsistent with Section 16(b) of the Exchange Act; provided, that
no amendment or alteration shall be made which would impair the rights of any
participant under any NSO theretofore granted, without his consent (unless made
solely to conform such NSO to, and necessary because of, changes in the
foregoing laws, rules or regulations), and except that no amendment or
alteration shall be made without the approval of shareholders which would:
(a) Increase the total number of shares reserved for the purposes of this
Plan or decrease the NSO price provided for in Paragraph 5 (except as provided
in Paragraph 9), or change the classes of persons eligible to participate in
this Plan as provided in Paragraph 3; or
(b) Extend the NSO period provided for in Paragraph 6; or
(c) Materially increase the benefits accruing to participants under this
Plan; or
(d) Materially modify the requirements as to eligibility for participation
in this Plan; or
(e) Extend the expiration date of this Plan as set forth in Paragraph 11.
13. Government Regulations.
This Plan, and the granting and exercise of NSOs hereunder, and the
obligation of the Company to sell and deliver shares of Stock under such NSOs,
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.
14. Liability.
No member of the Board of Directors, the Committee or officers or
employees of the Company or any Affiliated Corporation shall be personally
liable for any action, omission or determination made in good faith in
connection with this Plan.
15. Miscellaneous.
(a) The term "Affiliated Corporation" used herein shall mean any Parent or
Subsidiary.
- 6 -
<PAGE>
(b) The term "Parent" used herein shall mean any corporation owning 50
percent or more of the total combined voting stock of all classes of the Company
or of another corporation qualifying as a Parent within this definition.
(c) The term "Subsidiary" used herein shall mean any corporation more than
50 percent of whose total combined voting stock of all classes is held by the
Company or by another corporation qualifying as a Subsidiary within this
definition.
16. Options in Substitution for Other Options.
The Committee may, in its sole discretion, at any time during the term of
this Plan, grant new options to an employee under this Plan or any other stock
option plan of the Company on the condition that such employee shall surrender
for cancellation one or more outstanding options which represent the right to
purchase (after giving effect to any previous partial exercise thereof) a number
of shares, in relation to the number of shares to be covered by the new
conditional grant hereunder, determined by the Committee. If the Committee shall
have so determined to grant such new options on such a conditional basis ("New
Conditional Options"), no such New Conditional Option shall become exercisable
in the absence of such employee's consent to the condition and surrender and
cancellation as appropriate. New Conditional Options shall be treated in all
respects under this Plan as newly granted options. Option may be granted under
this Plan from time to time in substitution for similar rights held by employees
of other corporations who are about to become employees of the Company or an
Affiliated Corporation, or the merger or consolidation of the employing
corporation with the Company or an Affiliated Corporation, or the acquisition by
the Company or an Affiliated Corporation of the assets of the employing
corporation, or the acquisition by the Company or an Affiliated Corporation of
stock of the employing corporation as the result of which it becomes an
Affiliated Corporation.
17. Withholding Taxes.
Pursuant to applicable federal and state laws, the Company may be required
to collect withholding taxes upon the exercise of a NSO. The Company may
require, as a condition to the exercise of a NSO, that the optionee concurrently
pay to the Company the entire amount or a portion of any taxes which the Company
is required to withhold by reason of such exercise, in such amount as the
Committee or the Company in its discretion may determine. In lieu of part or all
of any such payment, the optionee may elect to have the Company withhold from
the shares to be issued upon exercise of the option that number of shares having
a Fair Market Value equal to the amount which the Company is required to
withhold.
- 7 -
<PAGE>
EXHIBIT 10.7
SEILER POLLUTION CONTROL SYSTEMS, INC.
1994 NON-STATUTORY STOCK OPTION PLAN
1. Purpose of this Plan.
This Non-Statutory Stock Option Plan (the "Plan") is intended as an
employment incentive, to aid in attracting and retaining in the employ or
service of SEILER POLLUTION CONTROL SYSTEMS, INC. (the "Company"), a Delaware
corporation, and any Affiliated Corporation, persons of experience and ability
and whose services are considered valuable, to encourage the sense of
proprietorship in such persons, and to stimulate the active interest of such
persons in the development and success of the Company. This Plan provides for
the issuance of non-statutory stock options ("NSOs" or "Options") which are not
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Administration of this Plan.
The Company's Board of Directors ("Board") may appoint and maintain as
administrator of this Plan the Compensation Committee (the "Committee") of the
Board which shall consist of at least three members of the Board. Until such
time as the Committee is duly constituted, the Board itself shall have and
fulfill the duties herein allocated to the Committee. The Committee shall have
full power and authority to designate Plan participants, to determine the
provisions and terms of respective NSOs (which need not be identical as to
number of shares covered by any NSO, the method of exercise as related to
exercise in whole or in installments, or otherwise), including the NSO price,
and to interpret the provisions and supervise the administration of this Plan.
The Committee may in its discretion provide that certain NSOs not vest (that is,
become exercisable) until expiration of a certain period after issuance or until
other conditions are satisfied, so long as not contrary to this Plan.
A majority of the members of the Committee shall constitute a quorum. All
decisions and selections made by the Committee pursuant to this Plan's
provisions shall be made by a majority of its members. Any decision reduced to
writing and signed by all of the members shall be fully effective as if it had
been made by a majority at a meeting duly held. The Committee shall select one
of its members as its chairman and shall hold its meetings at such times and
places as it deems advisable. If at any time the Board shall consist of seven or
more members, then the Board may amend this Plan to provide that the Committee
shall consist only of Board members who shall not have been eligible to
participate in this Plan (or similar stock or stock option plan) of the Company
or its affiliates at any time within one year prior to appointment to the
Committee.
All NSOs granted under this Plan are subject to, and may not be exercised
before, the approval of this Plan by the holders of a majority of the Company's
outstanding shares, and
<PAGE>
if such approval is not obtained, all NSOs previously granted shall be void.
Each NSO shall be evidenced by a written agreement containing terms and
conditions established by the Committee consistent with the provisions of this
Plan.
3. Designation of Participants.
The persons eligible for participation in this Plan as recipients of NSOs
shall include full-time and part-time employees (as determined by the Committee)
and officers of the Company or of an Affiliated Corporation. In addition,
directors of the Company or any Affiliated Corporation who are not employees of
the Company or an Affiliated Corporation and any attorney, consultant or other
adviser to the Company or any Affiliated Corporation shall be eligible to
participate in this Plan. For all purposes of this Plan, any director who is not
also a common law employee and is granted an option under this Plan shall be
considered an "employee" until the effective date of the director's resignation
or removal from the Board of Directors, including removal due to death or
disability. The Committee shall have full power to designate, from among
eligible individuals, the persons to whom NSOs may be granted. A person who has
been granted an NSO hereunder may be granted an additional NSO or NSOs, if the
Committee shall so determine. The granting of an NSO shall not be construed as a
contract of employment or as entitling the recipient thereof to any rights of
continued employment.
4. Stock Reserved for this Plan.
Subject to adjustment as provided in Paragraph 9 below, a total of 500,000
shares of Common Stock, $.0001 par value per share ("Stock"), of the Company
shall be subject to this Plan. The Stock subject to this Plan shall consist of
unissued shares or previously issued shares reacquired and held by the Company
or any Affiliated Corporation, and such amount of shares shall be and is hereby
reserved for sale for such purpose. Any of such shares which may remain unsold
and which are not subject to outstanding NSOs at the termination of this Plan
shall cease to be reserved for the purpose of this Plan, but until termination
of this Plan, the Company shall at all times reserve a sufficient number of
shares to meet the requirements of this Plan. Should any NSO expire or be
canceled prior to its exercise in full, the unexercised shares theretofore
subject to such NSO may again be subjected to an NSO under this Plan.
5. Option Price.
The purchase price of each share of Stock placed under NSO shall not be
less than Eighty Five percent (85%) of the fair market value of such share on
the date the NSO is granted. The fair market value of a share on a particular
date shall be deemed to be the average of either (i) the highest and lowest
prices at which shares were sold on the date of grant, if traded on a national
securities exchange, (ii) the high and low prices reported in the consolidated
reporting system, if traded on a "last sale reported" system, such as NASDAQ,
for over the counter securities, or (iii) the high bid and high asked price for
other over-the-counter securities. If no transactions in the Stock occur on the
date of grant, the fair market value shall be
- 2 -
<PAGE>
determined as of the next earliest day for which reports or quotations are
available. If the common shares are not then quoted on any exchange or in any
quotation medium at the time the option is granted, then the Board of Directors
or Committee will use its discretion in selecting a good faith value believed to
represent fair market value based on factors then known to them. The cash
proceeds from the sale of Stock are to be added to the general funds of the
Company.
6. Exercise Period.
(a) The NSO exercise period shall be a term of not more than ten (10)
years from the date of granting of each NSO and shall automatically terminate:
(i) Upon termination of the optionee's employment with the Company
for cause;
(ii) At the expiration of twelve (12) months from the date of
termination of the optionee's employment with the Company for any reason other
than death, without cause; provided, that if the optionee dies within such
nine-month period, subclause (iii) below shall apply; or
(iii) At the expiration of fifteen (15) months after the date of
death of the optionee.
(b) "Employment with the Company" as used in this Plan shall include
employment with any Affiliated Corporation, and NSOs granted under this Plan
shall not be affected by an employee's transfer of employment among the Company
and any Parent or Subsidiary thereof. An optionee's employment with the Company
shall not be deemed interrupted or terminated by a bona fide leave of absence
(such as sabbatical leave or employment by the Government) duly approved,
military leave, maternity leave or sick leave
7. Exercise of Options.
(a) The Committee, in granting NSOs, shall have discretion to determine
the terms upon which NSOs shall be exercisable, subject to applicable provisions
of this Plan. Once available for purchase, unpurchased shares of Stock shall
remain subject to purchase until the NSO expires or terminates in accordance
with Paragraph 6 above. Unless otherwise provided in the NSO, an NSO may be
exercised in whole or in part, one or more times, but no NSO may be exercised
for a fractional share of Stock.
(b) NSOs may be exercised solely by the optionee during his lifetime, or
after his death (with respect to the number of shares which the optionee could
have purchased at the time of death) by the person or persons entitled thereto
under the decedent's will or the laws of descent and distribution.
- 3 -
<PAGE>
(c) The purchase price of the shares of Stock as to which an NSO is
exercised shall be paid in full at the time of exercise and no shares of Stock
shall be issued until full payment is made therefor. Payment shall be made
either (i) in cash, represented by bank or cashier's check, certified check or
money order (ii) in lieu of payment for bona fide services rendered, and such
services were not in connection with the offer or sale of securities in a
capital-raising transaction, (iii) by delivering shares of the Company's Common
Stock which have been beneficially owned by the optionee, the optionee's spouse,
or both of them for a period of at least six (6) months prior to the time of
exercise (the "Delivered Stock") in a number equal to the number of shares of
Stock being purchased upon exercise of the NSO or (iv) by delivery of shares of
corporate stock which are freely tradable without restriction and which are part
of a class of securities which has been listed for trading on the NASDAQ system
or a national securities exchange, with an aggregate fair market value equal to
or greater than the exercise price of the shares of Stock being purchased under
the NSO, or (v) a combination of cash, services, Delivered Stock or other
corporate shares. An NSO shall be deemed exercised when written notice thereof,
accompanied by the appropriate payment in full, is received by the Company. No
holder of an NSO shall be, or have any of the rights and privileges of, a
shareholder of the Company in respect of any shares of Stock purchasable upon
exercise of any part of an NSO unless and until certificates representing such
shares shall have been issued by the Company to him or her.
8. Assignability.
No NSO shall be assignable or otherwise transferable (by the optionee or
otherwise) except by will or the laws of descent and distribution. No NSO shall
be pledged or hypothecated in any manner, whether by operation of law or
otherwise, nor be subject to execution, attachment or similar process.
9. Reorganizations and Recapitalizations of the Company
(a) The existence of this Plan and NSOs granted hereunder shall not affect
in any way the right or power of the Company or its shareholders to make or
authorize any and all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stocks ahead of or affecting the Company's Common Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any sale,
exchange or transfer of all or any part of its assets or business, or the other
corporation act or proceeding, whether of a similar character or otherwise.
(b) The shares of Stock with respect to which NSOs may be granted
hereunder are shares of the Common Stock of the Company as currently
constituted. If, and whenever, prior to delivery by the Company of all of the
shares of Stock which are subject to NSOs granted hereunder, the Company shall
effect a subdivision or consolidation of shares or other capital readjustment,
the payment of a Stock dividend, a stock split, combination of shares (reverse
stock split) or recapitalization or other increase or reduction of the number of
shares of the
- 4 -
<PAGE>
Common Stock outstanding without receiving compensation therefor in money,
services or property, then the number of shares of Stock available under this
Plan and the number of shares of Stock with respect to which NSOs granted
hereunder may thereafter be exercised shall (i) in the event of an increase in
the number of outstanding shares, be proportionately increased, and the cash
consideration payable per share shall be proportionately reduced; and (ii) in
the event of a reduction in the number of outstanding shares, be proportionately
reduced, and the cash consideration payable per share shall be proportionately
increased.
(c) If the Company is reorganized, merged, consolidated or party to a plan
of exchange with another corporation pursuant to which shareholders of the
Company receive any shares of stock or other securities, there shall be
substituted for the shares of Stock subject to the unexercised portions of
outstanding NSOs an appropriate number of shares of each class of stock or other
securities which were distributed to the shareholders of the Company in respect
of such shares of Stock in the case of a reorganization, merger, consolidation
or plan of exchange; provided, however, that all such NSOs may be canceled by
the Company as of the effective date of a reorganization, merger, consolidation,
plan of exchange, or any dissolution or liquidation of the Company, by giving
notice to each optionee or his personal representative of its intention to do so
and by permitting the purchase of all the shares subject to such outstanding
NSOs for a period of not less than thirty (30) days during the sixty (60) days
next preceding such effective date.
(d) Except as expressly provided above, the Company's issuance of shares
of Stock of any class, or securities convertible into shares of Stock of any
class, for cash or property, or for labor or services, either upon direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into shares of
Stock or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number of shares of Stock subject to NSOs
granted hereunder or the purchase price of such shares.
10. Purchase for Investment.
Unless the shares of Stock covered by this Plan have been registered under
the Securities Act of 1933, as amended, each person exercising an NSO under this
Plan may be required by the Company to give a representation in writing that he
is acquiring such shares for his own account for investment and not with a view
to, or for sale in connection with, the distribution of any part thereof.
11. Effective Date and Expiration of this Plan.
This Plan shall be effective as of August 18, 1994, the date of its
adoption by the Board, subject to the approval of the Company's shareholders,
and no NSO shall be granted pursuant to this Plan after its expiration. This
Plan shall expire on December 26, 2001 except as to NSOs then outstanding, which
shall remain in effect until they have expired or been exercised.
- 5 -
<PAGE>
12. Amendments or Termination.
The Board may amend, alter or discontinue this Plan at any time in such
respects as it shall deem advisable in order to conform to any change in any
other applicable law, or in order to comply with the provisions of any rule or
regulation of the Securities and Exchange Commission required to exempt this
Plan or any NSOs granted thereunder from the operation of Section 16(b) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), or in any other
respect not inconsistent with Section 16(b) of the Exchange Act; provided, that
no amendment or alteration shall be made which would impair the rights of any
participant under any NSO theretofore granted, without his consent (unless made
solely to conform such NSO to, and necessary because of, changes in the
foregoing laws, rules or regulations), and except that no amendment or
alteration shall be made without the approval of shareholders which would:
(a) Increase the total number of shares reserved for the purposes of this
Plan or decrease the NSO price provided for in Paragraph 5 (except as provided
in Paragraph 9), or change the classes of persons eligible to participate in
this Plan as provided in Paragraph 3; or
(b) Extend the NSO period provided for in Paragraph 6; or
(c) Materially increase the benefits accruing to participants under this
Plan; or
(d) Materially modify the requirements as to eligibility for participation
in this Plan; or
(e) Extend the expiration date of this Plan as set forth in Paragraph 11.
13. Government Regulations.
This Plan, and the granting and exercise of NSOs hereunder, and the
obligation of the Company to sell and deliver shares of Stock under such NSOs,
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.
14. Liability.
No member of the Board of Directors, the Committee or officers or
employees of the Company or any Affiliated Corporation shall be personally
liable for any action, omission or determination made in good faith in
connection with this Plan.
15. Miscellaneous.
(a) The term "Affiliated Corporation" used herein shall mean any Parent or
Subsidiary.
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<PAGE>
(b) The term "Parent" used herein shall mean any corporation owning 50
percent or more of the total combined voting stock of all classes of the Company
or of another corporation qualifying as a Parent within this definition.
(c) The term "Subsidiary" used herein shall mean any corporation more than
50 percent of whose total combined voting stock of all classes is held by the
Company or by another corporation qualifying as a Subsidiary within this
definition.
16. Options in Substitution for Other Options.
The Committee may, in its sole discretion, at any time during the term of
this Plan, grant new options to an employee under this Plan or any other stock
option plan of the Company on the condition that such employee shall surrender
for cancellation one or more outstanding options which represent the right to
purchase (after giving effect to any previous partial exercise thereof) a number
of shares, in relation to the number of shares to be covered by the new
conditional grant hereunder, determined by the Committee. If the Committee shall
have so determined to grant such new options on such a conditional basis ("New
Conditional Options"), no such New Conditional Option shall become exercisable
in the absence of such employee's consent to the condition and surrender and
cancellation as appropriate. New Conditional Options shall be treated in all
respects under this Plan as newly granted options. Option may be granted under
this Plan from time to time in substitution for similar rights held by employees
of other corporations who are about to become employees of the Company or an
Affiliated Corporation, or the merger or consolidation of the employing
corporation with the Company or an Affiliated Corporation, or the acquisition by
the Company or an Affiliated Corporation of the assets of the employing
corporation, or the acquisition by the Company or an Affiliated Corporation of
stock of the employing corporation as the result of which it becomes an
Affiliated Corporation.
17. Withholding Taxes.
Pursuant to applicable federal and state laws, the Company may be required
to collect withholding taxes upon the exercise of a NSO. The Company may
require, as a condition to the exercise of a NSO, that the optionee concurrently
pay to the Company the entire amount or a portion of any taxes which the Company
is required to withhold by reason of such exercise, in such amount as the
Committee or the Company in its discretion may determine. In lieu of part or all
of any such payment, the optionee may elect to have the Company withhold from
the shares to be issued upon exercise of the option that number of shares having
a Fair Market Value equal to the amount which the Company is required to
withhold.
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<PAGE>
EXHIBIT 10.8
SEILER POLLUTION CONTROL SYSTEMS, INC.
1995 NON-STATUTORY STOCK OPTION PLAN
1. Purpose of the Plan.
The 1995 Non-Statutory Stock Option Plan (the "Plan") is intended as an
employment incentive, to aid in attracting and retaining in the employ or
service of SEILER POLLUTION CONTROL SYSTEMS, INC. (the "Company"), a Delaware
corporation, and any Affiliated Corporation, persons of experience and ability
and whose services are considered valuable, to encourage the sense of
proprietorship in such persons, and to stimulate the active interest of such
persons in the development and success of the Company. The Plan provides for the
issuance of non-statutory stock options ("Options") which are not intended to
qualify as "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
2. Administration of the Plan.
The Company's Board of Directors ("Board") may appoint and maintain as
administrator of the Plan a Compensation Committee (the "Committee") of the
Board which shall consist of at least three members of the Board. Until such
time as the Committee is duly constituted, the Board itself shall have and
fulfill the duties herein allocated to the Committee. The Committee shall have
full power and authority to designate Plan participants, to determine the
provisions and terms of respective Options, the method of exercise as related to
exercise in whole or in installments, and Option price, and to interpret the
provisions and supervise the administration of the Plan. The Committee may in
its discretion provide that certain Options not vest until expiration of a
certain period after issuance or until other conditions are satisfied, so long
as not contrary to the Plan.
A majority of the members of the Committee shall constitute a quorum. All
decisions and selections made by the Committee pursuant to the Plan's provisions
shall be made by a majority of its members. Any decision reduced to writing and
signed by all of the members shall be fully effective as if it had been made by
a majority at a meeting duly held. The Committee shall select one of its members
as its chairman and shall hold its meetings at such times and places as it deems
advisable. If at any time the Board shall consist of seven or more members, then
the Board may amend the Plan to provide that the Committee shall consist only of
Board members who shall not have been eligible to participate in the Plan (or
similar stock option plan) of the Company or its affiliates at any time within
one year prior to appointment to the Committee.
Each Option shall be evidenced by a written agreement containing terms and
conditions established by the Committee consistent with the provisions of the
Plan.
<PAGE>
3. Designation of Participants.
The persons eligible for participation in the Plan as recipients of
Options shall include full-time and part-time employees (as determined by the
Committee) and officers of the Company or of an Affiliated Corporation. In
addition, directors of the Company or any Affiliated Corporation who are not
employees of the Company or an Affiliated Corporation and any attorney,
consultant or other adviser to the Company or any Affiliated Corporation shall
be eligible to participate in the Plan. For all purposes of the Plan, any
director who is not also a common law employee and is granted an Option under
the Plan shall be considered an "employee" until the effective date of the
director's resignation or removal from the Board of Directors, including removal
due to death or disability. The Committee shall have full power to designate,
from among eligible individuals, the persons to whom Options may be granted. A
person who has been granted an Option hereunder may be granted an additional
Option or Options, if the Committee shall so determine. The granting of an
Option shall not be construed as a contract of employment or as entitling the
recipient thereof to any rights of continued employment.
4. Stock Reserved for the Plan.
Subject to adjustment as provided in Paragraph 9 below, a total of
1,000,000 shares of Common Stock, $.0001 par value per share ("Stock"), of the
Company shall be subject to the Plan. The Stock subject to the Plan shall
consist of unissued shares or previously issued shares reacquired and held by
the Company or any Affiliated Corporation, and such amount of shares shall be
and is hereby reserved for sale for such purpose. Any such shares which may
remain unsold and which are not subject to outstanding Options at the
termination of the Plan shall cease to be reserved for the purpose of the Plan,
but until termination of the Plan, the Company shall at all times reserve a
sufficient number of shares to meet the requirements of the Plan. Should any
Option expire or be canceled prior to its exercise in full, the unexercised
shares theretofore subject to such Option may again be subjected to an Option
under the Plan.
5. Option Price.
The purchase price of each share of Stock placed under Option shall not be
less than eighty-five percent (85%) of the fair market value of such share on
the date the Option is granted. The fair market value of a share on a particular
date shall be deemed to be the average of either (i) the highest and lowest
prices at which shares were sold on the date of grant, if traded on a national
securities exchange, (ii) the high and low prices reported in the consolidated
reporting system, if traded on a "last sale reported" system, such as NASDAQ,
for over-the-counter securities, or (iii) the high bid and high asked price for
other over-the-counter securities. If no transactions in the Stock occur on the
date of grant, the fair market value shall be determined as of the next earliest
day for which reports or quotations are available. If the common shares are not
then quoted on any exchange or in any quotation medium at the time the Option is
granted, then the Board of Directors or Committee shall use its discretion in
selecting
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<PAGE>
a good faith value believed to represent fair market value based on factors then
known to them. The cash proceeds from the sale of Stock shall be added to the
general funds of the Company.
6. Exercise Period.
(a) The Option exercise period shall be a term of not more than ten (10)
years from the date of granting of each Option and shall automatically
terminate:
(i) Upon the expiration of the term of the Option as set
forth in the Option agreement but in no event (except as
provided in (iv) below) later than ten (10) years from
the date of grant of such Option;
(ii) Upon termination of the optionee's employment with the
Company for cause;
(iii) Subject to subclause (i) above, upon the expiration of
twelve (12) months from the date of termination of the
optionee's employment with the Company for any reason,
other than death, without cause; provided, that if the
optionee dies within three months after termination of
his employment, subclause (iv) below shall apply; or
(iv) Upon the expiration of fifteen (15) months after the
date of death of the optionee, provided that the Option
was exercisable on the date of death.
(b) "Employment with the Company" as used in the Plan shall include
employment with any Affiliated Corporation, and Options granted under the Plan
shall not be affected by an employee's transfer of employment among the Company
and any Parent or Subsidiary thereof. An optionee's employment with the Company
shall not be deemed interrupted or terminated by a bona fide leave of absence
(such as sabbatical leave or employment by the Government) duly approved,
military leave, maternity leave or sick leave.
7. Exercise of Options.
(a) The Committee, in granting Options, shall have discretion to determine
the terms and conditions upon which Options shall be exercisable, subject to
applicable provisions of the Plan. Once available for purchase, unpurchased
shares of Stock shall remain subject to purchase until the Option expires or
terminates in accordance with Paragraph 6 above. Unless otherwise provided in
the Option, an Option may be exercised in whole or in part, one or more times,
but no Option may be exercised for a fractional share of Stock.
- 3 -
<PAGE>
(b) Options may be exercised solely by the optionee during his lifetime,
or after his death (with respect to the number of shares which the optionee
could have purchased at the time of death) by the person or persons entitled
thereto under the decedent's will or the laws of descent and distribution.
(c) The purchase price of the shares of Stock as to which an Option is
exercised shall be paid in full at the time of exercise and no shares of Stock
shall be issued until full payment is made therefor. Payment shall be made
either (i) in cash, represented by bank or cashier's check, certified check or
money order, (ii) in lieu of payment for bona fide services rendered, provided
that such services were not in connection with the offer or sale of securities
in a capital-raising transaction, (iii) by delivery of shares of the Company's
Common Stock or by delivery of shares of corporate stock which are freely
tradable without restriction and which are part of a class of securities which
has been listed for trading on the NASDAQ system or a national securities
exchange, with an aggregate fair market value on the date of exercise equal to
or greater than the exercise price of the shares of Stock being purchased under
the Option, or (iv) a combination of cash, services, or corporate shares.
Notwithstanding the foregoing, any method of payment other than in cash may be
used only with the consent of the Committee (or if none, the Board). An Option
shall be deemed exercised when written notice thereof, accompanied by the
appropriate payment in full, is received by the Company. No holder of an Option
shall be, or have any of the rights and privileges of, a shareholder of the
Company in respect of any shares of Stock purchasable upon exercise of any part
of an Option unless and until certificates representing such shares shall have
been issued by the Company to him or her.
8. Assignability.
No Option shall be assignable or otherwise transferable (by the optionee
or otherwise) except by will or the laws of descent and distribution. No Option
shall be pledged or hypothecated in any manner, whether by operation of law or
otherwise, nor be subject to execution, attachment or similar process.
9. Reorganizations and Recapitalizations of the Company.
(a) The existence of the Plan and Options granted hereunder shall not
affect in any way the right or power of the Company or its shareholders to make
or authorize any and all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stocks ahead of or affecting the Company's Common Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any sale,
exchange or transfer of all or any part of its assets or business, or the other
corporation act or proceeding, whether of a similar character or otherwise.
(b) The shares of Stock with respect to which Options may be granted
hereunder are shares of the Common Stock of the Company as currently
constituted. If, and whenever, prior to delivery by the Company of all of the
shares of Stock which are subject to Options granted
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<PAGE>
hereunder, the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a Stock dividend, a stock split,
combination of shares (reverse stock split) or recapitalization or other
increase or reduction of the number of shares of the Common Stock outstanding
without receiving compensation therefor in money, services or property, then the
number of shares of Stock available under this Plan and the number of shares of
Stock with respect to which Options granted hereunder may thereafter be
exercised shall (i) in the event of an increase in the number of outstanding
shares, be proportionately increased, and the cash consideration payable per
share shall be proportionately reduced; and (ii) in the event of a reduction in
the number of outstanding shares, be proportionately reduced, and the cash
consideration payable per share shall be proportionately increased.
(c) If the Company is reorganized, merged, consolidated or party to a plan
of exchange with another corporation pursuant to which shareholders of the
Company receive any shares of stock or other securities, there shall be
substituted for the shares of Stock subject to the unexercised portions of
outstanding Options an appropriate number of shares of each class of stock or
other securities which were distributed to the shareholders of the Company in
respect of such shares of Stock in the case of a reorganization, merger,
consolidation or plan of exchange; provided, however, that all such Options may
be canceled by the Company as of the effective date of a reorganization, merger,
consolidation, plan of exchange, or any dissolution or liquidation of the
Company, by giving notice to each optionee or his personal representative of its
intention to do so and by permitting the purchase of all the shares subject to
such outstanding Options for a period of not less than thirty (30) days during
the sixty (60) days next preceding such effective date.
(d) Except as expressly provided above, the Company's issuance of shares
of Stock of any class, or securities convertible into shares of Stock of any
class, for cash or property, or for labor or services, either upon direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into shares of
Stock or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number of shares of Stock subject to Options
granted hereunder or the purchase price of such shares.
10. Purchase for Investment.
Unless the shares of Stock covered by this Plan have been registered under
the Securities Act of 1933, as amended, each person exercising an Option under
the Plan may be required by the Company to give a representation in writing that
he is acquiring such shares for his own account for investment and not with a
view to, or for sale in connection with, the distribution of any part thereof.
11. Effective Date and Expiration of the Plan.
The Plan shall be effective as of September 15, 1995, the date of its
adoption by the Board, and no Option shall be granted pursuant to the Plan after
its expiration. This Plan shall
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<PAGE>
expire on December 31, 2005 except as to Options then outstanding, which shall
remain in effect until they have expired or been exercised.
12. Amendments or Termination.
The Board may amend, alter or discontinue the Plan at any time in such
respects as it shall deem advisable in order to conform to any change in any
applicable law, or in order to comply with the provisions of any rule or
regulation of the Securities and Exchange Commission required to exempt the Plan
or any Option granted thereunder from the operation of Section 16(b) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), or in any other
respect not inconsistent with Section 16(b) of the Exchange Act; provided, that
no amendment or alteration shall be made which would impair the rights of any
participant under any Option theretofore granted, without his consent (unless
made solely to conform such Option to, and necessary because of, changes in the
foregoing laws, rules or regulations).
13. Government Regulations.
The Plan, and the granting and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares of Stock under such
Options, shall be subject to all applicable laws, rules and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required.
14. Liability.
No member of the Board of Directors, the Committee or officers or
employees of the Company or any Affiliated Corporation shall be personally
liable for any action, omission or determination made in good faith in
connection with the Plan.
15. Miscellaneous.
(a) The term "Affiliated Corporation" used herein shall mean any Parent or
Subsidiary.
(b) The term "Parent" used herein shall mean any corporation owning 50
percent or more of the total combined voting stock of all classes of the Company
or of another corporation qualifying as a Parent within this definition.
(c) The term "Subsidiary" used herein shall mean any corporation more than
50 percent of whose total combined voting stock of all classes is held by the
Company or by another corporation qualifying as a Subsidiary within this
definition.
(d) The term "Committee" as used herein shall mean the Board of Directors
of the Company in such situations when the Company has no Compensation
Committee.
- 6 -
<PAGE>
16. Options in Substitution for Other Options.
The Committee may, in its sole discretion, at any time during the term of
the Plan, grant new options to an employee under the Plan or any other stock
option plan of the Company on the condition that such employee shall surrender
for cancellation one or more outstanding options which represent the right to
purchase (after giving effect to any previous partial exercise thereof) a number
of shares, in relation to the number of shares to be covered by the new
conditional grant hereunder, determined by the Committee. If the Committee shall
have so determined to grant such new options on such a conditional basis ("New
Conditional Options"), no such New Conditional Option shall become exercisable
in the absence of such employee's consent to the condition and surrender and
cancellation as appropriate. New Conditional Options shall be treated in all
respects under the Plan as newly granted options. Options may be granted under
the Plan from time to time in substitution for similar rights held by employees
of other corporations who are about to become employees of the Company or an
Affiliated Corporation, or the merger or consolidation of the employing
corporation with the Company or an Affiliated Corporation, or the acquisition by
the Company or an Affiliated Corporation of the assets of the employing
corporation, or the acquisition by the Company or an Affiliated Corporation of
stock of the employing corporation as the result of which it becomes an
Affiliated Corporation.
17. Withholding Taxes.
Pursuant to applicable federal and state laws, the Company may be required
to collect withholding taxes upon the exercise of an Option. The Company may
require, as a condition to the exercise of an Option that the optionee
concurrently pay to the Company the entire amount or a portion of any taxes
which the Company is required to withhold by reason of such exercise, in such
amount as the Committee or the Company in its discretion may determine. In lieu
of part or all of any such payment, the optionee may elect to have the Company
withhold from the shares to be issued upon exercise of the option that number of
shares having a Fair Market Value equal to the amount which the Company is
required to withhold.
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<PAGE>
EXHIBIT 10.9
SEILER POLLUTION CONTROL SYSTEMS, INC.
1996 NON-STATUTORY STOCK OPTION PLAN
1. Purpose of the Plan.
The 1996 Non-Statutory Stock Option Plan (the "Plan") is intended as an
employment incentive, to aid in attracting and retaining in the employ or
service of SEILER POLLUTION CONTROL SYSTEMS, INC. (the "Company"), a Delaware
corporation, and any Affiliated Corporation, persons of experience and ability
and whose services are considered valuable, to encourage the sense of
proprietorship in such persons, and to stimulate the active interest of such
persons in the development and success of the Company. The Plan provides for the
issuance of non-statutory stock options ("Options") which are not intended to
qualify as "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
2. Administration of the Plan.
The Company's Board of Directors ("Board") may appoint and maintain as
administrator of the Plan a Compensation Committee (the "Committee") of the
Board which shall consist of at least three members of the Board. Until such
time as the Committee is duly constituted, the Board itself shall have and
fulfill the duties herein allocated to the Committee. The Committee shall have
full power and authority to designate Plan participants, to determine the
provisions and terms of respective Options, the method of exercise as related to
exercise in whole or in installments, and Option price, and to interpret the
provisions and supervise the administration of the Plan. The Committee may in
its discretion provide that certain Options not vest until expiration of a
certain period after issuance or until other conditions are satisfied, so long
as not contrary to the Plan.
A majority of the members of the Committee shall constitute a quorum. All
decisions and selections made by the Committee pursuant to the Plan's provisions
shall be made by a majority of its members. Any decision reduced to writing and
signed by all of the members shall be fully effective as if it had been made by
a majority at a meeting duly held. The Committee shall select one of its members
as its chairman and shall hold its meetings at such times and places as it deems
advisable. If at any time the Board shall consist of seven or more members, then
the Board may amend the Plan to provide that the Committee shall consist only of
Board members who shall not have been eligible to participate in the Plan (or
similar stock option plan) of the Company or its affiliates at any time within
one year prior to appointment to the Committee.
Each Option shall be evidenced by a written agreement containing terms and
conditions established by the Committee consistent with the provisions of the
Plan.
<PAGE>
3. Designation of Participants.
The persons eligible for participation in the Plan as recipients of
Options shall include full-time and part-time employees (as determined by the
Committee) and officers of the Company or of an Affiliated Corporation. In
addition, directors of the Company or any Affiliated Corporation who are not
employees of the Company or an Affiliated Corporation and any attorney,
consultant or other adviser to the Company or any Affiliated Corporation shall
be eligible to participate in the Plan. For all purposes of the Plan, any
director who is not also a common law employee and is granted an Option under
the Plan shall be considered an "employee" until the effective date of the
director's resignation or removal from the Board of Directors, including removal
due to death or disability. The Committee shall have full power to designate,
from among eligible individuals, the persons to whom Options may be granted. A
person who has been granted an Option hereunder may be granted an additional
Option or Options, if the Committee shall so determine. The granting of an
Option shall not be construed as a contract of employment or as entitling the
recipient thereof to any rights of continued employment.
4. Stock Reserved for the Plan.
Subject to adjustment as provided in Paragraph 9 below, a total of
2,000,000 shares of Common Stock, $.0001 par value per share ("Stock"), of the
Company shall be subject to the Plan. The Stock subject to the Plan shall
consist of unissued shares or previously issued shares reacquired and held by
the Company or any Affiliated Corporation, and such amount of shares shall be
and is hereby reserved for sale for such purpose. Any such shares which may
remain unsold and which are not subject to outstanding Options at the
termination of the Plan shall cease to be reserved for the purpose of the Plan,
but until termination of the Plan, the Company shall at all times reserve a
sufficient number of shares to meet the requirements of the Plan. Should any
Option expire or be canceled prior to its exercise in full, the unexercised
shares theretofore subject to such Option may again be subjected to an Option
under the Plan.
5. Option Price.
The purchase price of each share of Stock placed under Option shall not be
less than eighty-five percent (85%) of the fair market value of such share on
the date the Option is granted. The fair market value of a share on a particular
date shall be deemed to be the average of either (i) the highest and lowest
prices at which shares were sold on the date of grant, if traded on a national
securities exchange, (ii) the high and low prices reported in the consolidated
reporting system, if traded on a "last sale reported" system, such as NASDAQ,
for over-the-counter securities, or (iii) the high bid and high asked price for
other over-the-counter securities. If no transactions in the Stock occur on the
date of grant, the fair market value shall be determined as of the next earliest
day for which reports or quotations are available. If the common shares are not
then quoted on any exchange or in any quotation medium at the time the Option is
granted, then the Board of Directors or Committee shall use its discretion in
selecting
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<PAGE>
a good faith value believed to represent fair market value based on factors then
known to them. The cash proceeds from the sale of Stock shall be added to the
general funds of the Company.
6. Exercise Period.
(a) The Option exercise period shall be a term of not more than ten (10)
years from the date of granting of each Option and shall automatically
terminate:
(i) Upon the expiration of the term of the Option as set
forth in the Option agreement but in no event (except as
provided in (iv) below) later than ten (10) years from
the date of grant of such Option;
(ii) Upon termination of the optionee's employment with the
Company for cause;
(iii) Subject to subclause (i) above, upon the expiration of
twelve (12) months from the date of termination of the
optionee's employment with the Company for any reason,
other than death, without cause; provided, that if the
optionee dies within three months after termination of
his employment, subclause (iv) below shall apply; or
(iv) Upon the expiration of fifteen (15) months after the
date of death of the optionee, provided that the Option
was exercisable on the date of death.
(b) "Employment with the Company" as used in the Plan shall include
employment with any Affiliated Corporation, and Options granted under the Plan
shall not be affected by an employee's transfer of employment among the Company
and any Parent or Subsidiary thereof. An optionee's employment with the Company
shall not be deemed interrupted or terminated by a bona fide leave of absence
(such as sabbatical leave or employment by the Government) duly approved,
military leave, maternity leave or sick leave.
7. Exercise of Options.
(a) The Committee, in granting Options, shall have discretion to determine
the terms and conditions upon which Options shall be exercisable, subject to
applicable provisions of the Plan. Once available for purchase, unpurchased
shares of Stock shall remain subject to purchase until the Option expires or
terminates in accordance with Paragraph 6 above. Unless otherwise provided in
the Option, an Option may be exercised in whole or in part, one or more times,
but no Option may be exercised for a fractional share of Stock.
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(b) Options may be exercised solely by the optionee during his lifetime,
or after his death (with respect to the number of shares which the optionee
could have purchased at the time of death) by the person or persons entitled
thereto under the decedent's will or the laws of descent and distribution.
(c) The purchase price of the shares of Stock as to which an Option is
exercised shall be paid in full at the time of exercise and no shares of Stock
shall be issued until full payment is made therefor. Payment shall be made
either (i) in cash, represented by bank or cashier's check, certified check or
money order, (ii) in lieu of payment for bona fide services rendered, provided
that such services were not in connection with the offer or sale of securities
in a capital-raising transaction, (iii) by delivery of shares of the Company's
Common Stock or by delivery of shares of corporate stock which are freely
tradable without restriction and which are part of a class of securities which
has been listed for trading on the NASDAQ system or a national securities
exchange, with an aggregate fair market value on the date of exercise equal to
or greater than the exercise price of the shares of Stock being purchased under
the Option, or (iv) a combination of cash, services, or corporate shares.
Notwithstanding the foregoing, any method of payment other than in cash may be
used only with the consent of the Committee (or if none, the Board). An Option
shall be deemed exercised when written notice thereof, accompanied by the
appropriate payment in full, is received by the Company. No holder of an Option
shall be, or have any of the rights and privileges of, a shareholder of the
Company in respect of any shares of Stock purchasable upon exercise of any part
of an Option unless and until certificates representing such shares shall have
been issued by the Company to him or her.
8. Assignability.
No Option shall be assignable or otherwise transferable (by the optionee
or otherwise) except by will or the laws of descent and distribution. No Option
shall be pledged or hypothecated in any manner, whether by operation of law or
otherwise, nor be subject to execution, attachment or similar process.
9. Reorganizations and Recapitalizations of the Company.
(a) The existence of the Plan and Options granted hereunder shall not
affect in any way the right or power of the Company or its shareholders to make
or authorize any and all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stocks ahead of or affecting the Company's Common Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any sale,
exchange or transfer of all or any part of its assets or business, or the other
corporation act or proceeding, whether of a similar character or otherwise.
(b) The shares of Stock with respect to which Options may be granted
hereunder are shares of the Common Stock of the Company as currently
constituted. If, and whenever, prior to delivery by the Company of all of the
shares of Stock which are subject to Options granted
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hereunder, the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a Stock dividend, a stock split,
combination of shares (reverse stock split) or recapitalization or other
increase or reduction of the number of shares of the Common Stock outstanding
without receiving compensation therefor in money, services or property, then the
number of shares of Stock available under this Plan and the number of shares of
Stock with respect to which Options granted hereunder may thereafter be
exercised shall (i) in the event of an increase in the number of outstanding
shares, be proportionately increased, and the cash consideration payable per
share shall be proportionately reduced; and (ii) in the event of a reduction in
the number of outstanding shares, be proportionately reduced, and the cash
consideration payable per share shall be proportionately increased.
(c) If the Company is reorganized, merged, consolidated or party to a plan
of exchange with another corporation pursuant to which shareholders of the
Company receive any shares of stock or other securities, there shall be
substituted for the shares of Stock subject to the unexercised portions of
outstanding Options an appropriate number of shares of each class of stock or
other securities which were distributed to the shareholders of the Company in
respect of such shares of Stock in the case of a reorganization, merger,
consolidation or plan of exchange; provided, however, that all such Options may
be canceled by the Company as of the effective date of a reorganization, merger,
consolidation, plan of exchange, or any dissolution or liquidation of the
Company, by giving notice to each optionee or his personal representative of its
intention to do so and by permitting the purchase of all the shares subject to
such outstanding Options for a period of not less than thirty (30) days during
the sixty (60) days next preceding such effective date.
(d) Except as expressly provided above, the Company's issuance of shares
of Stock of any class, or securities convertible into shares of Stock of any
class, for cash or property, or for labor or services, either upon direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into shares of
Stock or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number of shares of Stock subject to Options
granted hereunder or the purchase price of such shares.
10. Purchase for Investment.
Unless the shares of Stock covered by this Plan have been registered under
the Securities Act of 1933, as amended, each person exercising an Option under
the Plan may be required by the Company to give a representation in writing that
he is acquiring such shares for his own account for investment and not with a
view to, or for sale in connection with, the distribution of any part thereof.
11. Effective Date and Expiration of the Plan.
The Plan shall be effective as of April 15, 1996, the date of its adoption
by the Board, and no Option shall be granted pursuant to the Plan after its
expiration. This Plan shall expire
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on December 31, 2006 except as to Options then outstanding, which shall remain
in effect until they have expired or been exercised.
12. Amendments or Termination.
The Board may amend, alter or discontinue the Plan at any time in such
respects as it shall deem advisable in order to conform to any change in any
applicable law, or in order to comply with the provisions of any rule or
regulation of the Securities and Exchange Commission required to exempt the Plan
or any Option granted thereunder from the operation of Section 16(b) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), or in any other
respect not inconsistent with Section 16(b) of the Exchange Act; provided, that
no amendment or alteration shall be made which would impair the rights of any
participant under any Option theretofore granted, without his consent (unless
made solely to conform such Option to, and necessary because of, changes in the
foregoing laws, rules or regulations).
13. Government Regulations.
The Plan, and the granting and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares of Stock under such
Options, shall be subject to all applicable laws, rules and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required.
14. Liability.
No member of the Board of Directors, the Committee or officers or
employees of the Company or any Affiliated Corporation shall be personally
liable for any action, omission or determination made in good faith in
connection with the Plan.
15. Miscellaneous.
(a) The term "Affiliated Corporation" used herein shall mean any Parent or
Subsidiary.
(b) The term "Parent" used herein shall mean any corporation owning 50
percent or more of the total combined voting stock of all classes of the Company
or of another corporation qualifying as a Parent within this definition.
(c) The term "Subsidiary" used herein shall mean any corporation more than
50 percent of whose total combined voting stock of all classes is held by the
Company or by another corporation qualifying as a Subsidiary within this
definition.
(d) The term "Committee" as used herein shall mean the Board of Directors
of the Company in such situations when the Company has no Compensation
Committee.
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16. Options in Substitution for Other Options.
The Committee may, in its sole discretion, at any time during the term of
the Plan, grant new options to an employee under the Plan or any other stock
option plan of the Company on the condition that such employee shall surrender
for cancellation one or more outstanding options which represent the right to
purchase (after giving effect to any previous partial exercise thereof) a number
of shares, in relation to the number of shares to be covered by the new
conditional grant hereunder, determined by the Committee. If the Committee shall
have so determined to grant such new options on such a conditional basis ("New
Conditional Options"), no such New Conditional Option shall become exercisable
in the absence of such employee's consent to the condition and surrender and
cancellation as appropriate. New Conditional Options shall be treated in all
respects under the Plan as newly granted options. Options may be granted under
the Plan from time to time in substitution for similar rights held by employees
of other corporations who are about to become employees of the Company or an
Affiliated Corporation, or the merger or consolidation of the employing
corporation with the Company or an Affiliated Corporation, or the acquisition by
the Company or an Affiliated Corporation of the assets of the employing
corporation, or the acquisition by the Company or an Affiliated Corporation of
stock of the employing corporation as the result of which it becomes an
Affiliated Corporation.
17. Withholding Taxes.
Pursuant to applicable federal and state laws, the Company may be required
to collect withholding taxes upon the exercise of an Option. The Company may
require, as a condition to the exercise of an Option that the optionee
concurrently pay to the Company the entire amount or a portion of any taxes
which the Company is required to withhold by reason of such exercise, in such
amount as the Committee or the Company in its discretion may determine. In lieu
of part or all of any such payment, the optionee may elect to have the Company
withhold from the shares to be issued upon exercise of the option that number of
shares having a Fair Market Value equal to the amount which the Company is
required to withhold.
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