SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
October 31, 1996
________________________________________________
Date of Report (Date of earliest event reported)
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
________________________________________________
(Exact name of registrant as specified in its charter)
Colorado 0-25868 84-1293167
________________________________________________
(State or other (Commission I.R.S.Employer
jurisdiction File Number) Identification No.)
of incorporation)
4750 Table Mesa Drive, Boulder, CO 80303
________________________________________________
Address of principal executive offices) (Zip Code)
(303) 494-3000
________________________________________________
Registrant's telephone number, including area code
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) In accordance with the terms of an Agreement
and Plan of Reorganization dated October 31, 1996, on
October 31, 1996, the Company acquired all of the issued
and outstanding stock of Aquacare Environment, Inc., a
Washington corporation ("Aquacare"), in a stock for stock
exchange intended to qualify as a tax free reorganization
under Section 368(a)(1)(B) of the Internal Revenue Code of
1986. The Company issued 240,000 shares of its common
stock in escrow, pending receipt of the July 31, 1996,
audited financial statements of Aquacare, to the share-
holders of Aquacare. Upon completion of the transaction,
Aquacare became a wholly-owned subsidiary of the Company.
The shareholders of Aquacare who will receive
shares of the Company in the stock exchange are Henning
Gatz, Thomas J. Beiton, Lawrence W. Templeton, Arthur
C. Jones and Gregg Bonacker.
The Agreement and Plan of Reorganization also
provides for the issuance of up to 240,000 additional shares
("earn-out" shares) of the Company's common stock to the
shareholders of Aquacare, based upon the net after tax
earnings of Aquacare for each of the 3 fiscal years
immediately following the date of the stock exchange. In
order for the Company to be obligated to issue earn-out
shares, the net after tax earnings of Aquacare must exceed
$240,000 in the first fiscal year after the share exchange,
$360,000 in the second fiscal year after the share exchange,
and $480,000 in the third fiscal year after the share
exchange.
(b) Aquacare is engaged in the business of
development and marketing of cost-effective equipment and
systems used in modern intensive land-based fish farming.
Aquacare has been in business since 1987, and has developed
or supplied equipment for the culture of salmon, trout,
Arctic char, sea bream, sea bass, halibut, catfish, striped
bass, sturgeon, tilapia, abalone and shrimp. Aquacare will
continue in the same business following the share exchange,
and will provide equipment and services to the Company for
its own self-sustaining aquaculture activities.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited financial statements are not currently
available for Aquacare. Required financial statements for
Aquacare will be filed by the Company as soon as
practicable, but in any event not later than 60 days after the
due date of this Form 8-K reporting the acquisition of all
of the issued and outstanding stock of Aquacare.
(c) Exhibit (10) Agreement and Plan of
Reorganization.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
/s/ J. A. Garcia, President 10/14/96
________________________________________________
(Signature) (Date)
<PAGE>
EXHIBIT (10)
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF
REORGANIZATION dated as of October 31, 1996, among
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, a Colorado corporation ("CEA TECH"),
and AQUACARE ENVIRONMENT, INC., a Washington
corporation ("AQUACARE").
WHEREAS, the shareholders of AQUACARE (the
"Shareholders") own all of the issued and outstanding stock
of AQUACARE Corporation (the "AQUACARE Stock");
and
WHEREAS, the Shareholders desire to transfer to
CEA TECH, and CEA TECH desires to acquire from the
Shareholders, all of the Shareholders' AQUACARE stock,
pursuant to the applicable provisions of the Washington
Business Corporation Act and the Colorado Business
Corporation Act, in exchange for 240,000 shares of
common stock of CEA TECH (the "CEA TECH Stock")'
and additional performance (earn-out) shares totalling
240,000 shall be issued in accordance with 1.1(a); and
WHEREAS, the parties hereto intend that the
issuance of the shares of CEA TECH Stock in exchange for
the AQUACARE Stock, shall qualify as a "tax free"
exchange as contemplated by the provisions of Section
368(a)(1)(B) of the Internal Revenue Code of 1986.
NOW THEREFORE, in consideration of the
foregoing and in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereby agree
as follows:
Section 1. ISSUANCE AND TRANSFER OF STOCK
1.1 Issuance and Transfer. Upon the terms and
subject to the conditions set forth on this Agreement, at the
"Closing" on the "Closing Date" (as hereinafter defined),
the Shareholders shall sell, assign, convey and deliver to
CEA TECH, and CEA TECH shall purchase and receive
from the Shareholders all of their shares of common stock,
constituting all of the issued and outstanding AQUACARE
Stock and set forth opposite each such Shareholder's name
on Exhibit A. In consideration for the transfer of such
shares of AQUACARE common stock to CEA TECH,
CEA TECH shall issue to the Shareholders in exchange for
each share of AQUACARE common stock, 133.33 shares
of authorized and newly issued CEA TECH common stock
having the same terms and conditions as the exchanged
AQUACARE stock. No fractional shares shall be issued.
1.1.(a) Additional Performance Shares. Up
to an additional 240,000 common shares shall be issued as
part of this acquisition to the original shareholders listed on
Exhibit A hereto, as directed in Exhibit A(1).
1.2 Total Shares to be Issued and Outstanding.
Upon the Closing Date, the total number of shares to be
issued and outstanding of CEA TECH, including shares
issued to AQUACARE Shareholders, shall be no more than
3,057,000 common shares.
SECTION 2 CLOSING; TERMINATION
2.1 Closing. Subject to the fulfillment or waiver
of the conditions precedent set forth in Sections 7 and 8
hereof, the Closing shall take place on the Closing Date at
the offices of CEA TECH, or at such other place on the
Closing Date as the parties may mutually agree in writing.
2.2 Closing Date. The Closing Date shall be
October 31, 1996, or such later date upon which AZ and
the Shareholders and CT may mutually agree in writing.
If the Closing Date shall not have taken place on or before
December 31, 1996, this Agreement shall terminate upon
written notice of such termination given by either party not
then in material default. Upon such termination, the
parties shall be released from all obligation or liabilities
arising hereunder except for (a) liabilities arising out of
pre-termination breaches hereof and (b) obligations arising
under Section 9.4 hereof.
2.3 Filings; Cooperation.
(a) Prior to the Closing, the parties shall
proceed with due diligence and in good faith to make such
filings and take such other actions as may be necessary to
satisfy the conditions precedent set forth in Sections 7 and
8 below.
(b) On and after the Closing Date, CT and AZ
and the Shareholders shall, on request with and without
further consideration, cooperate with one another by
furnishing or using their best efforts to cause other to
furnish any additional information and/or executing and
delivering or using their best efforts to cause other to
execute and deliver any additional documents and/or
instruments, and doing or using their best efforts to cause
others to do any and all such other things as may be
reasonably required by the parties or their counsel to
consummate or otherwise implement the transactions
contemplated by this Agreement.
SECTION 3 AQUACARE CORPORATION'S
REPRESENTATIONS AND WARRANTIES
3.1 AQUACARE's REPRESENTATIONS AND
WARRANTIES. Set forth in this Section 3.1 are certain
representations and warranties made by AQUACARE to
CEA TECH which shall constitute all of the representations
and warranties by AQUACARE with respect to the
transactions covered by this Agreement.
(a) Organization and Good Standing. The Articles
of Incorporation of AQUACARE as presently in effect,
certified by the Secretary of State of Washington, and the
Bylaws of AQUACARE as presently in effect, certified by
the President and Secretary of AQUACARE, have been
delivered to CEA TECH and are complete and correct and
since the date of such delivery, there has been no
amendment, modification or other change thereto other than
those necessary to consummate this Agreement and
therefore, disclosed herein.
(b) Capitalization. AQUACARE's authorized
capital stock consists of 200,000 shares of common stock
(defined as AQUACARE Common Stock), par value $1.00
per share, of which 1800 shares are issued and outstanding.
No other equity securities or debt obligations of
AQUACARE are authorized, issued or outstanding.
(c) Subsidiaries. AQUACARE has no subsidiaries,
investments, or other financial interest in any other
corporation or business organization, joint venture or
partnership.
(d) Financial Statements. AQUACARE has
furnished to CEA TECH its unaudited financial statements
as of July 31, 1996. Said statements reflect an unaudited
net worth of $1,101,547. Included in that net equity are
accounts receivable of $17,935 due from NASDAQ - Asia
Environmental Partnership, Notes Receivable from Hydro
Care of $66,666, Note Receivable from Belton for
$11,346, and Note Receivable from WCEC, Inc. for
$950,000, or a total of $1,045,948. The audited statement
being prepared as at July 31, 1996 by Vaughn S. Hagen,
CPA will not be available as originally scheduled by
October 31, 1996. (CEA TECH will close the transaction
and issue the 240,000 shares to Henning Gatz as trustee for
the AQUACARE shareholders to be held in escrow by
Gary Joiner, Esq., attorney for CEA TECH, pending
receipt of audited July 31, 1996 financial statements.) Said
audited July 31, 1996 financial statements shall show a
minimum net worth of $1,000,000 to earn the 240,000
shares. Any reduction of net worth below $1,000,000 shall
be offset by reducing the 240,000 shares by 1 share for
every $5.00 below $1,000,000 (i.e. $900,000 net worth
would cause a reduction of 20,000 shares) to a minimum
of $500,000, or 120,000 shares. In the event that the
audited net worth should be less than $500,000, either
party may at their option elect to rescind the transaction,
and the escrowed shares shall be returned to CEA TECH
for cancellation.
(e) Litigation. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court,
governmental or regulatory body or arbitration tribunal
against AQUACARE or its properties. There are no
actions, suits or proceedings pending, or of threatened
against or affecting AQUACARE, or any of its properties,
at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or
foreign, in connection with the business, operations or
affairs of AQUACARE which might result in any material
adverse change in the operations or financial condition of
AQUACARE, or which might prevent or materially impede
the consummation of the transactions under this
Agreement.
(f) Compliance with Laws. To the best of
AQUACARE's actual knowledge, the operations and affairs
of AQUACARE do not violate any law, ordinance, rule or
regulation currently in effect, or any order, writ, injunction
or decree of any court or governmental agency, the
violation of which would substantially and adversely affect
the business, financial conditions or operations of
AQUACARE.
(g) Absence of Undisclosed Liabilities.
AQUACARE did not have, as of July 31, 1996, and
AQUACARE shall not have as of the Closing Date, any
liabilities except those liabilities incurred in the ordinary
course of business.
(h) Disclosure. Neither this Agreement, nor any
certificate, exhibit, schedule or other written document or
statement, furnished to CEA TECH by AQUACARE in
connection with the transactions contemplated by this
Agreement contains or will contain any untrue statement of
a material fact or willfully omits to state a material fact
necessary to be stated to make the statements contained
herein or therein not misleading.
(i) Title to Assets. Schedule 3.1(i) hereto lists all
the assets which will be owned by AQUACARE on the
Closing Date. AQUACARE owns outright and has good,
marketable title to all of such assets including, without
limitation, all of the assets reflected on the July 31, 1996
AQUACARE financial statements, except as otherwise
disclosed on Schedule 3.1(i).
(j) Contracts. Set forth on Schedule 3.1(j) hereto is
a true and complete list of all material contracts,
agreements or commitments to which AQUACARE is a
party or is bound. All such material contracts, agreements
and commitments are valid and binding on AQUACARE in
accordance with their terms.
(k) Books and Records. To its best actual
knowledge the books and records of AQUACARE are
complete and correct, are maintained in accordance with
good business practice and the transactions therein
described, and there have been no transactions involving
AQUACARE which properly should have been set forth
therein and which have not been accurately set forth.
(l) Operating Authorities. To the best actual
knowledge of AQUACARE, it has all material operating
authorities, governmental certificates and licenses, permits,
authorizations and approvals ("Permits") required to
conduct its business as presently conducted. Since inception
to AQUACARE's actual knowledge, there ham not been
any notice or adverse development regarding such permits;
such permits are in full force and effect; no material
violations are or have been recorded in respect of any
Permit; and no proceeding is pending or threatened to
revoke or limit any Permit.
(m) Indemnification. AQUACARE shall indemnify
CEA TECH from any losses sustained by it as a result of
any breach, inaccuracy or omission by AQUACARE with
regard to any representation or warranty set forth in this
Agreement.
3.2 Restrictions on Securities
(a) Transfer of Securities. None of the CEA TECH
Common Stock acquired pursuant to this Agreement shall
be transferable except upon the conditions specified in this
Section 3.2, which conditions are intended to insure
compliance with the provisions of the Securities Act of
1933, as amended ("1933 Act") in respect to the transfer of
such Shares.
(b) Legend. Unless and until otherwise permitted
by this Section 3.2, each certificate or other document
evidencing any of the CEA TECH Common Stock and
Preferred Stock shall be endorsed with a legend
substantially in the following form:
"THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS
(A) COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS
AMENDED, (B) IN COMPLIANCE WITH
RULE 145 UNDER SUCH ACT, OR (C)
THE COMPANY HAS BEEN
FURNISHED WITH AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE
TO THE COMPANY TO THE EFFECT
THAT NO REGISTRATION IS
REQUIRED BY SUCH TRANSFER."
(c) Restrictions on Transfer. None of the CEA
TECH Common Stock or Preferred Stock shall be
transferred, and CEA TECH shall not be required to
register any such transfer on the books of CEA TECH,
unless and until one of the following events shall have
occurred:
(A) CEA TECH shall have received an
opinion of counsel, in form and in substance reasonably
acceptable to CEA TECH and its counsel, stating that the
contemplated transfer in exempt from registration under the
1933 Act as then in effect, and the Rules and Regulations
of the Securities and Exchange Commission (the
"Commission") thereunder. Within five business days after
delivery to CEA TECH and its counsel of such an opinion,
CEA TECH either shall deliver to the proposed transferor
a statement to the effect that such opinion is not
satisfactory in the reasonable opinion of its counsel (and
shall specify in detail the legal analysis supporting any such
conclusion) or shall authorize CEA TECH's transfer agent
to make the requested transfer;
(B) CEA TECH shall have been furnished
with a letter from the Commission in response to a written
request in form and substance acceptable to counsel for
CEA TECH setting forth all of the facts and circumstances
surrounding the contemplated transfer, stating that the
Commission will take no action with regard to the
contemplated transfer;
(C) The shares of CEA TECH's Common
Stock are transferred pursuant to a registration statement
which has been filed with the Commission and has become
effective;
(D) The shares of CEA TECH Common
Stock are transferred pursuant to and in accordance with
Rule 144 promulgated by the Commission under the 1933
Act.
SECTION 4 CEA TECH'S REPRESENTATIONS AND
WARRANTIES
CEA TECH represents and warrants to
AQUACARE and the Shareholders as follows:
4.1 Organization and Good Standing. CEA TECH
is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado and
has full corporate power and authority to own or lease its
properties and to carry on its business as now being
conducted and as proposed to be conducted. The Articles
of Incorporation of CEA TECH and all amendments
thereto, certified by the Secretary of State of Colorado, and
the Bylaws of CEA TECH, as presently in effect, certified
by the President and Secretary of CEA TECH, have been
delivered to AQUACARE and are complete and correct
and since the date of such delivery, there has been no
amendment, modification or other change thereto other than
those necessary to consummate this Agreement, and
therefore, disclosed herein.
4.2 Authority.
(a) CEA TECH has full corporate power to enter
into this Agreement, to execute all attendant documents and
instruments necessary to consummate the transactions
contemplated hereunder, to issue and transfer CEA TECH
Stock to the Shareholders and to carry out all of its
obligations hereunder, but consummation of this Agreement
is subject to approval of the principal terms of this
Agreement by its outstanding shares, as those terms are
defined under the Colorado Business Corporation Act, of
CEA TECH. The execution and delivery of this Agreement
and all other agreements, documents and instruments to be
executed herewith, have been duly authorized by the Board
of Directors of CEA TECH.
(b) CEA TECH shall have obtained any approval of
the transactions set forth in this Agreement by its
outstanding shares required under the Colorado Business
Corporation Act.
(c) Neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated hereby nor compliance by CEA TECH with
any of the provisions hereof will:
(i) violate or conflict with, or result in a
breach of any provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would
constitute a default) under, any of the terms, conditions or
provisions of the Articles of Incorporation or Bylaws of
CEA TECH or any note, bond, mortgage, indenture, deed
of trust, license, agreement or other instrument to which
CEA TECH is a party, or by which it or its properties or
assets may be bound or affected; or
(ii) violate any order, writ, injunction or
decree, or any statute, rule, permit, or regulation
applicable to CEA TECH or any of its properties or assets.
(d) Indemnification. CEA TECH shall indemnify
AQUACARE for any losses resulting from any breach,
inaccuracy or omission on the part of CEA TECH with
regard to any representation or warranty set forth in this
Agreement.
4.3 Description of and Title to Stock.
(a) CEA TECH's authorized capital stock consists
of 100,000,000 shares of common stock, no par value, of
which the issued and outstanding shares do not exceed
3,057,000 shares, and 5,000,000 shares of preferred stock,
of which no shares are issued and outstanding. A total of
2,739,000 Class A warrants exercisable until December 31,
1999, are authorized and outstanding. These warrants are
convertible into common stock at $2.00 per share. No other
equity securities or debt obligations of CEA TECH are
authorized, issued or outstanding except those performance
shares described in l.l(a).
(b) The outstanding shares of CEA TECH Stock are
free and clear of all liens, charges, claims, pledges,
restrictions and encumbrances whatsoever of any kind or
nature that would inhibit, prevent, or otherwise interfere
with the transactions contemplated hereby. All of the
outstanding shares of CEA TECH Stock are validly issued,
fully paid and nonassessable and there are no voting trust
agreements or other contracts, agreements or other
contracts, agreements or arrangements restricting or
affecting voting or divided rights or transferability with
respect to the outstanding shares of CEA TECH Stock.
(c) All of the CEA TECH Common to be issued to
or transferred to the Shareholders pursuant to this
Agreement, when issued, transferred, and delivered as
provided herein, will be duly authorized, validly issued,
fully paid and nonassessable, and will be free and clear of
all liens, charges, claims, pledges, restrictions and
encumbrances whatsoever of any nature.
4.4 Subsidiaries. CEA TECH is incorporating three
corporations in the State of Hawaii to operate as wholly
owned subsidiaries in order to conduct its businesses
located in Hawaii.
4.5 Financial Statements. The Form 10-KSB dated
January 31, 1996, and subsequent Form 10-Qs filed for the
quarters ended April 30, 1996 and July 31, 1996, contain
audited January 31, 1996 and unaudited 10-Q financial
statements and the related statements of operations and
shareholders equity. CEA TECH, formerly known as
Global Capital Access Corporation can be classified to date
as a development stage company, or start up. The Board
of Directors have approved the issuance of the additional
shares subject to this agreement, additional shares in
connection with a private placement of $2,500,000, and
additional shares to finders, and key employees, officers
and directors, totalling 1,340,000 restricted shares when
issued. The total common stock issued and outstanding
will total 3,057,000 shares giving effect to these
transactions.
4.6 Absence of Certain Changes. Since the CEA
TECH Balance Sheet Date, (a) there has been no change in
the condition (financial or otherwise), business, property,
prospects, assets or liabilities of CEA TECH as shown on
the CEA TECH Balance Sheet at that date contained in the
CEA TECH Financial Statements; (b) there has been no
damage to, destruction of, or loss of any of the properties
or assets of CEA TECH (whether or not covered by
insurance); (c) CEA TECH has not declared, or paid any
dividend or made any distribution on its capital stock,
redeemed, purchased or otherwise acquired any of its
capital stock, granted any options to purchase shares of its
stock, or issued any shares of its capital stock, except as
outlined in Section 4.5 above; (d) there have been no loans
made by CEA TECH to its employees, officers or
directors; (e) there have been no waiver or compromise by
CEA TECH of valuable rights or of a material debt owed
to it; (f) CEA TECH has made no payment or agreement
or commitment to pay any compensation, fee or other
monies to any employee, officer, director, or agent of CEA
TECH; (g) there has been no agreement or commitment by
CEA TECH to do or perform any of the acts described in
this Section 4.6; and (h) there has been no other event or
condition of any character which might adversely change
the condition (financial or otherwise), business, property,
prospects, assets or liabilities of CEA TECH or to impair
materially the ability to conduct the business now being
conducted by it.
4.7 Absence of Undisclosed Liabilities. Except as
disclosed in CEA TECH's Financial Statements, CEA
TECH did not have, as of the Closing Date, any liabilities
(secured or unsecured and whether accrued, absolute,
direct, indirect, or otherwise) of a kind required by
generally accepted accounting principles and consistent with
past practice to be set forth on a financial statement or the
notes thereto.
4.8 Litigation. There are no outstanding orders,
injunctions, awards or decrees of any court, governmental
or regulatory body or arbitration tribunal against CEA
TECH or its properties. Except for the threat of litigation
by D.J. Walsh & Associates (USA) Inc., of which the
parties hereto have full and prior knowledge, and mutually
agree to be without merit, there are no judgments, actions,
suits or proceedings pending, or to the knowledge of CEA
TECH, threatened against or affecting CEA TECH or any
of its properties, at law or in equity, or before any state,
municipal or other governmental department, commission,
board, bureau, agency or instrumentality, foreign or
domestic, in connection with the business, operations or
affairs of CEA TECH which could prevent or impede the
consummation of the transactions contemplated under this
Agreement.
4.9 Compliance with Laws. The operations and
affairs of CEA TECH do not violate any law, ordinance,
rule or regulation currently in effect, or any order, writ,
injunction or decree of any court or governmental agency.
4.10 Brokers: Underwriters. CEA TECH has not
used the services of or entered into any agreement with,
any broker, agent or finder in connection with this
Agreement or the transactions contemplated hereby, nor
has CEA TECH taken any action which could result in any
other broker's, finder's or other fees or commission being
due and payable to any party with respect to this
Agreement or the transactions contemplated hereby. CEA
TECH has not entered into any agreements, commitments,
arrangements or understandings of any kind whatsoever
with any broker-dealer or underwriter in connection with
the transactions contemplated under this Agreement or the
AQUACARE Stock being acquired hereunder or CEA
TECH Stock being issued hereunder.
4.11 Disclosure. Neither this Agreement, nor any
certificate, exhibit, schedule or other written document or
statement furnished to the Shareholders by CEA TECH in
connection with the transactions contemplated by this
Agreement contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact
necessary to be stated in order to make the statements
contained herein or therein not misleading.
4.12 Tax Matters. All federal, foreign, state and
local tax returns, reports and information statements
required to be filed by or with respect to the activities of
CEA TECH have been filed for all the years and periods
for which such returns and statements were due, including
extensions thereof. Since the CEA TECH Balance Sheet
Date, CEA TECH has not incurred any liability with
respect to any federal, foreign, state or local taxes except
in the ordinary and regular course of business. Such
returns, reports and information statements are true and
correct in all material respects insofar as they relate to the
activities of CEA TECH. On the date of this Agreement,
CEA TECH is not delinquent in the payment of any such
tax or assessment, and no deficiencies for any amount of
such tax have been proposed in a revenue agent's report or
assessed, and to the best knowledge of CEA TECH, there
is no basis for any such deficiency or claim. There is no
tax sharing agreement among or between CEA TECH and
any affiliate thereof. There is not now in force any
extension of time with respect to the date on which any tax
return was or is due to be filed by or with respect to CEA
TECH, or any waiver or agreement by CEA TECH for the
extension of time for the assessment of any tax, and CEA
TECH is not a "consenting corporation" within the
meaning of Section 341(f)(1) of the Internal Revenue Code
of 1986.
4.13 Books and Records. The books and records of
CEA TECH are complete and correct, are maintained in
accordance with good business practice and accurately
present and reflect, in all material respects, all of the
transactions therein described, and there have been no
transactions involving CEA TECH which properly should
have been set forth therein and which have not been
accurately so set forth.
4.14 Registration Rights. CEA TECH has not
granted or agreed to grant any rights relating to the
registration of its securities under applicable federal and
state securities laws, including piggy-back rights.
4.15 Employee Benefit Plans. CEA TECH has
never adopted or maintained a "defined benefit plan" within
the meaning of the Employee Retirement Income Security
Act of 1974 ("ERISA"), nor has such a plan been
maintained by any person, firm or corporation which is
under "common controls (within the meaning of Section
4001(b) of ERISA) with CEA TECH. Any Defined
contribution plan" within the meaning of ERISA adopted or
maintained by CEA TECH has been properly terminated
and all accrued benefits thereunder have been transferred
to the employees or beneficiaries entitled thereto. CEA
TECH has never participated in a Multi-employer plans
within the meaning of ERISA. There have been no
"prohibited transactions" or other violations of law or
threatened or pending claims with respect to any of CEA
TECH's employee benefit plans.
4.16 Hazardous Waste. CEA TECH did not use,
generate, store, release or transport any hazardous waste,
hazardous materials or hazardous substances, or cause,
direct, or permit any of the foregoing to be done, and CEA
TECH did not violate or breach any federal state or local
environmental protection and/or health and safety laws and
regulations thereto, and CEA TECH has no contingent
liabilities as a "responsible party."
4.17 SEC Filings. CEA TECH is a reporting
company under Section 12g of the Act and has fulfilled all
of the reporting requirements of the SEC and is current
with its filings .
SECTION 5 SURVIVAL OF REPRESENTATIONS AND
WARRANTIES
The representations, warranties and covenants of
AQUACARE contained herein and the representations and
warranties of the Shareholders set forth in their consent
forms shall survive the execution and delivery of this
Agreement, the Closing and the consummation of the
transactions called for by this Agreement. The
representations, warranties and covenants of CEA TECH
contained herein shall survive the execution and delivery of
this Agreement, the Closing and the consummation of the
transactions called for by this Agreement.
SECTION 6 CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF CEA TECH REGARDING THE CEA
TECH STOCK
The obligations of CEA TECH under this
Agreement in respect to the issuance and transfer of CEA
TECH Stock shall, at the option of CEA TECH, be subject
to the satisfaction, on or prior to the Closing Date, of each
of the following conditions precedent.
6.1 Accuracy of Representations and Warranties:
Performance. The representations and warranties made by
AQUACARE in this Agreement and the representations and
warranties of the Shareholders set forth in their consent
forms shall be true and correct in all material respects on
and as of the Closing Date; the Shareholders shall have
performed or complied with all covenants, agreements and
conditions contained in this Agreement on its part required
to be performed or complied with at or prior to Closing.
AQUACARE shall have delivered to CEA TECH an
officer's certificate, dated as of the Closing Date, to the
foregoing effect.
6.2 Shareholder Approval. AQUACARE shall have
obtained all necessary shareholder approval for this
acquisition and exchange of stock.
6.3 No Contrary Judgment. The Closing shall not
violate any Permit or order, decree, or judgment of any
court or governmental body having competent jurisdiction,
and there shall not have been instituted any legal or
administrative action or proceeding to enjoin the transaction
contemplated hereby or seeking damages from CEA TECH
with respect thereto.
6.4 Closing. AQUACARE and the Shareholders
shall deliver or cause to be delivered to CEA TECH at or
prior to the Closing the following documents:
(i) Certificate(s) representing all of the
Shareholders' shares of AQUACARE Stock, which
certificate(s) shall be either (A) duly endorsed in blank, or
(B) accompanied by stock powers duly executed;
(ii) The certificate referred to in Section 6.1 hereof;
(iii) AQUACARE's Articles of Incorporation,
certified by the Secretary of State of Washington;
(iv) Bylaws of AQUACARE certified as of the
Closing Date by the President and Secretary of
AQUACARE.
(v) Such other documents, instruments or
certificates as shall be reasonably requested by CEA TECH
or its counsel.
SECTION 7 CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE SHAREHOLDERS
REGARDING THE AQUACARE STOCK
The obligations of AQUACARE under the
Agreement and the obligations of the Shareholders, and
each of them, under this Agreement to sell the
AQUACARE Stock shall, at the option of AQUACARE
and the Shareholders, be subject to the satisfaction, on or
prior to the Closing Date, of each of the following
conditions precedent.
7.1 Accuracy of Representations and Warranties:
Performance. All representations and warranties made by
CEA TECH in this Agreement shall be true and correct in
all material respects on and as of the Closing Date with the
same effect as if such representations and warranties had
been made on and as of the Closing Date; CEA TECH
shall have performed or complied with all covenants,
agreements and conditions contained in this Agreement on
its part required to be performed or complied with at or
prior to Closing. CEA TECH shall have delivered to the
Shareholders, dated the Closing Date to the foregoing
effect.
7.2 Shareholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved
and adopted by The Rally Group Ltd., the majority
shareholder of CEA TECH.
7.3 Consents. All material authorizations, consents
or approvals of any and all governmental regulatory
authorities necessary in connection with the consummation
of the transactions contemplated by this Agreement, shall
have been obtained and be in full force and effect.
7.4 No Contrary Judgment. The Closing shall not
violate any permit or order, decree or judgment of any
court or governmental body having competent jurisdiction
and there shall not have been instituted any legal or
administrative action or proceeding to enjoin the transaction
contemplated hereby or seeking damages from the
Shareholders or AQUACARE with respect thereto.
7.5 Closing. CEA TECH shall deliver or cause to
be delivered to AQUACARE and the Shareholders at or
prior to the Closing Date the following documents:
(i) Certificates representing the shares of CEA
TECH Stock to be newly issued by CEA TECH under this
Agreement, which certificates shall be in the names of the
Shareholders and duly executed by CEA TECH;
(ii) An officer's certificate signed by the President
and Secretary of CEA TECH, as to such matters as
AQUACARE deems necessary, including, without
limitation, the matters referred to in Section 7.1 hereof and
affirming that all of the conditions detailed in Sections 7.2,
7.3, and 7.4, have been satisfied;
(iii) CEA TECH's Articles of Incorporation,
certified by the Secretary of State of Colorado;
(iv) Current Certificate of the Secretary of State of
Colorado as to the good standing of CEA TECH;
(v) Certified copies of resolutions adopted by the
Board of Directors of CEA TECH authorizing the
execution and delivery of this Agreement and the
transactions contemplated hereby;
(vi) Bylaws of CEA TECH, certified as of the
Closing Date by the President and Secretary of CEA
TECH;
(vii) Such other documents, instruments or
certificates as shall be reasonably requested by the
Shareholders, or any of them, or their counsel.
SECTION 8 ADDITIONAL COVENANTS OF THE
PARTIES
8.1 Expenses. AQUACARE shall pay all of its own
costs and expenses (including attorneys' and accountants'
fees, costs, and expenses) incurred in connection with this
Agreement and the consummation of the transactions
contemplated herein. CEA TECH may elect to advance
costs to AQUACARE, which shall be repaid after Closing
or in the event that AQUACARE should not complete this
transaction due to no fault of CEA TECH.
8.2 Access to Properties and Records. CEA TECH
and AQUACARE shall, at all reasonable times prior to
Closing, make the properties, premises, books and records
of CEA TECH and AQUACARE available to each other
and each other's authorized representatives, during
reasonable business hours, in such a manner as not to
unduly disrupt normal business activities.
8.3 Corporate Existence. Rights and Franchises.
Prior to the Closing, AQUACARE and its authorized
representatives shall cause AQUACARE to conduct its
business in the ordinary course and, to the extent not
inconsistent with prudent business practice, in such a
manner as to maintain its business organization intact and
to retain its present employees, and to maintain its
relationships with customers, suppliers and others having
business relationships with it, and without the prior written
consent of CEA TECH, shall not permit AQUACARE's
assets to become bound by or subject to any contracts or
other agreements except in the ordinary course of business.
AQUACARE shall respond promptly to any reasonable
requests for reports or additional information by CEA
TECH.
8.4 Confidentiality. Except for such documents,
reports, information and data (including financial
statements) which are of a public nature, pending the
Closing ( and if this Agreement is terminated, at all times
after the date hereof), CEA TECH shall treat as
confidential and, except as may be required by law or
necessary or, in the opinion of counsel to AQUACARE or
CEA TECH, desirable, to obtain required regulatory
approval of the transactions contemplated hereby or
otherwise, will not use, submit or disclose , or file with
others, or permit any person, firm, corporation or entity
under its control to use, submit or disclose, or file with
others, any documents, reports, information or data
concerning AQUACARE which CEA TECH may obtain
from the Shareholders of AQUACARE; and, except for
such documents, reports and other written materials
(including financial statements) of a public nature, if this
Agreement is terminated, CEA TECH shall return to
AQUACARE and the Shareholders any and all documents,
reports and other written materials (including financial
statements) concerning AQUACARE as AQUACARE and
the Shareholders may reasonably request.
8.5 Dispute Resolution. In the event of a dispute,
controversy or claim among the parties hereto involving a
claim of breach of representation or warranty hereunder, or
to enforce a covenant herein (either or both of which are
referred to hereafter as a "Claim") the rights and
obligations of the parties 14 hereto arising under the terms
of this Agreement with respect to such Claims and/or
resolution of such disputes shall be submitted to arbitration
before and in accordance with the rules of the American
Arbitration Association or any mutually agreeable
arbitration association. Judgment upon an arbitration award
may be entered in any court having competent jurisdiction
and shall be binding, final, and non-appealable. No
punitive or exemplary damages shall be awarded against
any of the parties. Prior to any arbitration proceeding
taking place, either party may at its option elect to (a) have
the arbitrator conduct, in a separate proceeding prior to the
actual arbitration, a preliminary hearing, at which hearing
testimony and other evidence may be presented, or (b)
submit the controversy or claim to non-binding mediation,
in which event the parties shall execute a suitable
confidentiality agreement. The rules of evidence as then in
effect in the State of Colorado shall be followed throughout
the arbitration proceedings, including without limitation any
preliminary hearings. This arbitration provision shall be
deemed to be self-executing and in the event either party
fails to appear at any properly noticed arbitration
proceeding, an award may be entered against such party
notwithstanding said failure to appear. Such arbitration
shall take place in a mutually agreed upon location. The
arbitrator may, at its discretion, award the prevailing party
its attorney's fees and costs incurred in the arbitration of
any dispute arising under or in any way connected with the
Agreement.
8.6 Employment Contracts. The parties hereto
acknowledge the existence of employment contracts
between Aquacare and Henning Gatz and Gregg Bonacker,
executed copies of which are attached hereto as Exhibit
8.6. The contracts shall remain effect after the Closing and
the parties hereto shall be bound by the terms thereof.
SECTION 9 MISCELLANEOUS
9.1 Entire Agreement. This Agreement (including
the Exhibits and Schedules hereto) contains the entire
agreement between the parties with respect to the
transactions contemplated hereby, and supersedes all
negotiations, representations, warranties, commitments,
offers, contracts, and writings prior to the date hereof. No
waiver and no modification or amendment of any provision
of this Agreement shall be effective unless specifically
made in writing and duly signed by the party to be bound
thereby.
9.2 Counterparts. This Agreement may be executed
in one or more counterparts, each of which may be deemed
an original, but all of which together, shall constitute one
and the same instrument.
9.3 Severability. If any provisions hereof shall be
held invalid or unenforceable by a court of competent
jurisdiction, or as a result of future legislative action, such
holding or action shall be strictly construed and shall not
affect the validity or effect of any other provisions hereof.
9.4 Assignability. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns
of the parties hereto, provided that, neither thin Agreement
nor any right hereunder shall be assignable by the
Shareholders, or any of them, or CEA TECH, or
AQUACARE without prior written consent of the other
party.
9.5 Captions. The captions of the various Sections
of this Agreement have been inserted only for convenience
of reference and shall not be deemed to modify, explain,
enlarge or restrict any of the provisions of this Agreement.
9.6 Governing Law. The validity, interpretation and
effect of this Agreement shall be governed exclusively by
the laws of the State of Colorado.
9.7 Notices. All notices, requests, demands, and
other communications under this Agreement shall be in
writing and delivered in person or sent by certified mail,
postage prepaid and properly addressed as follows:
To the Shareholders and Aquacare Environment. Inc.:
AQUACARE ENVIRONMENT, INC.
Henning Gatz, President
1155 N. State Street #303
Bellingham, WA 98225
To CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY:
CONTROLLED ENVIRONMENT
AQUACULTURE TECHNOLOGY
c/o Gary Joiner
Frascona, Joiner & Goodman
4750 Table Mesa Drive Boulder, CO 80303
J.A. Garcia
16015 Woodvale Road
Encino, CA 91436
Any party may from time to time change its address
for the purpose of notices to that party by a similar notice
specifying the new address, but no such notice of change
shall be deemed to have been given until it is actually
received by the respective party hereto.
All notices and other communications required or
permitted under this Agreement which are addressed as
provided in this Section 9.7, if delivered personally, shall
be effective upon delivery; and, if delivered by mail, shall
be effective three (3) days following deposit in the United
States Mail, postage prepaid.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first written above.
AQUACARE ENVIRONMENT, INC.
_______________________________________________
Henning Gatz, President
CONTROLLED ENVIRONMENT AQUICULTURE
TECHNOLOGY
_______________________________________________
J. A. Garcia, President
_______________________________________________
Charles Spira, Secretary
<PAGE>
EXHIBIT A
Shares to be issued to the former AQUACARE
Shareholders:
SHAREHOLDER COMMON SHARES
Henning Gatz 164,000
Thomas J. Beiton 5,000
Lawrence W. Templeton 10,000
Arthur C. Jones 25,000
Gregg Bonacker 36,000
<PAGE>
ADDENDUM NUMBER 1 TO AGREEMENT AND
PLAN OF REORGANIZATION
This ADDENDUM NUMBER 1 TO AGREEMENT AND
PLAN OF REORGANIZATION by and between
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, a Colorado corporation ("CEA TECH"),
and AQUACARE ENVIRONMENT, INC., a Washington
corporation ("AQUACARE"), is entered into as of the 30th
day of September, 1996, and is hereby incorporated into
and made a part of the AGREEMENT AND PLAN OF
REORGANIZATION (the "Agreement").
WHEREAS, the parties to the Agreement desire to
more clearly define the terms of Section l.l(a) of the
Agreement;
NOW THEREFORE, in consideration of the mutual
covenants, conditions and agreements set forth in the
Agreement the parties hereby adopt the following additions
and clarifications to Section l.l(a):
l.l(b) Time Period. The earn-out of an additional
240,000 shares of common stock of CEA TECH shall be
for a period of three (3) years, commencing February 1,
1997, and each fiscal year ending January 31 until the
fiscal year-end January 31, 2000. (AQUACARE may elect
to commence the earn-out period effective November 1,
1996, and adjust on a monthly basis until October 31,
1999.)
YEAR ONE
CEA TECH shall issue one (1) share of its
restricted common stock for every $1.00 net after tax
earnings of AQUACARE over $240,000 net for the period,
with no limitation on the total shares up to 240,000 over
three (3) years.
YEAR TWO
CEA TECH shall issue one (1) share of its
restricted common stock for every $1.50 of net after tax
earnings of AQUACARE over $360,000 net, with no limit
up to a total of 240,000 over three (3) years.
YEAR THREE
CEA TECH shall issue one (1) share of its
restricted common stock for every $2.00 of net after tax
earnings of AQUACARE over $480,000 net to a total of
240,000 over the three year period. All earned shares to
be issued under Rule 144 within 30 days of receipt of
audited statement. Earn-out shares shall be issued
proportionately to the shares owned by and acquired from
the original AQUACARE shareholders in Exhibit A of the
Agreement.
IN WITNESS WHEREOF, the parties hereto have
executed this ADDENDUM TO AGREEMENT AND
PLAN OF REORGANIZATION as of the date first written
above.
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY
_________________________________
J.A. Garcia, President
_________________________________
Charles Spira, Secretary
AQUACARE ENVIRONMENT, INC.
_________________________________
Henning Gatz, President
_________________________________
Secretary
<PAGE>
ESCROW AGREEMENT
This Escrow Agreement is executed and entered into by
and among Controlled Environment Aquaculture
Technology, Inc., a Colorado corporation ("CEA Tech"),
and Aquacare Environment, Inc., a Washington corporation
("Aquacare"), in connection with the Agreement and Plan
of Reorganization (the "Agreement"), dated October 31,
1996, between CEA Tech and Aquacare, and is
incorporated into and made a part thereof by this reference.
CEA Tech and Aquacare hereby agree as follows:
1. WHEREAS, pursuant to the terms of the Agreement, the
shareholders of Aquacare (the "Shareholders") shall sell,
assign, convey and deliver to CEA Tech, and CEA Tech
shall purchase and receive from the Shareholders, all of
their outstanding shares, constituting all of the outstanding
shares of Aquacare, in exchange for a total of 240,000
newly issued shares of CEA Tech common stock (the
"CEA Tech Shares"), and up to an additional 240,000
performance or "earn-out" shares pursuant to Addendum
No.1 to the Agreement (the "Earn-Out Shares"); and
2. WHEREAS, pursuant to Section 3(d) of the Agreement
the 240,000 CEA Tech Shares shall be issued to Henning
Gatz, as trustee for the Aquacare Shareholders, upon
closing of the Agreement. Said CEA Tech Shares shall then
be placed in escrow with Gary S. Joiner, Esq., attorney for
CEA Tech, pending receipt of Aquacare's audited July 31,
1996, financial statements. The audited July 31, 1996
Aquacare financial statements must show a minimum net
worth of $ 1,000,000 in order for all 240,000 shares to be
released to the Shareholders. If the audited financial
statements show a net worth below $1,000,000, the
240,000 shares shall be reduced by one (1) share for every
five dollars ($5.00) below $1,000,000. The number of
Earn-Out shares available under Addendum No. 1 to the
Agreement shall also be reduced by 1 share for every $5
below $ 1,000,000 audited net worth of Aquacare;
NOW THEREFORE,
3. Upon closing of the Agreement, a certificate for 240,000
common shares of CEA Tech, in the name of Henning
Gatz, as trustee for the Aquacare Shareholders, shall be
deposited in escrow with Gary S. Joiner, Esq. of Frascona,
Joiner & Goodman, 4750 Table Mesa Drive, Boulder,
Colorado 80303. Upon receipt by CEA Tech of Aquacare's
audited July 31, 1996 financial statements showing a
minimum net worth of $ 1,000,000, said certificate shall
be released to Henning Gatz for distribution to the
Shareholders. If the audited financial statements show a net
worth of less than $ 1,000,000, CEA Tech shall reduce the
number of shares to be issued to the Shareholders in
accordance with the formula set forth in 3. above.
Dated: __________________
Controlled Environment Aquaculture Technology, Inc.
__________________________________________
J.A. Garcia, President
Aquacare Environment, Inc.
__________________________________________
Henning Gatz, President
<PAGE>
AQUACARE ENVIRONMENT, INC.
Officers' Certificate
The undersigned, Henning Gatz and , hereby certify
that they are the duly elected and acting President and
Secretary, respectively, of Aquacare Environment, Inc., a
Washington corporation (the Company"), and with respect
to the Agreement and Plan of Reorganization (the
Agreement") between the Company and Controlled
Environment Aquaculture Technology, Inc. ("CEA Tech"),
a Colorado corporation, further certify that to their best
knowledge based upon reasonable investigation:
1. There are no material legal proceedings pending
or threatened against the Company or any subsidiary, of a
character affecting the validity of the Agreement as of the
date of Closing, and there are no material transactions or
contracts which are required to be summarized therein
which are not so summarized.
2. They have carefully examined the Agreement as
of the Closing Date of the Agreement, and the Agreement
did not include any untrue statement of a material fact
required to be stated herein or necessary to make the
statements therein not misleading.
3. Except as contemplated in the Agreement,
subsequent to the Closing Date of the Agreement, the
Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any
material transactions not in the ordinary course of business,
and there has not been any material change in the capital
stock or financial statements of the Company, or any
material adverse change in the condition (financial or other)
of the Company, or in the earnings, affairs or business
prospects of the Company, whether or not arising in the
ordinary course of business.
4. The Company is operating substantially in
compliance with all franchises, authorizations, licenses,
permits, easements, consents, certificates and orders of any
governmental or self-regulatory body required for the
conduct of its business, properties or assets, and all of its
licenses are valid and in full force and effect, and the
Company is in compliance with all laws, regulations,
orders and decrees applicable to it, the noncompliance with
which would have a material adverse effect on its business,
properties or assets.
5. The Company has good title to, or leasehold
estates in, all real and personal property described in its
financial statements as being owned by it, in each case free
and clear of all liens, claims, security interests or other
encumbrances except liens for taxes not due and payable
and except such as are described in the financial statements
or such as are not materially significant or important in
relation to the business of the Company as a whole.
6. To the best of their knowledge, neither the
Company nor any employee or agent of the Company has
made any payment or transfer of any funds or assets of the
Company or received any funds, assets or personal benefits
in violation of any law, rule or regulation, which is
required to be stated in the Agreement or statements therein
not misleading.
7. The Company has filed all tax returns which are
required to be filed by it and has paid all taxes shown
thereon as due, and it has paid all assessments, received by
it to the extent the same have become due and payable. The
Company has no knowledge of any tax deficiency which
might be asserted against the Company which could
materially and adversely affect its business or properties
All taxes with respect to which the Company is obligated
have been paid or adequate accruals have been established
to cover any such unpaid taxes.
8. Subsequent to the Closing Date of the Agreement
the Company has not sustained any material loss or damage
to its property, whether or not insured.
9. Immediately prior to the Closing Date of the
Agreement the representations and warranties of the
Company contained in the Agreement are true and correct
in all material respects; and the Company has complied in
all material respects with all of its agreements therein
contained.
10. There has been no amendment, other than the
name change, to the Articles of Incorporation of the
Company prior to the Closing Date of the Agreement.
11. The Company as of this date, has 1,800 shares
of its Common Stock outstanding, all of which have been
duly authorized and validly issued.
12. The Bylaws of the Company as submitted on the
Closing Date remain in effect and have not been changed,
amended or modified.
13. The Company has obtained all necessary
shareholder approval for the transactions contemplated by
the Agreement.
IN WITNESS WHEREOF, I have hereunto signed
by name and affixed the seal of the Company.
DATED:__________________________
_____________________________________
Henning Gatz, President
_____________________________________
Secretary
<PAGE>
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
Officers' Certificate
The undersigned, J.A. Garcia and Charles Spira,
hereby certify that they are the duly elected and acting
President and Secretary, respectively, of Controlled
Environment Aquaculture Technology, Inc., a Colorado
corporation (the "Company"), and with respect to the
Agreement and Plan of Reorganization (the Agreement")
between the Company and Aquacare Environment, Inc., a
Washington corporation., further certify that to their best
knowledge based upon reasonable investigation:
1. There are no material legal proceedings pending
or threatened against the Company or any subsidiary, of a
character affecting the validity of the Agreement as of the
date of Closing, and there are no material transactions or
contracts which are required to be summarized therein
which are not so summarized.
2. They have carefully examined the Agreement as
of the Closing Date of the Agreement, and the Agreement
did not include any untrue statement of a material fact
required to be stated herein or necessary to make the
statements therein not misleading.
3. Except as contemplated in the Agreement,
subsequent to the Closing Date of the Agreement, the
Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any
material transactions not in the ordinary course of business,
and there has not been any material change in the capital
stock or financial statements of the Company, or any
material adverse change in the condition (financial or other)
of the Company, or in the earnings, affairs or business
prospects of the Company, whether or not arising in the
ordinary course of business.
4. The Company is operating substantially in
compliance with all franchises, authorizations, licenses,
permits, easements, consents, certificates and orders of any
governmental or self-regulatory body required for the
conduct of its business, properties or assets, and all of its
licenses are valid and in full force and effect, and the
Company is in compliance with all laws, regulations,
orders and decrees applicable to it, the noncompliance with
which would have a material adverse effect on its business,
properties or assets.
5. The Company has good title to, or leasehold
estates in, all real and personal property described in its
financial statements as being owned by it, in each case free
and clear of all liens, claims, security interests or other
encumbrances except liens for taxes not due and payable
and except such as are described in the financial
statements or such as are not materially significant or
important in relation to the business of the Company as a
whole.
6. To the best of their knowledge, neither the
Company nor any Employee or agent of the Company has
made any payment or transfer of any funds or assets of the
Company or received any funds, assets or personal benefits
in violation of any law, rule or regulation, which is
required to be stated in the Agreement or necessary to
make the statements therein not misleading.
7. The Company has filed all tax returns which are
required to be filed by it and has paid all taxes shown
thereon as due, and it hag paid all assessments, received by
it to the extent the same have become due and payable.
The Company has no knowledge of any tax deficiency
which might be asserted against the Company which could
materially and adversely affect its business or properties.
All taxes with respect to which the Company is obligated
have been paid or adequate accruals have been established
to cover any such unpaid taxes.
8. Subsequent to the Closing Date of the Agreement
the Company has not sustained any material loss or damage
to its property, whether or not insured.
9. Immediately prior to the Closing Date of the
Agreement the representations and warranties of the
Company contained in the Agreement are true and correct
in all material respects; and the Company has complied in
all material respects with all of its agreements therein
contained.
10. There has been no amendment, other than the
name change, to the Articles of Incorporation of the
Company prior to the Closing Date of the Agreement.
11. The Company as of this date, has 1,717,000
shares of its Common Stock outstanding, all of which have
been duly authorized and validly issued.
12. The Bylaws of the Company as submitted on the
Closing Date remain in effect and have not been changed,
amended or modified.
13. The Company has all necessary char holder
approval for the Agreement and the transactions
contemplated thereby.
IN WITNESS WHEREOF, I have hereunto signed
by name and affixed the seal of the Company.
DATED: ____________________________
____________________________
J.A. Garcia, President
____________________________
Charles Spira, Secretary
<PAGE>
EMPLOYMENT CONTRACT
This EMPLOYMENT AGREEMENT, effective
October 1, 1996, and continuing to September 30, 2001, is
between AQUACARE ENVIRONMENT INC., a
Corporation referred to as "Employer", and HENNING
GATZ, an individual, herein referred to as "Employee".
1. RECITALS
1.1 Employer is engaged in the business of
commercial scale controlled environment aquaculture, on
a worldwide basis.
1.2 Employer desires to secure the association and
services of Employee in order to retain his experience,
skills, abilities, background and knowledge of Employer's
business and is therefore willing to engage his services on
the terms and conditions set forth below.
1.3 Employee is willing to be employed by
Employer on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the
recitals, the mutual promises and covenants set forth in this
Agreement, and the payment by Employer to Employee of
the compensation recited herein, Employer and Employee
agree as follows:
2. EMPLOYMENT
2.1 Employment: Employer hereby employs
Employee as President and Chief Executive Officer of
Employer with responsibilities for overseeing production
and developing and expanding Employer's business.
Employee hereby accepts and agrees to such employment.
2.2 Duties of Employment: Employee shall, subject
to the control and discretion of Employer, be responsible
for the duties set forth in 2.1 above, and Employee shall at
all times faithfully, industriously, and to the best of his
ability, experience, and talent perform all duties that may
be required of him pursuant to the express and implicit
terms of this Agreement. Such duties shall be rendered at
the Employer's facility in Bellingham, Washington.
2.3 Term of Employment: The term of the
employment shall be for a period of 5 years commencing
October 1, 1996 and continuing thereafter until September
30, 2001.
2.4 Salary: Employer shall pay Employee the
compensation set forth herein for the term of this
Agreement.
(a) $60,000 dollars per year;
(b) Disability insurance for purposes of salary
replacement;
(c) Employee shall also receive 10 working days of
paid vacation per year, and in addition thereto, 6 working
days of paid sick leave per year.
2.6 Fringe Benefits: Employee shall be reimbursed
for automobile insurance on all vehicles he uses in the
course and scope of his employment. Employee shall
further be entitled to participate in any retirement, pension,
or profit sharing program of the Employer, as from time to
time instituted or put in place by the Employer.
2.7 Business Expenses: During the employment
term, Employee will be reimbursed by Employer all
reasonable, ordinary and necessary business expenses for
promoting employer's business, including any relocation
expenses incurred by reason of Employer having Employee
relocate himself and his family to a new business site
and/or local.
2.8 Termination of Employment: Employee may at
his option terminate his services under this Agreement at
will, on thirty days written notice to Employer; provided
however, should employee terminate this employment
before the end of the above stated term, he shall be bound
by the non-compete provisions of this agreement through
the end of the term of this Agreement, to wit September
30, 2001.
Employer may terminate this Agreement without
notice to Employee if Employee acts in any of the
following ways:
(a) Commits any material act of dishonesty;
(b) Discloses confidential information to a third
party;
(c) Is guilty of gross carelessness or misconduct in
his work;
(d) Unjustifiably neglects his duties under this
Agreement;
(e) Breaches any of the terms of this Agreement;
(f) Death of the Employee; or
(g) Acts in any way that has a direct, substantial,
and adverse effect on Employer's reputation or business
practice.
3. COVENANT NOT TO COMPETE
Employee agrees not to reestablish or reopen any
business, trade, or occupation operating in the same market
to the business of Employer as same is defined in
paragraph 1.1 of this Agreement, or in any manner to
become interested directly or indirectly, as an employee,
owner, partner, agent, stockholder, director, officer, or
otherwise, in any such business, trade or occupation within
the State of Washington for a period of five (5) years from
October 1, 1996.
4. INTEGRATION
This written Agreement contains the sole and entire
Agreement between the parties. It supersedes any and all
other Agreements between the parties.
5. MODIFICATION OR WAIVER
No waiver or modification of this Agreement or any
covenant, condition, or limitation herein contained shall be
valid unless in writing and duly executed by the party to be
charged therewith. Further, no evidence of any waiver or
modification shall be offered or received in evidence in any
proceeding, arbitration, or litigation between the parties
arising out of or effecting this Agreement, or the right or
obligation of any party hereunder, unless such waiver or
modification is in writing, duly executed as aforesaid. The
provisions of this paragraph may not be waived except as
herein set forth.
6. CHOICE OF LAW
This Agreement and performance hereunder in any
and all actions and special proceedings shall be construed
in accordance with the laws of the State of Washington.
7. ATTORNEY FEES AND COSTS
In the event either party is required to bring an
action in law or equity to enforce the terms and conditions
of this Agreement, the Court shall award the prevailing
party reasonable attorney fees, taxable court costs, and
expenses of litigation.
8. SUCCESSORS IN INTEREST
This Agreement shall be binding on and inure to the
benefit of the respective parties and their respective heirs,
legal representatives, successors in interest and assigns.
9. SEVERABILITY
If any court determines that any of the covenants,
terms, or conditions set forth in this Agreement, or any
part thereof, is invalid or unenforceable, the remainder of
the covenants, terms, and conditions shall not thereby be
affected and shall be given full effect, without regard to the
invalid portions.
10. SURVIVAL
The rights and obligations of the parties under this
Agreement shall survive the termination of this Agreement
or the termination of the employment of Employee.
11. JURISDICTION AND VENUE
Any action brought to enforce any of the provisions
of this Agreement shall be filed and remain in a court of
Competent jurisdiction in the county of Whatcom, State of
Washington.
12. NOTICES
All notices, demands and other communications
hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or mailed first
class, postage prepaid to:
A. If to Employer:
AQUACARE ENVIRONMENT, INC.
1155 North State Street
Ste. 303
Bellingham, WA 98225
B. If to Employee:
Henning Gag
916 Jersey St.
Bellingham, WA 98225
13. INDEPENDENT COUNSEL
The parties hereto acknowledge that prior to
executing this Employment Agreement, they have had the
opportunity to consult with an attorney of their own
choosing and have been advised and counseled by said
attorneys concerning their respective rights and obligations
hereunder.
IN WITNESS WHEREOF, the parties have
executed this agreement this 1st day of October, 1996.
AQUACARE ENVIRONMENT, INC.
By:__________________________________________
<PAGE>
EMPLOYMENT CONTRACT
This EMPLOYMENT AGREEMENT, effective
October 1, 1996, and continuing to September 30, 2001, is
between AQUACARE ENVIRONMENT INC., a
Corporation referred to as "Employer", and GREGG
BONACKER, an individual, herein referred to as
"Employee".
1. RECITALS
1.1 Employer is engaged in the business of
commercial scale controlled environment aquaculture, on
a worldwide basis.
1.2 Employer desires to secure the association and
services of Employee in order to retain his experience,
skills, abilities, background and knowledge of Employer's
business and is therefore willing to engage his services on
the terms and conditions set forth below.
1.3 Employee is willing to be employed by
Employer on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the
recitals, the mutual promises and covenants set forth in this
Agreement, and the payment by Employer to Employee of
the compensation recited herein, Employer and Employee
agree as follows:
2. EMPLOYMENT
2.1 Employment: Employer hereby employs
Employee as Vice President of Development with
responsibilities for developing and expanding Employer's
business. Employee hereby accepts and agrees to such
employment.
2.2 Duties of Employment: Employee shall, subject
to the control and discretion of Employer, be responsible
for the duties set forth in 2.1 above, and Employee shall at
all times faithfully, industriously, and to the best of his
ability, experience, and talent perform all duties that may
be required of him pursuant to the express and implicit
terms of this Agreement. Such duties shall be rendered at
the Employer's facility in Bellingham, Washington or at
such other place as the Employer may designate.
2.3 Term of Employment: The term of the
employment shall be for a period of 5 years commencing
October 1, 1996 and continuing thereafter until September
30, 2001.
2.4 Salary: Employer shall pay Employee the
compensation set forth herein for the term of this
Agreement. (a) $60,000 dollars per year; (b) Disability
insurance for purposes of salary replacement, (c) Employee
shall also receive 10 working days of paid vacation per
year, and in addition thereto, 6 working days of paid sick
leave per year.
2.6 Fringe Benefits: Employee shall receive medical
and dental insurance coverage on behalf of himself, and his
family, to the extent and in the same form as provided by
Employer to its company officers. Employee shall further
be entitled to participate in any retirement, pension, or
profit sharing program of the Employer, as from time to
time instituted or put in place by the Employer.
2.7 Business Expenses: During the employment
term, Employee will be reimbursed by Employer all
reasonable, ordinary and necessary business expenses for
promoting employer's business, including any relocation
expenses incurred by reason of Employer having Employee
relocate himself and his family to a new business site
and/or local.
2.8 Termination of Employment: Employee may at
his option terminate his services under this Agreement at
will, on thirty days written notice to Employer; provided
however, should employee terminate this employment
before the end of the above stated term, he shall be bound
by the non-compete provisions of this agreement through
the end of the term of this Agreement, to wit September
30, 2001.
Employer may terminate this Agreement without
notice to Employee if Employee acts in any of the
following ways:
(a) Commits any material act of dishonesty;
(b) Discloses confidential information to a third
party;
(c) Is guilty of gross carelessness or misconduct in
his work;
(d) Unjustifiably neglects his duties under this
Agreement;
(e) Breaches any of the terms of this Agreement;
(f) Death of the Employee; or
(g) Acts in any way that has a direct, substantial,
and adverse effect on Employer's reputation or business
practice.
3. COVENANT NOT TO COMPETE
Employee agrees not to reestablish or reopen any
business, trade, or occupation operating in the same market
to the business of Employer as same is defined in
paragraph 1.1 of this Agreement, or in any manner to
become interested directly or indirectly, as an employee,
owner, partner, agent, stockholder, director, officer, or
otherwise, in any such business, trade or occupation within
the State of Washington for a period of five (5) years from
October 1, 1996.
4. INTEGRATION
This written Agreement contains the sole and entire
Agreement between the parties. It supersedes any and all
other Agreements between the parties.
5. MODIFICATION OR WAIVER
No waiver or modification of this Agreement or any
covenant, condition, or limitation herein contained shall be
valid unless in writing and duly executed by the party to be
charged therewith. Further, no evidence of any waiver or
modification shall be offered or received in evidence in any
proceeding, arbitration, or litigation between the parties
arising out of or effecting this Agreement, or the right or
obligation of any party hereunder, unless such waiver or
modification is in writing, duly executed as aforesaid. The
provisions of this paragraph may not be waived except as
herein set forth.
6. CHOICE OF LAW
This Agreement and performance hereunder in any
and all actions and special proceedings shall be construed
in accordance with the laws of the State of Washington.
7. ATTORNEY FEES AND COSTS
In the event either party is required to bring an
action in law or equity to enforce the terms and conditions
of this Agreement, the Court shall award the prevailing
party reasonable attorney fees, taxable court costs, and
expenses of litigation.
8. SUCCESSORS IN INTEREST
This Agreement shall be binding on and inure to the
benefit of the respective parties and their respective heirs,
legal representatives, successors in interest and assigns.
9. SEVERABILITY
If any court determines that any of the covenants,
terms, or conditions set forth in this Agreement, or any
part thereof, is invalid or unenforceable, the remainder of
the covenants, terms, and conditions shall not thereby be
affected and shall be given full effect, without regard to the
invalid portions.
10. SURVIVAL
The rights and obligations of the parties under this
Agreement shall survive the termination of this Agreement
or the termination of the employment of Employee.
11. JURISDICTION AND VENUE
Any action brought to enforce any of the provisions
of this Agreement shall be filed and remain in a court of
competent jurisdiction in the county of Whatcom, State of
Washington.
12. NOTICES
All notices, demands and other communications
hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or mailed first
class, postage prepaid to:
A. If to Employer:
AQUACARE ENVIRONMENT, INC.
1155 North State Street
Ste. 303
Bellingham, WA 98225
B. If to Employee:
Gregg Bonacker
1416 Oriental Ave.
Bellingham, WA 98226
13. INDEPENDENT COUNSEL
The parties hereto acknowledge that prior to
executing this Employment Agreement, they have had the
opportunity to consult with an attorney of their own
choosing and have been advised and counseled by said
attorneys concerning their respective rights and obligations
hereunder.
IN WITNESS WHEREOF, the parties have
executed this agreement this 1st day of October, 1996.
AQUACARE ENVIRONMENT, INC.
By:_______________________________________
Title: President
By:_______________________________________
Gregg Bonacker, Employee
