EXHIBIT 2.1
PLAN AND AGREEMENT OF TRIANGULAR MERGER
BETWEEN
ENVIRONMENTAL TECHNOLOGIES, INC.
▇▇▇▇ SUB ONE, INC.
AND
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ DEVELOPMENT
THIS AGREEMENT is made this 29 day of December 2003 by and between
ENVIRONMENTAL TECHNOLOGIES, INC., a Nevada corporation ("Environmental
Technologies"), ▇▇▇▇ SUB ONE, INC., a California corporation ("▇▇▇▇ Sub One"),
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ DEVELOPMENT, a California corporation ("▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇"),
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇").
WHEREAS, ▇▇▇▇ Sub One is a wholly-owned subsidiary of Environmental
Technologies; and
WHEREAS, Environmental Technologies and the stockholder of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ desire to cause the merger of ▇▇▇▇ Sub One with and into
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ (the "Merger"); and
WHEREAS, as a result of the Merger, the stockholder of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will receive shares of the common stock, of Environmental
Technologies, par value $0.001 per share (the "Environmental Technologies Common
Stock") in exchange for all of his shares of the common stock of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, no par value per share (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common
Stock"); and
WHEREAS, after the Merger, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will become a wholly-owned
subsidiary of Environmental Technologies;
NOW, THEREFORE, in consideration of the foregoing and the following
mutual covenants and agreements, the parties agree as follows:
1. PLAN ADOPTED. A plan of merger whereby ▇▇▇▇ Sub One merges with and
into ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ (this "Plan of Merger"), pursuant to the provisions of
Chapter 92A of the Nevada Revised Statutes (the "NRS"), Section 1101 of the
California Corporations Code, and Section 368(a)(1)(A) of the Internal Revenue
Code of 1986, as amended, is adopted as follows:
(a) ▇▇▇▇ Sub One shall be merged with and into
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, to exist and be governed by the laws of the State of
California.
(b) ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall be the Surviving Corporation (the
"Surviving Corporation") and a wholly-owned subsidiary of Environmental
Technologies.
(c} When this Plan of Merger shall become effective, the
separate existence of ▇▇▇▇ Sub One shall cease and the Surviving Corporation
shall succeed, without other transfer, to all the rights and properties of ▇▇▇▇
Sub One and shall be subject to all the debts and liabilities of such
corporation in the same manner as if the Surviving Corporation had itself
incurred them. All rights of creditors and all liens upon the property of each
constituent entity shall be preserved unimpaired, limited in lien to the
property affected by such liens immediately prior to the Merger.
(d) The Surviving Corporation will be responsible for the
payment of all fees and franchise taxes of the constituent entities payable to
the States of California and Nevada, if any.
(e) The Surviving Corporation will carry on business with the
assets of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, as well as the assets of ▇▇▇▇ Sub One.
(f) The Surviving Corporation will be responsible for the
payment of the fair value of shares, if any, required under the NRS and the
California Corporations Code.
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(g) The stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will surrender all of
his shares of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock in the manner hereinafter set
forth.
(h) In exchange for the shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common
Stock surrendered by the stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Environmental
Technologies will issue and transfer to such stockholder on the basis
hereinafter set forth, shares of the Environmental Technologies Common Stock.
(i) Environmental Technologies, the sole stockholder of ▇▇▇▇
Sub One, will surrender its shares of the ▇▇▇▇ Sub One Common Stock held by it
in exchange for shares of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock.
2. EFFECTIVE DATE. The effective date of the Merger (the "Effective
Date") shall be the date of the filing of instruments effecting the Merger for
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and ▇▇▇▇ Sub One in the State of California.
3. SUBMISSION TO STOCKHOLDERS. This Plan of Merger shall be submitted
for approval separately to the stockholders of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and ▇▇▇▇ Sub
One in the manner provided by the laws of the State of California.
4. MANNER OF EXCHANGE. On the Effective Date, the stockholder of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall surrender his stock certificates representing the
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock to Environmental Technologies in exchange for
certificates representing the shares of the Environmental Technologies Common
Stock to which he is entitled. In exchange, Environmental Technologies shall
receive all of the issued and outstanding shares of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common
Stock held by the stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇. The 1,000 shares of the ▇▇▇▇
Sub One Common Stock will be cancelled.
5. BASIS OF EXCHANGE. The stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ currently
owns 1,000 shares of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock, which shares constitute
all of the issued and outstanding shares of the capital stock of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇. As a result of the Merger, the stockholder of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall be entitled to receive, in exchange for all of his
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock, 2,500,000 shares of the Environmental
Technologies Common Stock, having an agreed value of $5,000,000 on the Effective
Date. The shares to be transferred to the stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall
contain a legend restricting the transfer thereof as required by the Securities
Act of 1933, as amended.
6. CALL AND PUT ON ENVIRONMENTAL TECHNOLOGIES COMMON STOCK. Beginning
on the Effective Date and expiring at midnight, Pacific Time on June 30, 2005,
Environmental Technologies shall have a "call" (the "Call"), exercisable in
whole or in part during that period, on the 2,500,000 shares of the
Environmental Technologies Common Stock to be received by the stockholder of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ hereunder at a price of $2.00 per share, payable in cash. From
the Effective Date until midnight, Pacific Time on June 30, 2004, the Call shall
be exclusive on behalf of Environmental Technologies.
Beginning on July 1, 2004 and expiring at midnight, Pacific Time on
June 30, 2005, on each of September 30, 2004, December 31, 2004, March 31, 2005,
and June 30, 2005 (collectively, such dates being hereinafter referred to as the
"Put Dates"), and running concurrently with the Call during that period, to the
extent that the Call has not been theretofore exercised, the stockholder of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall have a "put" (the "Put") on each of the Put Dates,
exercisable in increments of up to 625,000 shares of the Environmental
Technologies Common Stock at a price of $2.00 per share, payable at the
discretion of Environmental Technologies either in cash or by means of a
promissory note, bearing no interest, and due on or before June 30, 2005 (the
"Note"). On each Put Date, to the extent that the stockholder of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ has not exercised his full Put to which he was entitled at any
given time, he may cumulate the shares which he had the right to be subject to
the Put on a previous Put date and Put such shares on a subsequent Put date, so
that on the fourth Put Date, the stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall have had
the right to Put all 2,500,000 of his shares of the Environmental Technologies
Common Stock subject to the terms of this Agreement, less any shares which have
been purchased by Environmental Technologies pursuant to the Call.
Provided, however, from and after June 30, 2004 and expiring at
midnight, Pacific Time on June 30, 2005, to the extent that Environmental
Technologies has not exercised the Call, the stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
may
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either elect to exercise the Put as provided herein or sell such shares to a
third-party free and clear of any claims by Environmental Technologies with
respect to the Call.
Upon the exercise of a Call or a Put hereunder, Environmental
Technologies must deliver to the stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ payment for
such shares in the form of cash or the Note as called for hereunder on or before
5:00 p.m. within 10 days following the exercise of the Call or the Put, as the
case may be. At such time, the stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall deliver to
Environmental Technologies the shares of the Environmental Technologies Common
Stock covered by the Call or the Put.
The Note shall be subject to the following terms:
(a) The principal shall be payable quarterly, in an amount up
to no more than 25 percent of the original principal balance, subject to the
further conditions recited below, with the first installment due 90 days after
the exercise of the Put;
(b) Provided, however, upon the payment of any installment of
the principal of the Note, the Board of Directors of Environmental Technologies,
with the stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ as a director of Environmental
Technologies recusing himself, may elect to pay less than 25 percent of the
original principal balance of the Note, if the Board of Directors of
Environmental Technologies determines in its sole and unfettered discretion that
the payment of such amount would not be in the best interest of Environmental
Technologies;
(c) Provided, further, if in the payment of any installment of
the Note, the Board of Directors of Environmental Technologies elects not to pay
the full 25 percent of the original principal balance of the Note, any
subsequent payment may be cumulative of all amounts of the original principal
balance of the Note which have not been paid theretofore, if the Board of
Directors of Environmental Technologies determines in its sole and unfettered
discretion, with the stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ as a director of
Environmental Technologies recusing himself, that the payment of such amount
would be in the best interest of Environmental Technologies; and
(d) The Note shall be secured by a stock pledge agreement
covering the shares of the Environmental Common Stock which have been purchased
pursuant to the Call. As long as there has been no default with respect to the
Note, the shares shall be deemed to have been cancelled and will have no voting
rights.
(e) Notwithstanding anything herein contained to the contrary,
the Note shall be fully payable on June 30, 2005.
7. DIRECTORS AND OFFICERS.
(a) The present Board of Directors of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall
serve as the Board of Directors of the Surviving Corporation until the next
annual meeting or until such time as their successors have been elected and
qualified.
(b) If a vacancy shall exist on the Board of Directors of the
Surviving Corporation on the Effective Date, such vacancy may be filled by the
Board of Directors as provided in the Bylaws of the Surviving Corporation.
(c) All persons who, on the Effective Date, are executive or
administrative officers of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall be officers of the Surviving
Corporation until the Board of Directors of the Surviving Corporation shall
otherwise determine. The Board of Directors of the Surviving Corporation may
elect or appoint such additional officers as it may deem necessary or
appropriate.
8. ARTICLES OF INCORPORATION. The Articles of Incorporation of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ existing on the Effective Date, a copy of which is attached
hereto as ATTACHMENT B, shall continue in full force as the Articles of
Incorporation of the Surviving Corporation until altered, amended, or repealed
as provided therein or as provided by law.
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9. BYLAWS. The Bylaws of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ existing on the Effective
Date, a copy of which is attached hereto as ATTACHMENT C, shall continue in full
force as the Bylaws of the Surviving Corporation until altered, amended, or
repealed as provided therein or as provided by law.
10. PAYMENT OF TAXES. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ currently has in effect an
election to be taxed as a "Subchapter S corporation" under the Internal Revenue
Code of 1986, as amended. Environmental Technologies shall pay all income taxes
for the 2003 fiscal year of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ which may be assessed against the
stockholders of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇.
11. EMPLOYMENT AGREEMENT. On the Effective Date, Environmental
Technologies shall execute an Employment Agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a
copy of which is attached hereto as ATTACHMENT D.
12. COPIES OF THE PLAN OF MERGER. A copy of this Plan of Merger is on
file at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the principal
offices of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the principal offices of Environmental Technologies and ▇▇▇▇
Sub One. A copy of this Plan of Merger will be furnished to any stockholder of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Environmental Technologies, or ▇▇▇▇ Sub One, on written
request and without cost.
13. RECORDS OF ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇. For a period of five years following
the Effective Date, the books of account and records of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
pertaining to all periods prior to the Effective Date shall be available for
inspection by the stockholder of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ for use in connection with
tax audits.
14. NO REPRESENTATION. It is acknowledged, understood and agreed that
Environmental Technologies has relied on its own investigations and due
diligence endeavors in making its decision to proceed with the Merger in
accordance with the terms hereof and will never claim that, in making its
decision to proceed with the Merger it has relied on any statements,
representations, or warranties (regardless of the form thereof) which may have
been made, directly or indirectly, by the Surviving Corporation, or any of its
officers, directors, stockholders, legal or financial representatives, or any
person, former entity affiliated or associated therewith and that Environmental
Technologies is acquiring the Surviving Corporation in the manner specified
herein on an "as is" basis and assumes all risks associated with the status of
the assets and liabilities of the Surviving Corporation as they may exist at the
Effective Date.
15. AGREEMENT REGARDING COLLATERAL. The undersigned, do hereby
acknowledge, understand and agree that in conjunction with the business
combination of Advance Fuel Filtration Systems, Inc., a California corporation,
▇.▇. ▇▇▇▇▇, Inc., a California corporation, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, and Environmental
Technologies, and with respect to any affiliate or successor in interest to any
of such corporations, as well as their officers, directors, and stockholders, no
asset belonging to any of the constituent corporations, or which may be made
available for their use, will be allowed to, or become, collateral for security
of the performance of any debt obligation arising out of the implementation of
such business combination in favor of any of the constituent corporations or any
of their officers, directors, stockholders or affiliates.
16. NO ASSIGNMENT. This Agreement shall not be assignable by any party
without the prior written consent of the other parties, which consent shall be
subject to such parties' sole, absolute and unfettered discretion.
17. ATTORNEYS' FEES. In the event that it should become necessary for
any party entitled hereunder to bring suit against any other party to this
Agreement for a breach of this Agreement, the parties hereby covenant and agree
that the party who is found to be in breach of this Agreement shall also be
liable for all reasonable attorneys' fees and costs of court incurred by the
other parties. Provided, however, in the event that there has been no breach of
this Agreement, whether or not the transactions contemplated hereby are
consummated, each party shall bear its own costs and expenses (including any
fees or disbursements of its counsel, accountants, brokers, investment bankers,
and finder's fees).
18. BENEFIT. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
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19. NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, or
by telecopy or e-mail, if to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and the stockholder of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, addressed to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and e-mail
▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇; and if to Environmental Technologies and ▇▇▇▇ Sub One,
addressed to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and e-mail
▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. Any party hereto may change its address upon 10 days'
written notice to any other party hereto.
20. CONSTRUCTION. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise.
21. WAIVER. No course of dealing on the part of any party hereto or its
agents, or any failure or delay by any such party with respect to exercising any
right, power or privilege of such party under this Agreement or any instrument
referred to herein shall operate as a waiver thereof, and any single or partial
exercise of any such right, power or privilege shall not preclude any later
exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
22. CUMULATIVE RIGHTS. The rights and remedies of any party under this
Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
23. INVALIDITY. In the event any one or more of the provisions
contained in this Agreement or in any instrument referred to herein or executed
in connection herewith shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect the other provisions of this Agreement or any such other
instrument.
24. TIME OF THE ESSENCE. Time is of the essence of this Agreement.
25. INCORPORATION BY REFERENCE. The Attachments to this Agreement
referred to or included herein constitute integral parts to this Agreement and
are incorporated into this Agreement by this reference.
26. MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
27. LAW GOVERNING; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, without
regard to any conflicts of laws provisions thereof. Each party hereby
irrevocably submits to the personal jurisdiction of the United States District
Court for the Central District of California, as well as of the Superior Courts
of the State of California in Riverside County, California over any suit, action
or proceeding arising out of or relating to this Agreement. Each party hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such mediation,
arbitration, suit, action or proceeding brought in any such county and any claim
that any such mediation, arbitration, suit, action or proceeding brought in such
county has been brought in an inconvenient forum.
28. ENTIRE AGREEMENT. This instrument and the attachments hereto, as
well as any collateral agreements relating to the subject matter hereto or the
operation of Environmental Technologies and the Surviving Corporation following
the Merger, contain the entire understanding of the parties with respect to the
subject matter hereof and may not be changed orally, but only by an instrument
in writing signed by the party against whom enforcement of any waiver, change,
modification, extension, or discharge is sought.
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IN WITNESS WHEREOF, this Agreement has been executed in multiple
counterparts on the date first written above.
ENVIRONMENTAL TECHNOLOGIES, INC.
By
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Chairman and Chief Executive Officer
▇▇▇▇ SUB ONE, INC.
By
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Chairman and Chief Executive Officer
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ DEVELOPMENT
By
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
ATTACHMENTS:
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Attachment A -- Stock Pledge Agreement
Attachment B -- Articles of Incorporation of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Development
Attachment C -- Bylaws of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Development
Attachment D -- Employment Agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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ATTACHMENT A
STOCK PLEDGE AGREEMENT
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STOCK PLEDGE AGREEMENT
THIS AGREEMENT is made this 29 day of December, 2003 by and between
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Secured Party") and Environmental Technologies, Inc.
(the "Debtor").
WHEREAS, the Secured Party, pursuant to that certain Plan and Agreement
of Triangular Merger dated December 29, 2003 (the "Merger Agreement") has sold
to the Debtor ________ shares (the "Company Common Stock") of the issued and
outstanding common stock, no par value per share, in ENVIRONMENTAL TECHNOLOGIES,
INC., a Nevada corporation (the "Company"); and
WHEREAS, pursuant to the Merger Agreement, the Debtor has executed and
delivered to the Secured Party that one certain promissory note of even date
herewith executed by the Debtor in the original principal amount of $__________
payable to the order of the Secured Party (the "Note");
NOW, THEREFORE, in consideration of the foregoing and the following
mutual covenants and agreements, the parties hereto do hereby agree as follows:
1. SECURITY INTEREST. The Debtor hereby grants to the Secured Party a
security interest and agrees and acknowledges that the Secured Party has and
shall continue to have a security interest in the Company Common Stock acquired
by the Debtor from the Secured Party pursuant to the Merger Agreement, together
with all monies, income, proceeds, substitutions, replacements, and benefits
attributable or accruing to said property, including, but not limited to, all
stock rights, rights to subscribe, liquidating dividends, stock dividends,
dividends paid in stock, new securities or other properties or benefits for
which the Debtor is or may hereafter become entitled to receive on account of
said property, and in the event that the Debtor shall receive any of such, the
Debtor shall hold same as trustee for the Secured Party and will immediately
deliver same to the Secured Party to be held hereunder in the same manner as the
properties specifically described above are held hereunder. All property of all
kinds in which the Secured Party is herein granted a security interest,
including, but not limited to, the Company Common Stock, shall hereinafter be
referred to as the "Collateral."
The Debtor agrees to execute such stock powers, endorse such
instruments, or execute such additional pledge agreements or other documents as
may be required by the Secured Party in order to effectively grant to the
Secured Party the security interest in the Collateral. The security interest
granted hereby is to secure the payment of any and all indebtedness and
liabilities whatsoever of the Debtor to the Secured Party whether direct or
whether now existing or hereafter arising, and howsoever evidenced or acquired,
and whether joint or several, including, but not limited to, the Merger
Agreement and the Note, and all costs incurred by the Secured Party to enforce
this Agreement or any of the above described agreements and instruments,
including but not limited to attorney's fees and expenses (all of such
obligations, indebtedness and liabilities being hereinafter collectively
referred to as the "Obligations").
2. WARRANTIES AND COVENANTS OF THE DEBTOR. The Debtor, for so long as
it has any duty with respect to the Obligations, hereby warrants and covenants
as follows:
(a) The security interest granted hereby will attach to the
Collateral on the date hereof.
(b) Except for the security interest granted hereby and for
taxes not yet due, the Debtor is the owner of the Collateral free of any adverse
claim, security interest or encumbrance, and the Debtor will defend the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein.
(c) The Debtor authorizes the Secured Party to file, in the
office of the Secretary of State of California, a financing statement signed
only by the Secured Party covering the Collateral, and at the request of the
Secured Party, the Debtor will join the Secured Party in executing one or more
financing statements pursuant to the Uniform Commercial Code in effect in the
State of California on the date hereof in a form satisfactory to the Secured
Party, and the Secured Party will pay the cost of filing the same, or filing or
recording the financing statements in all public offices wherever filing or
recording is deemed by the Secured Party to be necessary or
1
desirable. It being further stipulated in this regard that the Secured Party may
also at any time or times sign a counterpart of this Agreement signed by the
Debtor and file same as a financing statement if the Secured Party shall elect
to do so.
(d) The Debtor will not sell or offer to sell or otherwise
transfer or encumber the Collateral or any interest therein.
(e) The Debtor will keep the Collateral free from any adverse
lien, security interest, or encumbrance, except the security interest granted
hereby and for taxes not yet due.
(f) The Debtor will pay to the Secured Party all costs and
expenses, including reasonable attorney's fees, incurred or paid by the Secured
Party in exercising or protecting his interests, rights and remedies under this
Agreement in the event of default by the Debtor hereunder or under the Merger
Agreement or the Note.
(g) The Debtor will pay all expenses incurred by the Secured
Party in preserving, defending, and enforcing this security interest in the
Collateral and in collecting or enforcing the Obligations. Expenses for which
the Debtor is liable include, but are not limited to, taxes, assessments,
reasonable attorney's fees, and other legal expenses. These expenses will bear
interest from the dates of payment at the highest rate stated in the
Obligations, and the Debtor will pay the Secured Party this interest on demand
at a time and place reasonably specified by the Secured Party. These expenses
and interest will be part of the Obligations and will be recoverable as such in
all respects.
(h) The Debtor will immediately notify the Secured Party of
any change in the Debtor's name, address, or location, change in any matter
warranted or represented in this Agreement, change that may affect this security
interest, and any Event of Default.
(i) The Debtor appoints the Secured Party as the Debtor's
attorney-in-fact, effective if an Event of Default as hereinafter defined is not
cured within 30 days after receipt by the Debtor from the Secured Party of
notice thereof, to do any act that the Debtor is obligated to do by this
Agreement, to exercise all rights of the Debtor in the Collateral, to make all
collections, to execute any papers and instruments, and to do all other things
necessary to preserve and protect the Collateral and to make collections and to
protect the Secured Party's security interest in the Collateral.
3. GENERAL COVENANTS. The security interest granted hereby shall in no
way be affected by any indulgence or indulgences, extension or extensions,
change or changes in the form, evidence, maturity, rate of interest or otherwise
of the Obligations, or by want of presentment, notice, protest, suit, or
indulgence upon the Obligations, or shall any release of any security for any of
the parties liable for the payment of the Obligations in any manner affect or
impair this Agreement, and same shall continue in full force and effect in
accordance with their terms until the Obligations have been fully paid.
Any and all securities and other properties of the Debtor heretofore,
now or hereafter delivered to the Secured Party, or in the Secured Party's
possession, shall also secure the Obligations and shall be held and construed to
be a part of the Collateral hereunder to the same extent as fully described
herein.
4. EVENTS OF DEFAULT. The Debtor shall be in default under this
Agreement upon the happening of any of the following events or conditions
(hereinafter severally referred to as an "Event of Default" and collectively
referred to as the "Events of Default"):
(a) Default by the Debtor with respect to any of the
Obligations.
(b) The levy of any attachment, execution or other process
against the Debtor, the Company, or any of the Collateral that is not stayed or
dismissed within 30 days.
(c} Dissolution, termination of existence, insolvency or
business failure of the Debtor, the Company, or any endorser, guarantor or
surety of the Obligations, or commission of the act of bankruptcy by, or the
2
appointment of a receiver or other legal representative for any part of the
property of, assignment for the benefit of creditors by, or commencement of any
proceedings under any bankruptcy or insolvency law by or against, the Debtor,
the Company or any endorser, guarantor, or surety for the Obligations that are
not stayed or dismissed within 30 days of filing.
(d) Default in the performance of any covenant or agreement of
the Debtor or the Company to the Secured Party, whether under this Agreement or
the Note, or any other instrument executed in connection with said agreements or
otherwise.
(e) The occurrence of any event which under the terms of any
evidence of indebtedness, indenture, loan agreement, security agreement, or
similar instrument permits the acceleration of maturity of any indebtedness of
the Company or the Debtor to the Secured Party, or to persons other than the
Secured Party, or the Secured Party receives notification that another person
has or expects to acquire a security interest in the Collateral or any part
thereof.
(f) If any warranty, covenant, or representation made to the
Secured Party by or on behalf of the Debtor or the Company proves to have been
false in any material respect when made.
(g) If any lien attaches to any of the Collateral.
5. REMEDIES. Upon the failure of the Debtor or the Company to cure an
Event of Default within 30 days after receipt of notice from the Secured Party
of such Event of Default and at any time thereafter, at the option of the holder
thereof, any or all of the Obligations shall become immediately due and payable
without presentment or demand or any further notice to the Debtor, the Company
or any other person obligated thereon and the Secured Party shall have and may
exercise with reference to the Collateral any and all of the rights and remedies
of a secured party under the Uniform Commercial Code as adopted in the State of
California, and as otherwise granted herein or under any other agreement
executed by the Debtor, including, without limitation, the right and power to
sell at public or private sale or sales, or otherwise dispose of or utilize the
Collateral and any part or parts thereof in any manner authorized or permitted
under this Agreement or under the Uniform Commercial Code as adopted in the
State of California after default by the Debtor or the Company and to apply the
proceeds thereof toward the payment of any costs and expenses and attorney's
fees thereby incurred by the Secured Party and toward payment of the
Obligations, in such order or manner as the Secured Party may elect, including,
without limiting the foregoing:
(a) The Secured Party is hereby granted the right, at his
option, upon the occurrence of an Event of Default hereunder, to transfer at any
time to himself or to his nominee securities or other property hereby pledged,
or any part thereof, and to thereafter exercise all voting rights with respect
to such security so transferred and to receive the proceeds, payments, monies,
income or benefits attributable or accruing thereto and to hold the same as
security for the Obligations hereby secured or at the Secured Party's election,
to apply such amounts to the Obligations, whether or not then due, in such order
as the Secured Party may elect, or, the Secured Party may, at his option,
without transferring such securities or properties to his nominee, exercise all
voting rights with respect to the securities pledged hereunder and vote all or
any part of such securities at any regular or special meeting of the
stockholders of the Company, and the Debtor does hereby name, constitute and
appoint as a proxy of the Debtor the Secured Party, in the Debtor's name, place
and stead to vote any and all such securities, as said proxy may elect for and
in the name, place and stead of the Debtor, such proxy to be irrevocable and
deemed coupled with an interest.
(b) Sell, lease, or otherwise dispose of any of the Collateral
in accordance with the rights, remedies, and duties of a secured party under
Chapters 2 and 9 of the California Uniform Commercial Code after giving notice
as required by those chapters; unless the Collateral threatens to decline
speedily in value, is perishable, or would typically be sold on a recognized
market. The Secured Party will give the Debtor reasonable notice of any public
sale of the Collateral or of a time after which it may be otherwise disposed of
without further notice of the Debtor. In such event, notice will be deemed
reasonable if it is mailed, postage prepaid, to the Debtor at the address
specified in this Agreement at least 30 days before any public sale or 30 days
before the time when the Collateral may be otherwise disposed of without further
notice to the Debtor.
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(c) Apply any proceeds from disposition of the Collateral
after default in the manner specified in Chapter 9 of the California Uniform
Commercial Code, including payment of the Secured Party's reasonable attorney's
fees and court expenses.
(d) If, after disposition of the Collateral, the Obligations
remain unsatisfied, collect the deficiency from the Debtor.
6. VOTING RIGHTS. So long as no Event of Default has occurred and
remains uncured for the applicable grace period under the Merger Agreement, the
Note, or hereunder, the Debtor shall have the right to vote all of the Debtor's
shares of the Company Common Stock or items of the Collateral subject to this
Agreement, and the Secured Party shall on demand execute and deliver an
effective proxy or proxies in favor of the Debtor, whenever demand is made upon
the Secured Party for such proxy or proxies by the Debtor.
7. PAYMENT OF THE OBLIGATIONS. Simultaneously with the payment in full
of the Obligations, or the Obligations are otherwise deemed to have been paid in
full pursuant to the terms of the Merger Agreement and the Note, the Secured
Party shall execute and file at his own expense any and all instruments
necessary to terminate the security interest in the Collateral created by this
Agreement and also execute any and all other instruments deemed reasonably
necessary by the Debtor to vest in the Debtor title in the Company Common Stock
and any other item constituting the Collateral, free from any claim by the
Secured Party.
8. NO USURY. It is the intention of the parties hereto to comply with
the usury laws of the State of California. Accordingly, it is agreed that
notwithstanding any provision to the contrary in this Agreement or in any of the
documents evidencing the Obligations or otherwise relating thereto, no such
provision shall require the payment or permit the collection of interest in
excess of the maximum permitted by law. If any excess of interest in such
respect is provided for, or shall be adjudicated to be so provided for, in this
Agreement, or any of the documents evidencing the Obligations or otherwise
relating thereto, then in such event:
(a) The provisions of this paragraph shall govern and control;
(b} Neither the Debtor, the Company nor their successors or
assigns, or any other party liable for the payment of the Obligations, shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the maximum amount permitted by law;
(c) Any such excess interest which may have been collected
shall be, at the option of the holder of the instrument evidencing the
Obligations, either applied as a credit against the unpaid principal amount
thereof or refunded to the maker thereof; and
(d) The effective rate of interest shall be automatically
subject to reduction to the maximum lawful contract rate allowed under the usury
laws of the State of California as now or hereafter construed by any court of
competent jurisdiction.
9. ATTORNEY'S FEES. In the event that it should become necessary for
any party entitled hereunder to bring suit against the other party to this
Agreement for enforcement of the covenants herein contained, the parties hereby
covenant and agree that the party who is found to be in violation of said
covenants shall also be liable for all reasonable attorney's fees and costs of
court incurred by the other party hereto.
10. BENEFIT. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
11. NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, if
to the Secured Party, addressed to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and if to the Debtor, addressed to
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Any party hereto may change its
address upon 10 days' written notice to any other party hereto.
12. CONSTRUCTION. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise. In addition, the pronouns used in this Agreement shall be understood
and construed to apply whether the party referred to is an individual,
partnership, joint venture, corporation or an individual or individuals doing
business under a firm or trade name, and the masculine, feminine and neuter
pronouns shall each include the other and may be used interchangeably with the
same meaning.
13. WAIVER. No course of dealing on the part of any party hereto or its
agents, or any failure or delay by any such party with respect to exercising any
right, power or privilege of such party under this Agreement or any instrument
referred to herein shall operate as a waiver thereof, and any single or partial
exercise of any such right, power or privilege shall not preclude any later
exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
14. CUMULATIVE RIGHTS. The rights and remedies of any party under this
Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
15. INVALIDITY. In the event any one or more of the provisions
contained in this Agreement or in any instrument referred to herein or executed
in connection herewith shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect the other provisions of this Agreement or any such other
instrument.
16. TIME OF THE ESSENCE. Time is of the essence of this Agreement.
17. HEADINGS. The headings used in this Agreement are for convenience
and reference only and in no way define, limit, simplify or describe the scope
or intent of this Agreement, and in no way effect or constitute a part of this
Agreement.
18. EXCUSABLE DELAY. None of the parties hereto shall be obligated to
perform and none shall be deemed to be in default hereunder, if the performance
of a non-monetary obligation is prevented by the occurrence of any of the
following, other than as the result of the financial inability of the party
obligated to perform: acts of God, strikes, lock-outs, other industrial
disturbances, acts of a public enemy, terrorists, wars or war-like action
(whether actual, impending or expected and whether de jure or de facto), arrest
or other restraint of governmental (civil or military) blockades, insurrections,
riots, epidemics, landslides, lightning, earthquakes, fires, hurricanes, storms,
floods, washouts, sink holes, civil disturbances, explosions, breakage or
accident to equipment or machinery, confiscation or seizure by any government of
public authority, nuclear reaction or radiation, radioactive contamination or
other causes, whether of the kind herein enumerated, or otherwise, that are not
reasonably within the control of the party claiming the right to delay
performance on account of such occurrence.
19. MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. LAW GOVERNING. This Agreement shall be construed and governed by
the laws of the State of California, and all obligations hereunder shall be
deemed performable in Riverside County, California.
21. PERFECTION OF TITLE. The parties hereto shall do all other acts and
things that may be reasonably necessary or proper, fully or more fully, to
evidence, complete or perfect this Agreement, and to carry out the intent of
this Agreement.
22. ENTIRE AGREEMENT. This instrument contains the entire Agreement of
the parties with respect to the subject matter hereof, and may not be changed
orally, but only by an instrument in writing signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
5
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
THE SECURED PARTY:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
THE DEBTOR:
ENVIRONMENTAL TECHNOLOGIES, INC.
By
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
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ATTACHMENT B
ARTICLES OF INCORPORATION OF
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ DEVELOPMENT
1924127
ENDORSED - FILED
In the office of the Secretary of
State of the State of California
SEP 15 1995
▇▇▇▇ ▇▇▇▇▇, SECRETARY OF STATE
ARTICLES OF INCORPORATION
0F
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ DEVELOPMENT
I.
The name of the corporation is ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ DEVELOPMENT.
II.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
corporations Code.
III.
The name and address in the State of California of this corporation's
initial agent for service of process is ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, 18702 ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
IV.
This corporation is authorized to issue only one class of shares of
stock, and the total number of shares which this corporation is authorized to
issue is ONE HUNDRED THOUSAND (100,000) shares.
V.
The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
VI.
The corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the Corporations Code) for breach of duty to the
corporation and its shareholders through bylaw provisions or through agreements
with the agents, or both, in excess of the indemnification otherwise permitted
under Section 317 of the Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the Corporations Code.
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, INCORPORATOR
ATTACHMENT C
BYLAWS OF
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ DEVELOPMENT
BY-LAWS
OF
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ DEVELOPMENT
-----------------------------
ARTICLE 1.
OFFICES
1.1 PRINCIPAL OFFICES
-----------------
The board of directors shall fix the location of the principal
executive office of the corporation at any place within or outside the State of
California. If the principal executive office is located outside this state, and
the corporation has one or more business offices in this state, the board of
directors shall likewise fix and designate a principal business office in the
State of California.
1.2 OTHER OFFICES
-------------
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE 2.
MEETINGS OF SHAREHOLDERS
2.1 PLACE OF MEETINGS
-----------------
Meetings of shareholders shall be held at any place within or without
the State of California designated by the board of directors. In the absence of.
any such designation, shareholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETINGS
---------------
The annual meetings of shareholders shall be held on the 3rd day of
January in each year at 10:00 a.m.; provided, however, that should said day fall
upon a legal holiday, then any such annual meeting of shareholders shall be held
at the same time and place on the next day thereafter ensuing which is a full
business day. At such meetings, directors shall be elected and any other proper
business may be transacted.
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2.3 SPECIAL MEETINGS
----------------
A special meeting of the shareholders, for any purpose or purposes
whatsoever, may be called at any time by the board of directors, or by the
chairman of the board of directors, or by the president, or by one or more
shareholders holding shares in the aggregate entitled to cast not less than 10%
of the votes at any such meeting.
2.3.1 If a special meeting is called by any person or persons
other than the board of directors, the request shall be in writing, specifying
the time of such meeting and the general nature of the business proposed to be
transacted, and shall be delivered personally or sent by registered mail or by
telegraphic or other facsimile transmission to the chairman of the board, the
president, any vice-president or the secretary of the corporation. The officer
receiving such request forthwith shall cause notice to be given to the
shareholders entitled to vote, in accordance with the provisions of paragraphs
2.4 and 2.5 of this Article 2, that a meeting will be held at the time requested
by the person or persons calling the meeting, not less than thirty-five (35) nor
more than sixty (60) days after the receipt of the request. If the notice is not
given within twenty (20) days after receipt of the request, the person or
persons requesting the meeting may give the notice. Nothing contained in this
paragraph 2.3.1 shall be construed as limiting, fixing or affecting the time
when a meeting of shareholders called by action of the board of directors may be
held.
2.4 NOTICE OF SHAREHOLDERS' MEETINGS
--------------------------------
All notices of meetings of shareholders shall be sent or otherwise
given in accordance with paragraph 2.5 of this Article 2 not less than ten (10)
nor more than sixty (60) days before the date of the meeting being noticed. The
notice shall specify the place, date and hour of the meeting and (i) in the case
of a special meeting the general nature of the business to be transacted, or
(ii) in the case of the annual meeting those matters which the board of
directors, at the time of giving the notice, intends to present for action by
the shareholders. The notice of any meeting at which directors are to be elected
shall include the name of any nominee or nominees which, at the time of the
notice, management intends to present for election.
2.4.1 If an action is proposed to be taken at any meeting for
approval of (i) contracts or transactions in which a director has a direct or
indirect financial interest, pursuant to Section 310 of the Corporations Code of
California, (ii) an amendment to the articles of incorporation, pursuant to
Section 902 of such Code, (iii) a reorganization of the corporation, pursuant to
Section 1201 of such Code, (iv) dissolution of the corporation, pursuant to
Section 1900 of such Code, or (v) a distribution to
2
preferred shareholders, pursuant to Section 2007 of such Code, the notice shall
also state the general nature of such proposal.
2.5 MANNER OF GIVING NOTICE: AFFIDAVIT OF NOTICE
--------------------------------------------
Notice of any meeting of shareholders shall be given either personally
or by first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the shareholder at the address of such shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent by mail or telegram to the corporation's principal executive office, or if
published at least once in a newspaper of general circulation in the county
where this office is located. Notice shall be deemed to have been given at the
time when delivered personally or deposited in the mail or sent by telegram or
other means of written communication.
2.5.1 If any notice addressed to a shareholder at the address
of such shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at such address, all future notices or reports shall be deemed to have been
duly given without further mailing if the same shall be available to the
shareholder upon written demand of the shareholder at the principal executive
office of the corporation for a period of one year from the date of the giving
of such notice.
2.5.2 An affidavit of the mailing or other means of giving any
notice of any shareholder's meeting shall be executed by the secretary,
assistant secretary or any transfer agent of the corporation giving such notice,
and shall be filed and maintained in the minute book of the corporation.
2.6 QUORUM
------
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote at any meeting of shareholders shall constitute a
quorum for the transaction of business. The shareholders present at a
duly-called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
2.7 ADJOURNED MEETING AND NOTICE THEREOF
------------------------------------
Any shareholders' meeting, annual or special, whether or not a quorum
is present, may be adjourned from time to time by the
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vote of the majority of the shares represented at such meeting, either in person
or by proxy, but in the absence of a quorum, no other business may be transacted
at such meeting.
2.7.1 When any meeting of shareholders, either annual or
special, is adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at a meeting at
which the adjournment is taken, unless a new record date for the adjourned
meeting is fixed, or unless the adjournment is for more than forty-five (45)
days from the date set for the original meeting, in which case the board of
directors shall set a new record date. Notice of any such adjourned meeting
shall be given to each shareholder of record entitled to vote at the adjourned
meeting in accordance with the provisions of paragraphs 2.4 and 2.5 of Article
2. At any adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting.
2.8 VOTING
------
Unless a record date set for voting purposes be fixed as provided in
these By-Laws, then subject to the provisions of Section 702 to Section 704,
inclusive, of the Corporations Code of California, only persons in whose names
shares entitled to vote stand on the stock records of the corporation at the
close of business on the business day next preceding the day on which notice is
given (or, if notice is waived, at the close of business on the business day
next preceding the day on which the meeting is held) shall be entitled to vote
at such meeting. Any shareholder entitled to vote on any matter (other than
elections of directors or officers) may vote part of the shares in favor of the
proposal and refrain from voting the remaining shares or vote them against the
proposal, but if the shareholder fails to specify the number of shares such
shareholder is voting affirmatively, it will be conclusively presumed that the
shareholder's approving vote is with respect to all shares such shareholder is
entitled to vote. Such vote may be by voice vote or by ballot; provided,
however, that all elections for directors must be by ballot upon demand by a
share-holder at any election and before the voting begins.
2.8.1 At a shareholders' meeting involving the election of
directors, no shareholder shall be entitled to accumulate votes (i.e., cast for
any one or more candidates a number of votes greater than the number of the
shareholder's shares) unless such candidate or candidates' names have been
placed in nomination prior to the voting and a shareholder has given notice
prior to the voting of the shareholder's intention to accumulate votes. If any
shareholder has given such notice, then every shareholder entitled to vote may
accumulate such shareholder's votes for candidates in nomination and give one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which such shareholder's
4
shares are entitled, or distribute the shareholder's votes on the same principal
among any or all of the candidates, as the shareholder thinks fit. The
candidates receiving the highest number of votes up to the number of directors
to be elected shall be elected.
2.9 WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS
--------------------------------------------------
The transactions at any meeting of shareholders, either annual or
special, however called and noticed, and wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice, if a quorum be
present either in person or by proxy, and if, either before or after the
meeting, each person entitled to vote, not present in person or by proxy, signs
a written waiver of notice or a consent to a holding of the meeting, or an
approval of the minutes thereof. The waiver of notice or consent need not
specify either the business to be transacted or the purpose of any regular or
special meeting of shareholders, except that if action is taken or proposed to
be taken for approval of any of those matters specified in paragraph 2.4.1 of
Article 2, the waiver of notice or consent shall state the general nature of
such proposal. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
2.9.1 Attendance of a person at a meeting shall also
constitute a waiver of notice of such meeting, except when the person objects,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened, and except that attendance at a
meeting is not a waiver of any right to object to the consideration of matters
not included in the notice if such objection is expressly made at the meeting.
2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
-------------------------------------------------------
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. In the case of election
of directors, such consent shall be effective only if signed by the holders of
all outstanding shares entitled to vote for the election of directors. All such
consents shall be filed with the secretary of the corporation and shall be
maintained in the corporate records. Any shareholder giving a written consent,
or the shareholder's proxy holders, or a transferee of the shares or a personal
representative of the shareholder or their respective proxy holders, may revoke
the consent by a writing received by the secretary of the corporation prior to
the time that written
5
consents of the number of shares required to authorize the proposed action have
been filed with the secretary.
2.10.1 If the consents of all shareholders entitled to vote
have not been solicited in writing, and if the unanimous written consent of all
such shareholders shall not have been received, the secretary shall give prompt
notice of the corporate action approved by the shareholders without a meeting.
Such notice shall he given in the manner specified in paragraph 2.5 of Article
2.. In the case of approval of (i) contracts or transactions in which a director
has a direct or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California, (ii) indemnification of agents of the
corporation, pursuant to Section 316 of such Code, (iii) a reorganization of the
corporation, pursuant to Section 1201 of such Code, and (iv) a distribution to
preferred shareholders pursuant to Section 2007 of such Code, such notice shall
be given at least ten days before the consummation of any such action authorized
by any such approval.
2.11 PROXIES
-------
Every person entitled to vote for directors or on any other
matter shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation. A proxy shall be deemed signed if the shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the shareholder or the shareholder's attorney in
fact. A validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless revoked by the person executing it,
prior to the vote pursuant thereto, by a writing delivered to the corporation
stating that the proxy is revoked or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by the person executing the
proxy; provided, however, that no such proxy shall be valid after the expiration
of eleven (11) months from the date of such proxy, unless otherwise provided in
the proxy. The revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of Section 705(e) and (f) of the
Corporations Code of California.
2.12 INSPECTORS OF ELECTION
----------------------
Before any meeting of shareholders, the board of directors may appoint
any persons other than nominees for office to act as inspectors of election at
the meeting or its adjournment. If no inspectors of election are appointed, the
chairman of the meeting may, and on the request of any shareholder or his proxy
shall, appoint inspectors of election at the meeting. The number of inspectors
shall be either one (1) or three (3). If inspectors are appointed at a meeting
on the request of one or more shareholders or proxies, the holders of a majority
of shares or
6
their proxies present at the meeting shall determine whether one (1) or three
(3) inspectors are to be appointed. If any person appointed as inspector fails
to appear or fails or refuses to act, the vacancy may be filled by appointment
by the board of directors before the meeting, or by the chairman at the meeting.
The duties of these inspectors shall be as follows:
2.12.1 Determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity and effect of proxies;
2.12.2 Receive votes, ballots, or consents;
2.12.3 Hear and determine a11 challenges and questions in any
way arising in connection with the right to vote;
2.12.4 Count and tabulate all votes or consents;
2.12.5 Determine the election result; and
2.12.6 Do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
ARTICLE 3.
DIRECTORS
3.1 POWERS
------
Subject to the provisions of the California General Corporation Law
and any limitations in the articles of incorporation and these By-Laws relating
to action required to be approved by the shareholders or by the outstanding
shares, the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the board of
directors.
3.2 NUMBER AND QUALIFICATION OF DIRECTORS
-------------------------------------
The authorized number of directors shall be three (5) until changed by
a duly adopted amendment to the articles of incorporation or by an amendment to
this By-Law adopted by approval of the outstanding shares. In the event that the
number of directors is, or at any time becomes, five (5) or more, then an
amendment reducing the number of directors to a number less than five (5) cannot
be adopted if the votes cast against its adoption at a meeting, or the shares
not consenting in the case of action by written consent, are equal to more than
sixteen and two-thirds percent (16-2/3%) of the outstanding shares entitled to
vote.
7
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
----------------------------------------
Directors shall be elected at each annual meeting of the shareholders
to hold office until the next annual meeting. Each director, including a
director elected to fill a vacancy, shall hold office until the expiration of
the term for which elected and until a successor has been elected and qualified.
3.4 VACANCIES
---------
Vacancies in the board of directors may be filled by a majority of the
remaining directors, though less than a quorum, or by a sole remaining director,
except that a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by
approval of the shareholders. Each director so elected shall hold office until
the next annual meeting of the shareholders and until a successor has been
elected and qualified.
3.4.1 A vacancy in the board of directors exists as to any
authorized position of director which is not then filled by a duly elected
director, whether caused by death, resignation, removal, increase in the
authorized number of directors or otherwise.
3.4.2 The shareholders may elect a director or directors at
any time to fill any vacancy or vacancies not filled by the directors, but any
such election by written consent shall require the consent of a majority of the
outstanding shares entitled to vote. If the resignation of a director is
effective at a future time, the board of directors may elect a successor to take
office when the resignation becomes effective.
3.4.3 No reduction of the authorized number of directors shall
have the effect of removing any director prior to the expiration of his term of.
office.
3.5 PLACE OF MEETINGS
-----------------
Regular meetings of the board of directors shall be held at any place
within or without the State that has been designated from time to time by
resolution of the board. In the absence of such designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board shall be held at any place within or without the State
that has been designated in the notice of the meeting or, if not stated in the
notice or there is no notice, at the principal executive office of the
corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in such meeting can hear one
8
another, and all such directors shall be deemed to be present in person at such
meeting.
3.6 ANNUAL MEETINGS
---------------
Immediately following each annual meeting of shareholders, the board of
directors shall hold a regular meeting for the purpose of organization, any
desired election of officers and the transaction of other business. Notice of
this meeting shall not be required.
3.7 OTHER REGULAR MEETINGS
----------------------
Other regular meetings of the hoard of directors shall be held without
call at such time as shall from time to time be fixed by the board of directors,
Such regular meetings may be held without notice, provided the notice of any
change in the time of any such meetings shall be given to all of the directors.
Notice of a change in the determination of time shall be given to each director
in the same manner as notice for special meetings of the board of directors.
3.8 SPECIAL MEETINGS
----------------
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board or the president or any
vice-president or the secretary or any two (2) directors.
3.8.1 Notice of the time and place of special meetings shall
be delivered personally or by telephone to each director or sent by first-class
mail or telegram, charges prepaid, addressed to each director at his or her
address as it is shown upon the records of the corporation. In case such notice
is mailed, it shall be deposited in the United States mail at least four (4)
days prior to the time of the holding of the meeting. In case such notice is
delivered personally, or by telephone or telegram, it shall be delivered
personally or by telephone or to the telegraph company at least forty-eight (48)
hours prior to the time of the holding of the meeting. Any oral notice given
personally or by telephone may be communicated to either the director or to a
person at the office of the director who the person giving the notice has reason
to believe will promptly communicate it to the director. The notice need not
specify the purpose of the meeting nor the place if the meeting is to be held at
the principal executive office of the corporation.
3.9 QUORUM
------
A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as hereinafter
provided. Every act or decision done or
9
made by a majority of the directors present at a meeting duly held at which a
quorum is present shall be regarded as the act of the board of directors,
subject to the provisions of Section 310 of the Corporations Code of California
(approval of contracts or transactions in which a director has a direct or
indirect material financial interest), Section 311 (appointment of committees),
and Section 317(e) (indemnification of directors). A meeting at which a quorum
is initially present may continue to transact business notwithstanding the
withdrawal of directors, if any action taken is approved by at least a majority
of the required quorum for such meeting.
3.10 WAIVER OF NOTICE
----------------
The transactions of any meeting of the board of directors, however
called and noticed or wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice if a quorum be present and if,
either before or after the meeting, each of the directors not present signs a
written waiver of notice, a consent to holding the meeting or an approval of the
minutes thereof. The waiver of notice or consent need not specify the purpose of
the meeting. All such waivers, consents and approvals shall be filed with the
corporate records or made a part of the minutes of the meeting. Notice of a
meeting shall also be deemed given to any director who attends the meeting
without protesting, prior thereto or at its commencement, the lack of notice to
such director.
3.11 ADJOURNMENT
-----------
A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting to another time and place.
3.12 NOTICE OF ADJOURNMENT
---------------------
Notice of the time and place of holding an adjourned meeting need not
be given, unless the meeting is adjourned for more than twenty-four hours, in
which case notice of such time and place shall be given prior to the time of the
adjourned meeting, in the manner specified in paragraph 3.8 of this Article 3
to the directors who were not present at the time of the adjournment.
3.13 ACTION WITHOUT MEETING
----------------------
Any action required or permitted to be taken by the board of directors
may be taken without a meeting, if all members of the board shall individually
or collectively consent in writing to such action. Such action by written
consent shall have the same force and effect as a unanimous vote of the board of
directors. Such written consent or consents shall be filed with the minutes of
the proceedings of the board.
10
3.14 FEES AND COMPENSATION OF DIRECTORS
----------------------------------
Directors and members of committees may receive such compensation, if
any, for their services, and such reimbursement of expenses, as may be fixed or
determined by resolution of the board of directors. Nothing herein contained
shall be construed to preclude any director from serving the corporation in any
other capacity as an officer, agent, employee, or otherwise, and receiving
compensation for such services.
ARTICLE 4.
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
-----------------------
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent member at any meeting of the committee. Any such
committee, to the extent provided in the resolution of the board, shall have all
the authority of the board, except with respect to:
4.1.1 The approval of any action which, under the General
Corporation Law of California, also requires shareholders' approval or approval
of the outstanding shares;
4.1.2 The filling of vacancies on the board of directors or in
any committee;
4.1.3 The fixing of compensation of the directors for serving
on the board or on any committee;
4.1.4 The amendment or repeal of By-Laws or the adoption of
new By-Laws;
4.1.5 The amendment or repeal of any resolution of the board
of directors which by its express terms is not so amendable or repealable;
4.1.6 A distribution to the shareholders of the corporation,
except at a rate or in a periodic amount or within a price range determined by
the board of directors or of the board of directors or the members thereof;
4.1.7 The appointment of any other committees.
11
4.2 MEETINGS AND ACTION OF COMMITTEES
---------------------------------
Meetings and action of committees shall be governed by, and held and
taken in accordance with, the provisions of Article 3, paragraph 3.5 (Place of
Meetings), paragraph 3.7 (Regular Meetings), paragraph 3.8 (Special Meetings and
Notice), paragraph 3.9 Quorum, paragraph 3.10 (Waiver of Notice), paragraph 3.11
(Adjournment), paragraph 3.12 (Notice of Adjournment) and paragraph 3.13 (Action
Without Meeting), with such changes in the context of those By-Laws as are
necessary to substitute the committee and its members for the board of directors
and its members, except that the time of regular meetings of committees may be
determined by resolution of the board of directors as well as the committee,
special meetings of committees may also be called by resolutions of the board of
directors, and notice of special meetings of committees shall also be given to
all alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of any
committee not inconsistent with the provisions of these By-Laws.
ARTICLE 5.
OFFICERS
5.1 OFFICERS
--------
The officers of the corporation shall be a president, a secretary and a
treasurer. The corporation may also have, at the discretion of the board of
directors, a chairman of the board, one or more vice-presidents, one or more
assistant secretaries, one or more assistant treasurers, and such other officers
as may be appointed in accordance with the provisions of paragraph 5.3 of this
Article 5.
5.2 ELECTION OF OFFICERS
--------------------
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of paragraphs 5.3 or 5.5 of this
Article 5, shall he chosen by the board of directors, and each shall serve at
the pleasure of the board, subject to the rights, if any, of an officer under
any contract of employment.
5.3 SUBORDINATE OFFICERS, ETC.
--------------------------
The board of directors may appoint, and may empower the president to
appoint, such other officers as the business of the corporation may require,
each of whom shall hold office for such period, have such authority and perform
such duties as are provided in the By-Laws or as the board of directors may from
time to time determine.
12
5.4 REMOVAL AND RESIGNATION OF OFFICERS
-----------------------------------
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
board of directors, at any regular or special meeting thereof, or, except in
case of an officer chosen by the board of directors, by any officer upon whom
such power or removal may be conferred by the board of directors.
5.4.1 Any officer may resign at any time by giving written
notice to the corporation. Any such resignation shall take effect at the date of
the receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. Any such resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES
--------------------
A vacancy in any office because of death, resignation, removal,
disqualification or other cause shall be filled in the manner prescribed in
these By-Laws for regular appointments to such office.
5.6 CHAIRMAN OF THE BOARD
---------------------
The chairman of the board, if such an officer be elected, shall if
present, preside at all meetings of the board of directors and exercise and
perform such other powers and duties as may from time to time be assigned to him
by the board of directors or prescribed by the By-Laws. If there is no
president, the chairman of the board shall in addition be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
paragraph 5.7 of this Article 5.
5.7 PRESIDENT
---------
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction and control of the business and the officers of the corporation. He
shall preside at all meetings of the shareholders and, in the absence of the
chairman of the board or if there be none, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation, and shall have such other
powers and duties as may be prescribed by the board of directors or the By-Laws.
13
5.8 VICE PRESIDENTS
---------------
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president, and when so acting shall have all the powers of,
and be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors or the
By-Laws, the president or the chairman of the board.
5.9 SECRETARY
---------
The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders with the time and place of holding,
whether regular or special, and if special, how authorized, the notice thereof
given, the names of those present at directors meetings, the number of shares
present or represented at shareholders meetings, and the proceedings thereof.
5.9.1 The secretary shall keep or cause to be kept, at the
principal executive office or at the office of the corporation's transfer agent
or registrar, as determined by a resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all shareholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
5.9.2 The secretary shall give, or cause to be given, notice
of all meetings of the shareholders and of the board of directors required by
the By-Laws or by law to be given, and he shall keep the seal of the corporation
in safe custody, and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by the By-Laws.
5.10 TREASURER
---------
The treasurer shall keep and maintain, or cause to be kept and
maintained, adequate and correct books and records of accounts of the properties
and business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings
and shares. The books of account shall at all reasonable times be open to
inspection by any director.
14
5.10.1 The treasurer shall deposit all monies and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an account of
all of his transactions as treasurer and of the financial condition of the
corporation, and shall have other powers and perform such other duties as may be
prescribed by the board of directors or the By-Laws.
ARTICLE 6.
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
The corporation shall, to the maximum extent permitted by the General
Corporation Law of California, indemnify each of its agents against expenses,
judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding arising by reason of the fact any
such person is or was an agent of the corporation. For purposes of this
paragraph, an "agent" of the corporation includes any person who is or was a
director, officer, employee or other agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or was a director, officer, employee or agent of a corporation which
was a predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
ARTICLE 7.
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER
--------------------------------------------
The corporation shall keep at its principal executive office, or at the
office of its transfer agent or registrar, if either be appointed and as
determined by resolution of the board of directors, a record of its
shareholders, giving the names and addresses of all shareholders and the number
and class of shares held by each shareholder.
7.1.1 A shareholder or shareholders of the corporation holding
at least five percent (5%) in the aggregate of the outstanding voting shares of
the corporation may (i) inspect and copy the records of shareholders' names and
addresses and shareholdings during usual business hours upon five days prior
written demand upon the corporation, and/or (ii) obtain from the
15
transfer agent of the corporation, upon written demand and upon the tender of
such transfer agent's usual charges for such list, a list of the shareholders'
names and addresses, who are entitled to vote for the election of directors, and
their shareholdings, as of the most recent record date for which such list has
been compiled or as of a date specified by the shareholder subsequent to the
date of demand. Such list shall be made available by the transfer agent on or
before the latter of five (5) days after the demand is received or the date
specified therein as the date as of which the list is to be compiled. The record
of shareholders shall also be open to inspection upon the written demand of any
shareholder or holder of a voting trust certificate, at any time during usual
business hours, for a purpose reasonably related to such holder's interests as a
shareholder or as the holder of a voting trust certificate. Any inspection and
copying under this paragraph may be made in person or by an agent or attorney of
the shareholder or holder of a voting trust certificate making such demand.
7.2 MAINTENANCE AND INSPECTION OF BY-LAWS
-------------------------------------
The corporation shall keep at its principal executive office, or if its
principal executive office is not in this state, at its principal business
office in this state, the original or a copy of the By-Laws as amended to date,
which shall be open to inspection by the shareholders at all reasonable times
during office hours. If the principal executive office of the corporation is
outside this state and the corporation has no principal business office in this
state, the secretary shall, upon the written request of any shareholder, furnish
to such shareholder a copy of the By-Laws as amended to date.
7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS
-----------------------------------------------------
The accounting books and records and minutes of proceedings of the
shareholders and the board of directors and any committee or committees of the
board of directors shall be kept at such place or places designated by the board
of directors, or, in the absence of such designation, at the principal executive
office of the corporation. The minutes shall he kept in written form and the
accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form. Such minutes and
accounting books and records shall be open to inspection upon the written demand
of any shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to such
holder's interests as a shareholder or as the holder of a voting trust
certificate. Such inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. The foregoing rights of
inspection shall extend to the records of each subsidiary of the corporation.
16
7.4 ANNUAL REPORT TO SHAREHOLDERS
-----------------------------
The annual report to shareholders referred to in Section 1501 of the
General Corporation Law is expressly dispensed with, but nothing herein shall be
interpreted as prohibiting the board of directors from issuing annual or other
periodic reports to the shareholders of the corporation as they deem
appropriate.
7.5 FINANCIAL STATEMENTS
--------------------
A copy of any annual financial statement and any income statement of
the corporation for each quarterly period of each fiscal year, and any
accompanying balance sheet of the corporation as of the end of each such period,
that has been prepared by the corporation, shall be kept on file in the
principal executive office of the corporation for twelve (12) months and each
such statement shall be exhibited at all reasonable times to any shareholder
demanding an examination of any such statement or a copy shall be mailed to any
such shareholder.
7.5.1 If a shareholder or shareholders holding at least five
percent (5%) of the outstanding shares of any class of stock of the corporation
may make a written request to the corporation for an income statement of the
corporation for the three (3) month, six (6) month or nine (9) month period of
the then current fiscal year ending more than thirty (30) days prior to the date
of the request, and a balance sheet of the corporation as of the end of such
period, the treasurer shall cause such a statement to be prepared, if not
already prepared, and shall deliver personally or mail such statement or
statements to the person making the request within thirty (30) days after the
receipt of such request. If the corporation has not sent to the shareholders its
annual report for the last fiscal year, this report shall likewise be delivered
or mailed to such shareholder or shareholders within thirty (30) days after such
request.
7.5.2 The corporation shall also, upon the written request of
any shareholder, mail to the shareholder a copy of the last annual, semiannual
or quarterly income statement which it has prepared and a balance sheet as of
the end of such period.
7.5.3 The quarterly income statements and balance sheets
referred to in this section 7.5 shall be accompanied by the report thereon, if
any, of any independent accountants engaged by the corporation or the
certificate of an authorized officer of the corporation that such financial
statements were prepared without audit from the books and records of the
corporation.
17
7.6 ANNUAL STATEMENT OF GENERAL INFORMATION
---------------------------------------
The corporation shall, in each year, file with the Secretary of State
of the State of California, on the prescribed form, a statement setting forth
the authorized number of directors, the names and complete business or residence
addresses of all incumbent directors, the names and complete business or
residence addresses of the president, secretary and treasurer, the street
address of its principal executive office or principal business office in this
state, and the general type of business constituting the principal business
activity of the corporation, together with a designation of the agent of the
corporation for the purpose of service of process, all in compliance with
Section 1502 of the Corporations Code of California.
ARTICLE 8.
GENERAL CORPORATE MATTERS
8.1 RECORD DATE
-----------
For purposes of determining the shareholders entitled to notice of any
meeting or to vote 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 other lawful action, the board of directors may fix, in advance,
a record date which shall not be more than sixty (60) days nor less than ten
(10) days prior to the date of any such meeting nor more than sixty (60) days
prior to any other action, and in such case only shareholders of record on the
date so fixed are entitled to notice and to vote or to receive the dividend,
distribution or allotment of rights or to exercise the rights, as the case may
be, notwithstanding any transfer of any shares on the books of the corporation
after the record date fixed as aforesaid, except as otherwise provided in the
California General Corporation Law.
If the board of directors does not so fix a record date:
8.1.1 The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held.
8.1.2 The record date for determining shareholders entitled
to give consent to corporate action in writing without a meeting, when no prior
action by the board has been taken, shall be the day on which the first written
consent is given.
18
8.1.3 The record date for determining shareholders for any
other purpose shall be at the close of business on the day on which the board
adopts the resolution relating thereto, or the sixtieth (60th) day prior to the
date of such other action, whichever is later.
8.2 CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS
-----------------------------------------
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation,
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by resolution of the board of directors.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED
-------------------------------------------------
The board of directors, except as in the By-Laws otherwise provided,
may authorize any officer or officers, agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation and such authority may be general or confined to specific instances;
and, unless so authorized or ratified by the board of directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or to any amount.
8.4 STOCK CERTIFICATES
------------------
A certificate or certificates for shares of the capital stock of the
corporation shall be issued to each shareholder when any such shares are fully
paid, and the board of directors may authorize the issuance of certificates or
shares as partly paid provided that such certificates shall state the amount of
the consideration to be paid therefor and the amount paid thereon. All
certificates shall be signed in the name of the corporation by the chairman of
the board or vice chairman of the board or the president or vice president and
by the treasurer or an assistant treasurer or the secretary or any assistant
secretary, certifying the number of shares and the class or series of shares
owned by the shareholder. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if such
person were an officer, transfer agent or registrar at the date of issue.
8.5 LOST CERTIFICATES
-----------------
Except as hereinafter in this paragraph provided, no new certificates
for shares shall be issued in lieu of an old certifi-
19
cate unless the latter is surrendered to the corporation and cancelled at the
same time. The board of directors may in case any share certificate or
certificate for any other security is lost, stolen or destroyed, authorize the
issuance of a new certificate in lieu thereof, upon such terms and conditions as
the board may require, including provision for indemnification of the
corporation secured by a bond or other adequate security sufficient to protect
the corporation against any claim that may be made against it, including any
expense or liability, on account of the alleged loss, theft or destruction of
such certificate or the issuance of such new certificate.
8.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
----------------------------------------------
The chairman of the board, the president, or any vice president, or any
other person authorized by resolution of the board of directors or by any of the
foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations, foreign
or domestic, standing in the name of the corporation. The authority herein
granted to said officers to vote or represent on behalf of the corporation any
and all shares held by the corporation in any other corporation or corporations
may be exercised by any such officer in person or by any person authorized to do
so by proxy duly executed by said officer.
8.7 CONSTRUCTION AND DEFINITIONS
----------------------------
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the California General Corporation Law shall
govern the construction of the By-Laws. Without limiting the generality of the
foregoing, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
ARTICLE 9.
AMENDMENTS
9.1 AMENDMENT BY SHAREHOLDERS
-------------------------
New By-Laws may be adopted or these By-Laws may be amended or repealed
by approval of the outstanding shares; provided, however, that if the articles
of incorporation of the corporation set forth the number of authorized directors
of the corporation the authorized number of directors may be changed only by an
amendment of the articles of incorporation.
20
9.2 AMENDMENT BY DIRECTORS
----------------------
Subject to the rights of the shareholders as provided in paragraph 9.1
of this Article 9, By-Laws other than a By-Law or an amendment thereof changing
this authorized number of directors may be adopted, amended or repealed by the
board of directors.
CERTIFICATE OF SECRETARY OF
ADOPTION OF BY-LAWS
I hereby certify that I am the duly elected and acting Secretary of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ DEVELOPMENT, a California corporation, and that the foregoing
By-Laws, constituting the By-Laws of said corporation, were duly adopted by the
board of directors held on September 15, 1995.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of this corporation this 22nd day of September, 1995.
/S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Secretary
21
ATTACHMENT D
EMPLOYMENT AGREEMENT WITH ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
EMPLOYMENT CONTRACT
Environmental Technologies, Inc., (ENTECH) a Nevada Corporation, addressed at:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Development
dba CPI Development, a California corporation ("CPI"), ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇ ("Christie"), an individual, of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, in consideration of the mutual
promises made herein, agree as follows:
ARTICLE 1. TERM OF EMPLOYMENT
Specified Period
Section 1.01. ENTECH/CPI employs Christie and Christie accepts employment with
ENTECH and CPI for a period of three (3) years beginning on December 15, 2003
terminating on November 30, 2006.
Automatic Renewal
Section 1.02. This agreement shall be renewed automatically for two succeeding
terms of Three (3) years, each unless either party gives notice to the other at
least 180 days prior to the expiration of any term of his or its intention not
to renew.
"Employment Term" Defined
Section 1.03. "Employment term" refers to the entire period of employment of
Christie by ENTECH and CPI, whether for the periods provided above, or whether
terminated earlier as hereinafter provided or extended by mutual agreement
between ENTECH/CPI and Christie.
ARTICLE 2. DUTIES AND OBLIGATIONS OF CHRISTIE
General Duties
Section 2.01. Christie shall serve as the Chief Operating Officer of ENTECH and
President of CPI. In his capacity as Chief Operating Officer of ENTECH and
President of CPI, Christie shall do and perform all services, acts, or things
necessary or advisable, consistent with the normal duties of the chief operating
officer of a company to manage and conduct the business of ENTECH and CPI,
including the hiring and firing of all employees other than the officers of
ENTECH or CPI, subject at all times to the reasonable and prudent policies set
by ENTECH and CPI's Board of Directors, and to the consent of the Board when
required by the terms of this contract.
In addition, throughout the employment term:
Matters Requiring Consent of Board of Directors
Section 2.02. Christie shall not, without specific approval of ENTECH and/or
CPI's Board of Directors, do or contract to do any of the following:
(1) Borrow on behalf of CPI more than set forth in the fiscal budget approved by
the Board of Directors of ENTECH or CPI.
(2) Purchase capital equipment for amounts in excess of the amounts budgeted for
expenditure by the Board of Directors of ENTECH or CPI.
(3) Sell any capital asset of CPI.
(4) Terminate the services of any other officer of CPI or hire any replacement
of any officer whose services have been terminated.
(5) Commit CPI to the expenditure of funds for the development and sale of new
products or services more than set forth in the fiscal budget approved by the
Board of Directors of ENTECH and/or CPI.
Devotion to ENTECH and CPI's Business
Section 2.03. (a) Christie shall devote his entire productive time, ability, and
attention to the business of ENTECH and CPI during the term of this contract.
(b) Christie shall not engage in any other business duties or pursuits
whatsoever, or directly or indirectly render any services of a business,
commercial, or professional nature to any other person or organization, whether
for compensation or otherwise, without the prior written notice to ENTECH or
CPI's Board of Directors. The expenditure of reasonable amounts of time for
outside activities, e.g., educational, charitable, professional or political
activities shall not be deemed a breach of this agreement if those activities do
not materially interfere with the services required under this agreement and
shall not require the prior written notice to ENTECH or CPI's Board of
Directors.
(c) This agreement shall not prohibit Christie from making passive personal
investments or conducting private business affairs if those activities do not
materially interfere with the services required under this agreement. However,
Christie shall not directly or indirectly acquire, hold, or retain any interest
in any business competing with or similar in nature to the business of ENTECH or
CPI.
Competitive Activities
Section 2.04. (a) During the term of this contract, Christie shall not, directly
or indirectly, either as an employee, consultant, agent, principal, partner,
stockholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of ENTECH or CPI.
(b) Christie, subject to receiving compensation as set forth at Paragraph 8.0.5.
in the event of termination, agrees that during the term of this contract and
for a period of Three (3) years after termination of this agreement, Christie
shall not directly or indirectly solicit, hire, recruit, or encourage any other
employee of ENTECH or CPI to leave ENTECH or CPI.
Uniqueness of Christie's Services
Section 2.05. Christie represents and agrees that the services to be performed
under the terms of this contract are of a special, unique, unusual,
extraordinary, and intellectual character that gives them a peculiar value, the
loss of which cannot be reasonably or adequately compensated in damages in an
action at law. Christie, therefore, expressly agrees that ENTECH/CPI, in
addition to any other rights or remedies that ENTECH/CPI may possess, shall be
entitled to injunctive and other equitable relief to prevent or remedy a breach
of this contract by Christie.
Indemnification for Negligence or Misconduct
Section 2.06. Christie shall indemnify and hold ENTECH and CPI harmless from all
liability for loss, damage, or injury to persons or property resulting from the
negligence or misconduct of Christie from acts not in the normal course and/or
scope of his duties and activities as an Officer and/or Director of either
ENTECH or CPI.
Trade Secrets
Section 2.07. (a) The parties acknowledge and agree that during the term of this
agreement and in the course of the discharge of his duties hereunder, Christie
shall have access to and become acquainted with financial, personnel, sales,
scientific, technical and other information regarding formulas, patterns,
compilations, programs, devices, methods, techniques, operations, plans and
processes that are owned by ENTECH/CPI, actually or potentially used in the
operation of ENTECH/CPI's business, or obtained from third parties under an
agreement of confidentiality, and that such information constitutes ENTECH/CPI's
"trade secrets."
(b) Christie specifically agrees that he shall not misuse, misappropriate, or
disclose in writing, orally or by electronic means, any trade secrets, directly
or indirectly, to any other person or use them in any way, either during the
term of this agreement or at any other time thereafter, except as is required in
the course of his employment.
(c) Christie acknowledges and agrees that the sale or unauthorized use or
disclosure in writing, orally or by electronic means, of any of ENTECH/CPI's
trade secrets obtained by Christie during the course of his employment under
this agreement, including information concerning ENTECH/CPI's actual or
potential work, services, or products, the facts that any such work, services,
or products are planned, under consideration, or in production, as well as any
descriptions thereof, constitute unfair competition. Accordingly, Christie
promises and agrees, while ENTECH/CPI or their assigns are not otherwise in
breach of this agreement, not to engage in any such unfair competition with
ENTECH/CPI, either during the term of this agreement or at any other time
thereafter.
Services as Consultant
Section 2.08. Following Christie's retirement, and if the employment term has
not been terminated for cause, Christie shall make his advice and counsel
available to ENTECH and/or CPI for such a period as either may desire. The
parties agree that this advice and counsel shall not entail full time service
and shall be consistent with Christie's retirement status.
Use of Christie's Name
Section 2.09. (a) ENTECH or CPI shall have the right to use the name of Christie
as part of the trade name or trademark of ENTECH or CPI if it should be deemed
advisable to do so, Provided that neither ENTECH nor CPI is not in breach of any
covenant of this agreement. Any trade name or trademark, of which the name of
Christie is a part, that is adopted by ENTECH or CPI during the employment of
Christie may be used thereafter by ENTECH or CPI for as long as ENTECH or CPI
deems advisable.
(b) Christie shall not, during the term of this agreement, use or permit the use
of his name in the trade name or trademark of any other enterprise if that other
enterprise is engaged in a business similar in any respect to that conducted by
ENTECH or CPI, unless that trade name or trademark clearly indicates that the
other enterprise is a separate entity entirely distinct from and not to be
confused with ENTECH or CPI and unless that trade name or trademark excludes any
words or symbols stating or suggesting prior or current affiliation or
connection by that other enterprise with either ENTECH or CPI.
ARTICLE 3. OBLIGATIONS OF ENTECH/CPI
General Description
Section 3.01. ENTECH/CPI shall provide Christie with the compensation,
incentives, benefits, and business expense reimbursement specified elsewhere in
this agreement. In addition, ENTECH/CPI shall require only those items
consistent with normal duties of the job.
Office and Staff
Section 3.02. ENTECH/CPI shall provide Christie with appropriate office space,
furniture, fixtures, and administrative support suitable to Christie's position
and adequate for the performance of his duties.
Indemnification of Losses of Christie
Section 3.03. ENTECH and CPI shall indemnify Christie for all necessary
expenditures or losses incurred by Christie in direct consequence of the
discharge of his duties on ENTECH and/or CPI's behalf.
ARTICLE 4. OBLIGATIONS OF ENTECH
Issuance of Shares of ENTECH
Section 4.01. Concurrent with the execution of this agreement and as part of the
inducement to enter into this agreement ENTECH shall have issued Million
(1,000,000) additional shares of its stock to Christie. To the extent that such
issuance of shares by ENTECH or transfer can be affected without recognition of
income or other tax to Christie the parties agree to execute such other and
further documents as will affect such non-recognition.
Section 4.02. Concurrent with the beginning of the second year of this contract
and subsequently with each annual renewal of employment, ENTECH shall issue two
hundred thousand (200,000) additional share of its stock to Christie. The shares
shall be subject to registration rights and be free trading with no
restrictions.
ARTICLE 5. COMPENSATION OF CHRISTIE
Annual Salary
Section 5.01. (a) As initial compensation for the services to be performed
hereunder, ENTECH/CPI shall pay Christie a salary at the rate Three Hundred
Thousand ($300,000.00) per annum, payable not less than twice monthly during the
employment term.
(b) Christie shall receive such annual increases in salary as may be determined
by ENTECH and CPI's Board of Directors in its reasonable discretion on an annual
basis commensurate with Christie's performance and/or attainment of ENTECH/CPI
business objectives and any cost of living increases. In no event, shall any
such increase be less than percentage salary increases received by other persons
similarly employed by CPI/ENTECH (including the members of its board, its
employees, or the employees of its subsidiaries).
Deferred Compensation
Section 5.02. If Christie remains in the employ of ENTECH/CPI until age 65 or on
earlier retirement on mutual written consent of both Christie and ENTECH/CPI,
ENTECH/CPI agrees to pay to Christie additional compensation, commencing with
his first full month of retirement, at the annual rate of 80 percent of the
annual salary which he is receiving at age 65 payable in equal monthly
installments on the last day of each month during Christie's entire lifetime.
Qualified Pension Programs
Section 5.03. Christie shall participate ratably in any qualified pension or
profit-sharing programs of ENTECH/CPI or its successors.
Disability
Section 5.04. If Christie for any reason whatsoever becomes disabled so that he
is unable to perform the duties prescribed herein, ENTECH/CPI agrees to pay
Christie one hundred percent (100%) of Christie's annual salary reduced by the
benefits of any disability insurance policy, payable in the same manner as
provided for the payment of salary herein to the extent not covered by
disability insurance payments set forth in Section 7.06, for the remainder of
the employment term provided for herein.
ARTICLE 6. CHRISTIE INCENTIVES
Incentive Payment Based on Performance
Section 6.01. (a) For each fiscal year of ENTECH/CPI agrees to pay Christie,
within Ninety days (90) days after the end of ENTECH/CPI's fiscal year, an
annual incentive payment based on the profits of ENTECH/CPI.
(b) If the employment term is terminated by ENTECH/CPI for cause, Christie shall
not be entitled to any portion of the annual profit-sharing payment for the
fiscal year in which that termination occurs. However, if this contract should
expire or be terminated for reasons other than cause, Christie shall be entitled
to
a percentage of the annual profit-sharing payment equal to the percentage of the
fiscal year worked.
(c) In no event shall the payment of such a profit-sharing payment be less than
any profit sharing payment, performance incentive, or similar incentive, ratably
determined, paid to other persons similarly employed by CPI or ENTECH (including
the members of its board, its employees, or the employees of its subsidiaries).
Stock Option
Section 6.02. (a) Christie shall be given the option to participate in any stock
option plan offered by ENTECH or CPI during the term of this employment and
thereafter to the extent allowed by the Plan or applicable law
(b) In no event shall the benefit of such a stock option be less than any stock
option or similar incentive, ratably determined, as to other persons similarly
employed by CPI or ENTECH (including the members of its board, its employees, or
the employees of its subsidiaries).
ARTICLE 7. CHRISTIE BENEFITS
Annual Vacation
Section 7.01. Christie shall be entitled to Five (5) weeks vacation time each
year with full pay. If Christie is unable for any reason to take the total
amount of authorized vacation time during any year, he may accrue that time and
add it to vacation time for any following year or may receive a cash payment in
an amount equal to the amount of annual salary attributable to that period or
will not earn vacation time in any subsequent year until the earned vacation
time is used.
Illness
Section 7.02. Christie shall be entitled to ten days (14) per year as sick leave
with full pay.
Use of Automobile
Section 7.03. (a) CPI shall provide Christie with a monthly vehicle allowance of
One Thousand Three Hundred Dollars ($1,300.00).
(b) ENTECH/CPI shall pay all expenses of the automobile including, but not
limited to: maintenance, registration, fuel, repairs and insurance deductibles.
(c) ENTECH/CPI shall procure and maintain an automobile liability insurance
policy on the automobile, with coverage including Christie, Christie's spouse
and
those of his children who qualify as Christie's dependents under Section 152 of
the Internal Revenue Code in the minimum amounts of One Million Dollars
($1,000,000.00) for any single occurrence.
(d) If Christie is prohibited by order of any court from holding or using a
driver's license, Christie will no longer be entitled to this benefit.
Medical Insurance Coverage/Payment of Medical Premiums
Section 7.04. (a) ENTECH/CPI agrees to provide Christie with or to include
Christie in full-coverage medical, major medical, hospital, dental, and eye care
insurance. ENTECH/CPI further agrees to reimburse Christie for all medical and
dental expenses incurred by Christie, his spouse, and those of his children who
qualify as his dependents under Section 152 of the Internal Revenue Code of 1986
excepting co-payments or deductibles under such policies.
(b) in no event shall the benefits under such policies of insurance be less than
any less than the coverage afforded to those employed by ENTECH (including the
members of its board, its employees, or the employees of its subsidiaries) or
CPI.
Life Insurance
Section 7.05. (a) Within One Hundred and Eighty (180) days after the execution
of this agreement ENTECH/CPI agrees to obtain a life insurance policy on the
life of Christie in the face amount of One Million Dollars ($1,000,000.00).
ENTECH/CPI further agrees to make that insurance policy payable to the
beneficiary or beneficiaries designated by Christie. ENTECH/CPI agrees to pay
all premiums on the policy during the term of employment provided herein.
(b) Christie agrees to submit to any physical examination that may be required
for the purpose of ENTECH/CPI's obtaining life insurance on the life of Christie
for the benefit of Christie; provided, however, that ENTECH/CPI shall bear the
entire cost of that examination.
Disability Insurance
Section 7.06. To the extent that ENTECH (including the members of its board, its
employees, or the employees of its subsidiaries) or CPI provide Disability
Insurance to any of their employees or directors, similarly employed, ENTECH/CPI
agrees to obtain a policy of disability insurance for the benefit of Christie in
such an amount as will compensate Christie as provided in this agreement in full
in the event of his partial or full disability.
ARTICLE 8. BUSINESS EXPENSES
Payment of Expenses
Section 8.01. (a) It is understood and agreed by the parties that the services
required by ENTECH and/or CPI will require Christie to incur entertainment
expenses on behalf of ENTECH and/or CPI. ENTECH and CPI hereby agree to and
shall make available to, and/or reimburse Christie for, such amounts as are
reasonably incurred in connection with the business of ENTECH and/or CPI, as the
case may be.
(b) Christie shall, however, furnish to ENTECH and/or CPI adequate records and
other documentary evidence required by federal and state statutes and
regulations for the substantiation of each such expenditure as an income tax
deduction.
Section 8.02. (a) ENTECH and/or CPI, as the case may be, shall promptly
reimburse Christie for all other reasonable business expenses incurred by
Christie in connection with the business of ENTECH or CPI
(b) Each such expenditure shall be reimbursable only if it is of a nature
qualifying it as a proper deduction on the federal and state income tax return
of ENTECH and/or CPI.
(c) Each such expenditure shall be reimbursable only if Christie furnishes to
ENTECH and/or CPI adequate records and other documentary evidence required by
federal and state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of each such expenditure as an income tax
deduction.
ARTICLE 9. TERMINATION OF EMPLOYMENT
Termination for Cause
Section 9.01. (a) ENTECH/CPI may terminate this agreement only if Christie
willfully breaches or habitually neglects the duties which he is required to
perform under the terms of this agreement; or incurably commits the act set for
in Section (d) hereof which would prevent the effective performance of his
duties.
(b) ENTECH/CPI may at its option terminate this agreement for the reasons stated
in this Section by giving written notice of termination to Christie without
prejudice to any other remedy to which ENTECH/CPI may be entitled either at law,
in equity, or under this agreement.
(c) The notice of termination required by this section shall specify the ground
for the termination and shall be supported by a statement of all relevant facts
in justification for the termination.
(d) Termination under this section shall be considered "for cause" for the
purposes of this agreement.
1. Permanent Disability;
2. The customers, suppliers or financial institutions with which the CPI has
agreements refuse to accept such Shareholder's continued involvement in the
operation of the ENTECH/CPI's business;
3. Habitual on the job drunkenness;
4. Conviction of a crime involving defalcation, dishonesty or theft.
5. Commingling of the ENTECH/CPI's assets with his assets;
6. Acquisition of an interest adverse to that of the ENTECH/CPI;
7. Mismanagement of the assets of the ENTECH/CPI;
8. Taking of unauthorized compensation or perquisites;
9. Failure to act as directed by the ENTECH/CPI unless reasonable cause exists
therefore;
10. Misappropriation or misuse of assets, trade secrets, proprietary customer,
supplier or process information of the ENTECH/CPI; or
11. Failure to obey a court order regarding the ENTECH/CPI and/or its business
affairs.
(e) In the event that ENTECH/CPI desires to terminate Christie for cause and the
breach is curable, Christie shall be given written notice of the intention of
ENTECH/CPI to terminate Christie's employment under this agreement and Christie
shall be given a ninety day (90) period of time to cure the breach as reasonably
required, in which latter case, no termination for cause shall occur.
Termination Without Cause
Section 9.02. (a) This agreement shall be terminated upon the death of Christie.
(b) ENTECH/CPI reserves the right to terminate this agreement not less than
twelve months (12) after Christie suffers any physical or mental disability that
would prevent the performance of his essential job duties under this agreement,
unless reasonable accommodation can be made to allow Christie to continue
working. Such a termination shall be effected by giving Thirty days (30) written
notice of termination to Christie. Termination pursuant to this provision shall
not
prejudice Christie's rights to continued compensation pursuant to Section 5.03
or 9,0.5. of this agreement.
(c) Termination under this section shall not be considered "for cause" for the
purposes of this agreement.
Effect of Merger, Transfer of Assets, or Dissolution
Section 9.03. (a) This agreement shall not be terminated by any merger,
consolidation, reorganization, voluntary or involuntary dissolution of
ENTECH/CPI in which ENTECH/CPI is not the consolidated or surviving corporation,
or a transfer of all, or substantially all, of the assets of ENTECH/CPI.
(b) In the event of any such merger or consolidation or transfer of assets,
ENTECH/CPI's rights, benefits, and obligations hereunder shall be assigned to
the surviving or resulting corporation or the transferee of ENTECH/CPI's assets.
The obligations of ENTECH/CPI shall become the obligations of the surviving or
resulting corporation. The surviving entity shall assume the obligation to
perform under the terms of this contract. Any remaining renewal periods will be
activated upon such merger or consolidation.
(c) It is anticipated that ENTECH will acquire either the outstanding stock of
or business assets of CPI. To that extent, ENTECH or surviving company agrees to
assume and guarantee the obligations under this agreement in total.
Payment On Termination
Section 9.04. Notwithstanding any provision of this agreement, if ENTECH/CPI
terminates this agreement, it shall pay Christie an amount equal to his annual
salary at the then current rate of compensation beginning upon the effective
date of termination. ENTECH/CPI further agrees, for three (3) years following
any such termination, to reimburse Christie for all medical and dental expenses
incurred by Christie, his spouse, and those of his children.
Termination by Christie
Section 9.05. (a) Christie may terminate his employment under this agreement for
cause, without affecting the obligations of ENTECH/CPI to pay termination
benefits by giving ENTECH/CPI at least three (3) months notice in advance.
(b) Termination under this section shall be considered "for cause" for the
purposes of this agreement.
1. Bankruptcy of ENTECH/CPI;
2. The appointment of a receiver or assignment for the benefit of creditors of
ENTECH/CPI;
3. Request by ENTECH/CPI Christie reasonably deems to be illegal or unethical;
4. Conviction of ENTECH/CPI of any misdemeanor which involves dishonesty or
moral turpitude or conviction of a felony;
5. Commingling of the ENTECH/CPI assets with other assets;
6. The making of conflicting or unreasonable demands on Christie;
7. Mismanagement of the assets of the ENTECH/CPI;
8. Professional or personal differences with the Board of Directors of ENTECH.
ARTICLE 10. GENERAL PROVISIONS
Notices
Section 10.01. Any notices to be given hereunder by either party to the other
shall be in writing and may be transmitted by personal delivery or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at the addresses appearing in the
introductory paragraph of this agreement, but each party may change that address
by written notice in accordance with this section. Notices delivered personally
shall be deemed communicated as of the date of actual receipt; mailed notices
shall be deemed communicated as of the date of mailing.
Mediation
Section 10.02. Any controversy between ENTECH or CPI and Christie involving the
construction or application of any of the terms, provisions, or conditions of
this agreement shall on the written request of either party served on the other,
first be submitted to mediation by a neutral third party upon whom the parties
shall promptly agree. In the event that the parties are unable to agree or
resolve the controversy or dispute through mediation, the parties agree to
submit the matter directly to the Court.
Attorneys' Fees and Costs
Section 10.03. If any legal action is instituted to enforce or interpret the
terms of this agreement, the prevailing party shall be entitled to reasonable
attorneys'
fees, costs, and necessary disbursements in addition to any other relief to
which that party may be entitled, provided that such party first submitted the
issue or controversy to mediation or made written demand therefore and the other
party or parties refuses or fails to submit to mediation within thirty (30) days
after such notice. in determining who is the prevailing party for purposes of
this agreement the Court or arbitrator may, in addition to legal principals,
consider any written offer of compromise made and rejected by a party, during
mediation.
Entire Agreement
Section 10.04. This agreement supersedes any and all other agreements, either
oral or in writing, between the parties hereto with respect to the employment of
Christie by ENTECH and CPI and contains all of the covenants and agreements
between the parties with respect to that employment in any manner whatsoever.
Each party to this agreement acknowledges that no representation, inducements,
promises, or agreements, orally or otherwise, have been made by any party, or
anyone acting on behalf of any party, which are not embodied herein, and that no
other agreement, statement, or promise not contained in this agreement shall be
valid or binding on either party.
Modifications
Section 10.05. Any modification of this agreement will be effective only if it
is in writing and signed by the party to be charged.
Effect of Waiver
Section 10.06. The failure of either party to insist on strict compliance with
any of the terms, covenants, or conditions of this agreement by the other party
shall not be deemed a waiver of that term, covenant, or condition, nor shall any
waiver or relinquishment of any right or power at any one time or times be
deemed a waiver or relinquishment of that right or power for all or any other
times.
Partial Invalidity
Section 10.07. If any provision in this agreement is held by a court or
arbitrator of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
Law Governing Agreement
Section 10.08. This agreement shall be governed by and construed in accordance
with the laws of the State of California.
Sums Due Christie's Estate
Section 10.09. If Christie dies prior to the expiration of the term of his
employment, any sums that may be due him from ENTECH or CPI under this agreement
as of the date of death shall be paid to Christie's executors, administrators,
heirs, personal representatives, successors, and assigns.
Execution page follows
Executed on December 15, 2003 at Rancho Cucamonga, California. CPI Development
By: /S/
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Environmental Technologies, Inc.
By: /S/
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CPI Development
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