SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: August 30, 2004
Date of Earliest Event Reported: August 24, 2004
WORLD WASTE TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
California
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
1-11476 95-3977501
- --------------------------- -----------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
13520 Evening Creek Drive, Suite 130, San Diego, California 92128
- ------------------------------------------------------------ ------------------
(Address of Principal Executive Offices) (Zip Code)
(858) 391-3400
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
15915 Ventura Boulevard, Suite 301, Encino, California 91436
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
.
Item 2.01 Completion of Acquisition or Disposition of Assets
On August 24, 2004, a newly formed wholly owned subsidiary of Voice
Powered Technology International, Inc., a California corporation ("VPTI"),
merged with and into World Waste Technologies, Inc., a California corporation
("WWT"). As a result of this merger (the "Merger"), WWT became a wholly owned
subsidiary of VPTI and VPTI changed its name to "World Waste Technologies, Inc."
References in the Report to "WWT" mean World Waste Technologies, Inc. prior to
the Merger and, as applicable, VPTI after the Merger. See Item 5.01 of this
Current Report on Form 8-K, which is incorporated by reference into this Item
2.01.
Item 5.01 Changes in Control of Registrant
The Merger
On August 24, 2004, a newly formed wholly owned subsidiary of VPTI,
merged with and into WWT. As a result of this Merger, WWT became a wholly owned
subsidiary of VPTI and VPTI changed its name to "World Waste Technologies, Inc."
The Merger occurred pursuant to an Agreement and Plan of Reorganization
dated as of March 25, 2004, as amended on August 24, 2004 (the "Merger
Agreement") by and among VPTI, V-CO Acquisition, Inc. and WWT. On March 29,
2004, VPTI filed a copy of the Merger Agreement with the Securities and Exchange
Commission on a Current Report on Form 8-K.
Immediately prior to the Merger, VPTI had 92,970,027 outstanding shares
of common stock and no outstanding shares of preferred stock. Prior to the
Merger, VPTI implemented a 1 -for -60 reverse split of common stock by amending
and restating its articles of incorporation (the "Reverse Split").
After taking into account the Reverse Split and the amendment to the
articles of incorporation, the total number of shares that VPTI is authorized to
issue was changed from 119,500,000 to 110,000,000, comprised of 100,000,000
shares of common stock and 10,000,000 shares of preferred stock. The amended
articles of incorporation also eliminated the various classes of preferred stock
in order to allow the Board of Directors the flexibility to set new classes,
series, and other terms and conditions.
The controlling shareholder of VPTI prior to the Merger and the Reverse
Split, Belle Group, Ltd. (the "Controlling Shareholder") owned 74,258,788 shares
of common stock of VPTI. Pursuant to the Merger and after taking into account
the Reverse Split, a total of 349,500 shares of VPTI's outstanding common stock
were tendered by the Controlling Stockholder for cancellation resulting in the
total issued and outstanding shares of VPTI's common stock totaling 1,200,000
shares.
Pursuant to the Merger, VPTI, after taking into account the Reverse
Split, issued (i) 20,063,706 shares of its common stock in exchange for all of
the outstanding capital stock of WWT (which capital stock included 1,193,500
shares of common stock and issued upon the conversion of all of WWT's
outstanding promissory notes and 2,245,206 shares of common stock of WWT issued
by WWT pursuant to a private placement, in each case prior to the Merger) and
(ii) warrants to purchase an additional 1,067,021 shares of its common stock
in exchange for warrants to purchase common stock of WWT. The total issued
1
and outstanding shares of VPTI's common stock totals 21,263,706 shares after
giving effect to the Merger (assuming that none of the outstanding warrants are
exercised). In addition, WWT has also received approximately $1.1 million in
additional subscriptions (representing approximately 733,333 shares) based on
same terms of the private placement completed immediately prior to the Merger.
If the subscriptions are funded, additional shares of VPTI will be issued in
exchange for the shares of common stock of WWT. There can be no assurance as to
when these subscriptions will be funded, if at all. If all 1,067,021 warrants
to purchase VPTI's common stock are exercised, the total issued and outstanding
shares of VPTI's common stock would then total 22,330,727.
As a result of the Merger, (i) the current stockholders of VPTI own
approximately 1,200,000 shares, or approximately 5% of the issued and
outstanding shares of VPTI's common stock, based on 21,263,706 shares
outstanding after the Merger (assuming that none of the outstanding warrants are
exercised) and (ii) VPTI is now controlled by the former stockholders of WWT.
The share exchange ratio in the Merger was determined through
arms'-length negotiations between VPTI and WWT. Information in this Report on
Form 8-K regarding the number of shares of VPTI common stock issued in the
Merger assumes that no stockholders of VPTI or WWT will exercise their right
under California law to seek an appraisal of the value of their VPTI or WWT
stock in lieu of the receipt of shares of VPTI common stock.
Change of Executive Officers and Directors
Immediately following the completion of the Merger, all of the existing
members of VPTI's board of directors and all of its executive officers resigned
and new appointees comprised VPTI's board of directors as set forth below.
Information regarding WWT's directors and executive officers is set
forth below. If any director or executive officer listed below is unable to
serve, the directors will appoint a successor. Each director serves until his
successor is elected at the annual meeting of shareholders or until his earlier
death, resignation or removal and, subject to the terms of any employment
agreement with WWT, each executive officer serves at the pleasure of the Board
of Directors.
Name Age Position
- ---- --- --------
Thomas L. Collins 64 Chief Executive Officer and Chairman (Acting Chief
Financial Officer)
Steve Racoosin 50 President and Director
Fred Lundberg 67 Senior Vice President, Director and Secretary
John Pimentel 38 Director
Thomas L. Collins. Mr. Collins has been the Chief Executive Officer and
a Director of WWT since February 2004 and was appointed Chairman of the Board in
July 2004. He worked with Waste Management, Inc. from 1972 to 1995, including
serving as the Vice President and Controller for the Western Region. After
retiring from Waste Management in 1995, Mr. Collins was an independent
consultant for the waste industry until joining WWT in January 2003 as Executive
Vice President. Mr. Collins has a BA in Business Administration and Accounting
from Quincy University and is a CPA.
2
Steve Racoosin. Mr. Racoosin has served as President and a Director of
WWT since 2002. Since 1989, he has been developing steam classification vessels
for processing waste along with Dr. Eley and the University of Alabama in
Huntsville ("UAH"). From 1998 to 2001 Mr. Racoosin was a founder of Total
Recovery Systems International, Inc. which sought to commercialize the UAH waste
processing technology. Later in 2001 Mr. Racoosin continued working on
commercializing the UAH technology and in 2002 he founded World Waste of
America, Inc., which later became World Waste Technologies, Inc.
Fred Lundberg. In 2004, Mr. Lundberg joined WWT as Senior Vice
President, Secretary and Director. He is responsible for the engineering design
and construction of WWT's facilities, and for the market development and sales
of the wetlap fiber production from WWT facilities. From 2001 to 2004, Mr.
Lundberg was President of Veritas Consulting, LLC, where he provided strategic
and tactical consulting services to domestic pulp and paper clients. He was also
Manager of the Pulp and Paper Industry Practice for Baker & O'Brien, Inc., where
he provided chemical engineering consulting services and expert witness services
to pulp and paper clients under a semi-exclusive consulting contract between
Veritas and Baker & O'Brien. From 1998 to 2000, Mr. Lundberg was Acting
President/Vice President for Jacobs-Sirrine Consultants, Subsidiary of Jacobs
Engineering, Inc. where he managed the Facilities & Economics Group that
provided competitive analysis services to pulp and paper clients, and managed
and led strategic consulting and due diligence projects for domestic and
international pulp and paper clients. Prior to these consulting positions, Mr.
Lundberg was with Weyerhaeuser for the prior 26 years where he oversaw the
construction and operation of numerous pulp and paper facilities.
John Pimentel. Mr. Pimentel has served as a Director of WWT since
February 2004. From 1993-1996, Mr. Pimentel served as Deputy Secretary for
Transportation for the State of California where he oversaw a $4.5 billion
budget and 28,000 employees including the Department of Transportation, the
California Highway Patrol, and parts of the Department of Motor Vehicles. From
1998 to 2002, he worked with Bain & Company in the firm's Private Equity Group,
and the general consulting practice. Since 2003, Mr. Pimentel has been a
Director with Cagan McAfee Capital Partners where he is responsible for business
development, investment structuring, and portfolio company management. Mr.
Pimentel has an MBA from Harvard Business School, and a BA from University of
California at Berkeley.
The following advisors to WWT are expected to continue as advisors
following the Merger:
Dr. Michael Eley. Dr. Eley is President of Bio-Products International,
Inc. and a professor and research scientist at the University of Alabama in
Huntsville and was the original inventor of the technology licensed to WWT. He
is a nationally recognized developer and inventor of processes for the treatment
of municipal solid waste. Dr. Eley holds a Ph.D. and an MS in Biochemistry and a
BA in Biology. In addition to his teaching and research, Dr. Eley has authored
more than 100 published articles and papers in the field of municipal waste
recovery.
Don Malley. Mr. Malley is the Chief Operating Officer of Bio-Products
International, Inc. and offers hands-on knowledge and experience in the
technical specifics of pressurized steam classification vessels. He successfully
3
operated the first-generation commercial facility based on the patented
technology. Mr. Malley has project management experience as a construction
supervisor for nine textile facilities throughout Mississippi, and also has
experience with HVAC, electrical design, and hydraulics system construction and
operations.
Certain Relationships and Related Transactions
Cagan McAfee Capital Partners, LLC ("Placement Agent") acted as the
placement agent for WWT in connection with the private placement of 2,245,206
shares of common stock of WWT which was completed prior to the Merger. WWT has
paid the Placement Agent a commission of 8% of the price of all shares sold by
it or approximately $360,000. In addition, WWT paid the Placement Agent a
non-accountable expense allowance (equal to 2% of the purchase price of the
shares or approximately $90,000) and issued the Placement Agent, or its
affiliates, warrants to purchase 317,021 of WWT's common shares, at an exercise
price of $1.50. Cagan McAfee Capital Partners, LLC and one of its directors,
John Pimentel, who is also a director of WWT following the Merger, will own
collectively 24.3% of the total issued and outstanding common stock of VPTI
after the Merger. In addition, WWT has also received approximately $1.1 million
in additional subscriptions (representing approximately 733,333 shares) based on
same terms of the private placement completed immediately prior to the Merger.
If the subscriptions are funded, additional shares of VPTI will be issued in
exchange for the shares of common stock of WWT and the Placement Agent will be
paid an additional $73,333.
On June 21, 2004, WWT issued two warrants to purchase 125,000 shares of
common stock of WWT to each of Michael H. Eley and Don Malley for an exercise
price of $1.50 per share. Each warrant is immediately exercisable in full and
fully vested.
WWT has granted registration rights to investors in the private
Placement. Under the registration rights agreement, the holders of approximately
2,245,206 shares of the common stock are entitled to require WWT to register the
sales of their shares under the Securities Act of 1933, as amended. Subject to
limitations specified in this agreement, these registration rights include:
o an unlimited number of piggyback registration rights that
require WWT to register sales of a holder's shares when it
undertakes a public offering and certain other types of
offerings, subject to the discretion of the managing
underwriter of the offering, if any, to decrease the amount
that holders may register; and
o within ninety (90) days of a merger of a company that has
shares of common stock that are registered under Section 12 of
the Securities Exchange Act of 1934, as amended, WWT will use
its commercially reasonable efforts to file and prepare a
registration statement on Form SB-2 or Form S-3 to register
the resale of the holders shares.
WWT will bear all registration expenses if these registration rights
are exercised, other than the fees of more than one legal counsel to the
holders, legal fees in excess of $10,000, and any underwriting fees, discounts
and commissions, all of which expenses will be borne by the holders. These
4
registration rights terminate as to a holder's shares when that holder is able
to sell those shares in a three month period pursuant to Rule 144 of the
Securities Act of 1933.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of WWT common stock
beneficially owned by (i) those persons or groups known to beneficially own more
than 5% of WWT's common stock, (ii) each executive officer and director of WWT,
and (iv) as a group, persons who are directors and executive officers of WWT.
The information is determined in accordance with Rule 13d-3 promulgated under
the Securities Exchange Act of 1934. Except as indicated below, the shareholders
listed possess sole voting and investment power with respect to their shares.
------------------------
Name and Address of Beneficial Owner Amount and
Nature of
Beneficial Percent of
Ownership(1) Class(1)
- ----------------------------------------------- ------------ ----------
Thomas L. Collins(2) 1,050,000 4.9
Steve Racoosin(3) 3,461,900 16.2
John Pimentel(4) 1,400,000 6.5
Laird Q. Cagan(5) 2,317,021 10.9
Eric A. McAfee(6) 1,942,021 9.1
Darren Pedersen(7) 1,337,500 6.3
Fred Lundberg(8) 660,000 3.1
One World Zero Waste, LLC(9) 2,161,900 10.1
Jan-Can LP(9) 1,300,000 6.1
- ------------------------------------------------------------------------
All executive officers and directors as a group 6,571,900 30.9%
(four persons)
- ------------------------------------------------------------------------
- ------------------
(1) Based on 21,263,706 shares outstanding on August 25, 2004.
(2) Includes 1,050,000 shares beneficially owned by a family trust over which
Mr. Collins has the power to vote and the power to dispose over such shares.
Excludes 100,000 shares issuable upon exercise of a warrant at $1.50 per share.
The warrant vests with respect to the first 25% of the shares after 8 months of
continuous service and the warrant vests with respect to an additional 1/12th of
the remaining shares upon completion of 3 months of service. None of the shares
are vested or will vest within 60 days.
(3) Includes 2,161,900 shares owned by One World Zero Waste, LLC and 1,300,000
shares owned by Jan-Can, L.P. over which Mr. Racoosin has the power to vote and
the power to dispose. Excludes 75,000 shares issuable upon exercise of a warrant
at $1.50 per share. The warrant vests with respect to the first 25% of the
shares after 8 months of continuous service and the warrant vests with respect
to an additional 1/12th of the remaining shares upon completion of 3 months of
service. None of the shares are vested or will vest within 60 days.
(4) Includes 350,000 shares owned by Mr. Pimental's spouse and 50,000 shares by
trusts for the benefit of his family members of which he is the trustee.
5
Address is c/o Cagan McAfee, 10600 N. De Anza Blvd., Suite 250, Cupertino, CA
95014.
(5) Includes 200,000 shares held in trust for the benefit of Mr. Cagan's
daughters of which Mr. Cagan is the trustee. Also includes warrants to
purchase 317,021 shares of common stock held by Cagan McAfee Capital Partners,
LLC which are vested and immediately exercisable. Address is c/o Cagan McAfee,
10600 N. De Anza Blvd., Suite 250, Cupertino, CA 95014.
(6) Includes (i) 425,000 shares directly held by Eric McAfee, (ii) 200,000
shares held by P2 Capital LLC, an entity owned 50% by Marguerite McAfee (Mr.
McAfee's spouse) and 25% by each of Mr. and Mrs. McAfee's minor children (over
which shares Mrs. McAfee holds sole dispositive and voting power), (iii)
1,000,000 shares held by McAfee Capital, LLC, an entity owned 50% by each of
Mr. and Mrs. McAfee (over which shares Mr. and Mrs. McAfee share voting and
dispositive power) and (iv) 200,000 shares owned by Berg McAfee, LLC, and
entity in which Mr. McAfee owns a 50% interest and shares voting and
dispositive power. Also includes immediately exercisable warrants to acquire
317,021 shares of common stock held by Cagan McAfee Capital Partners, LLC. Mr.
McAfee disclaims beneficial ownership over all of the shares held by P2 Capital
and 50% of the shares held by Berg McAfee. Mrs. McAfee disclaims beneficial
ownership over all of the shares and warrants held directly by Mr. McAfee and
all of the shares held by Berg McAfee. McAfee Capital disclaims beneficial
ownership over all of the shares held by P2 Capital LLC and 50% of the shares
held by Berg McAfee. Address is c/o Cagan McAfee, 10600 N. De Anza Blvd.,
Suite 250, Cupertino, CA 95014.
(7) Address: 903 Tourmaline Street, San Diego, California 92109.
(8) Excludes 75,000 shares issuable upon exercise of a warrant at $1.50 per
share. The warrant vests with respect to the first 25% of the shares after 8
months of continuous service and the warrant vests with respect to an additional
1/12th of the remaining shares upon completion of 3 months of service. None of
the shares are vested or will vest within 60 days.
(9) Address: c/o WWT, 13520 Evening Creek Drive, Suite 130, San Diego,
California 92128. Mr. Racoosin has the power to vote and the power to dispose
of these shares.
Business of VPTI
Immediately prior to the completion of the Merger, VPTI did not conduct
any business operations and had minimal assets and liabilities.
Business of WWT
WORLD WASTE TECHNOLOGIES, INC.
WWT is a development stage company formed to process and convert solid
waste into usable commodities. WWT has entered into a license agreement for
patented technology that would enable WWT to convert a percentage of Municipal
Solid Waste ("MSW") into usable commodities in the United States. This patented
process which is known as pressurized steam classification, uses a sealed
rotating autoclave vessel (the "Vessel") loaded with MSW. The MSW is treated
with a proprietary mixture of steam, heat, agitation and pressure for a
6
specified period of time. This process sterilizes all material and results in
the reduction of the volume of the waste with little effect to its weight. The
WWT process also results in the conversion of the waste into separated
components of "sterilized" organic and inorganic materials with limited
discharge into the air, water or soil. The volatile organic compounds are
captured and disposed of in a thermal oxidizer. The process extracts both (i) a
sanitized cellulose material containing papermaking fiber that can be sold,
after a conventional screening and cleaning process for use in making
paperboard, and (ii) inorganic, recyclable materials such as aluminum, steel,
and plastic products.
WWT intends to enter into service agreements with solid waste
collection companies and municipalities that will create value and reduce costs
by (i) significantly reducing the volume of waste going to landfills, thereby
extending the useful lives of the landfills, and reducing transportation costs
and (ii) assist in complying with laws mandating that up to 50% of MSW be
recycled. Management of WWT believes that secondary gains exist in that
communities may retain and enhance the use of popular recycling programs,
without increasing taxes and fees to the public as well as improve air quality.
THE INDUSTRY
According to Standard & Poor's Environmental & Waste Management
Industry Survey (2004) (the "Survey"), the approximate $36 billion Municipal
Solid Waste industry in the United States is dominated by three firms: Waste
Management, Inc. (32% market share, with $11.5 billion in revenues); Allied
Waste Industries, Inc. (15% market share, with $5.25 billion in revenues); and
Republic Services, Inc. (7% share, with $2.52 billion in revenues).
Historically, revenue growth in this industry has been principally driven by fee
increases at landfills ("tipping fees"), which fees currently average $35 per
ton nationally. The key industry cost drivers are landfill maintenance, labor,
recycling and separating facility costs, insurance, and interstate cartage fees.
Increased municipal recycling costs (currently estimated according to
the Waste Policy Center, a consulting firm in Virginia to average $100 per ton)
have led several cities, most notably New York, to cut back or even suspend
their curbside recycling programs, resulting in public and political backlash.
Traditional recycling facilities incur extremely high labor costs to sort,
clean, and process materials, while a flat price market for the resulting
recycled metals constrains profitability. A 2003 survey conducted by Waste News
showed that the recycling rate of the 30 largest US cities rose to 23.5% from
23.4% in the prior year. The average life of a U.S. landfill is approximately 20
years (only 12 years in the Northeast). Alternatives such as composting or
incineration can be either economically unviable or environmentally
unsustainable.
Many major companies in the waste handling and disposal market have
grown primarily through acquisitions over the past decade, not through growth in
the volume of waste processed annually. WWT management believes the industry is
currently actively seeking a technology-based solution that will extend the life
of existing landfills, lower hauling costs, and satisfy the public demand for
cost-effective recycling.
7
THE WWT SOLUTION
Initially, WWT's strategy is to process MSW that has been sorted and
processed at a Material Recover Facility ("MRF"). WWT has entered into an
agreement with Taormina Industries, LLC, a wholly-owned subsidiary of Republic
Services, Inc. ("Taormina Industries") to process waste from its MRF located in
Anaheim, California. Republic Services, Inc. is a nationwide handler of MSW and
the Taormina Industries MRF is just one of the many facilities it operates
throughout the country. Typically, MSW enters a MRF from curbside collection
vehicles, and is manually sorted to remove non-recyclable items such as car
batteries, tires, etc. The remainder of the waste is transported by conveyor
lines where laborers manually remove up to 50% of salable commodities such as
aluminum, steel, and cardboard. Under the WWT strategy, the remaining residual
MSW ("RMSW") will then be delivered to the WWT leased facility (located on the
Taormina Industries campus) for further processing using its licensed process.
WWT's proprietary process is expected to occur in five stages: (i) RMSW
will be delivered on-site to WWT's facility; (ii) the waste will then be
mechanically loaded into WWT's Vessel (it is anticipated that no sorting,
shredding, or opening of bags will be required); (iii) the Vessel will be sealed
and run for a specified period of time, during which time volatile organic
compounds will be captured and rendered inert and discharged; (iv) at the
conclusion of the cycle, the resulting discharged materials will be mechanically
separated by commodity type for processing, packaging and shipping; and (v) the
remaining waste, anticipated to be between 35-40% of the volume received by WWT,
will be placed on Taormina Industries trucks for transport to the landfill. Each
is expected to process approximately 250 tons of RMSW per day.
WWT expects to have three primary revenue drivers:
1. Tipping Fees. WWT anticipates entering into service agreements with
waste collection companies and municipalities and setting a tipping fee for the
term of each agreement. For example, WWT has already entered into an agreement
with Taormina Industries whereby Taormina Industries has agreed to pay a tipping
fee of $30 per ton to WWT.
2. Recycling Revenues. Clean recyclable materials, such as scrap
steel, cans, and aluminum will be mechanically sorted and collected, then sold
to recyclers at market prices or a slight discount to market prices.
3. Cellulose Extraction. Commercial tests have demonstrated that over
60% of MSW can be processed into a valuable cellulose fiber, with a market value
similar to cardboard boxes. WWT expects that this fiber will initially be sold
to paperboard manufacturing companies in Southern California.
WWT anticipates that its initial facility will be capable of processing
500 tons of residual MSW each day using 2 Vessels. The second phase of the
agreement with Taormina Industries calls for WWT to build an additional 2,000
ton per day, 8-Vessel plant in Orange County, California. WWT has committed to
process 2,500 tons per day of residual MSW pursuant to its agreement with
Taormina Industries. WWT's current strategy is to replicate the larger plant at
future sites.
8
THE TECHNOLOGY
Overview
It is anticipated that the waste processing facilities to be offered by
WWT will use patented methods and processes developed at the University of
Alabama, Huntsville over a 20-year period. This process, known as pressurized
steam classification ("PSC"), treats MSW with a combination of time, temperature
and pressure to sanitize all of the material. The composition of the paper in
the MSW is fragmented into a "cellulose" material which contains a significant
amount of fiber. Upon completion of the cycle, all materials are discharged
automatically from the Vessel onto a conveyor and then into a Rotary Trommel
which allows the "cellulose" to drop through to a separate conveyor which
transports it to the pulp processing area. The remaining materials go to a
different conveyor where a series of magnets automatically sort the steel, tin
and aluminum into separate bins. Management anticipates that approximately
60-65% of the RMSW processed is recycled into saleable products with the
remaining residual material returned to Taormina Industries for disposal. The
most recent United States patent includes the capturing of Volatile Organic
Compounds (VOCs) and its claims were allowed by the United States Patent and
Trademark Office in October 2001.
Intellectual Property
The University of Alabama at Huntsville currently holds the patent for
this PSC technology. This PSC patent was licensed to Bio-Products International,
Inc. and sublicensed to WWT for a period of 20 years. Under the license
agreement, WWT was required to pay an upfront license fee and a monthly fee for
technical services. WWT is also required to pay royalties based on the tons of
waste processed utilizing the technology as well as a royalties based on the
sales price of cellulosic product recovered from the process.
Vessel Operation
The MSW will be loaded in batches into a Vessel without sorting,
shredding or opening of bags. When the proper amount of material has been loaded
into the Vessel, it will be sealed and the steam saturation process will begin
by injecting low-pressure steam into the Vessel as it rotates. In a 24-hour
period each Vessel is expected to process up to 250 tons of MSW.
It is anticipated that the Vessel will be an American Society of
Mechanical Engineers designed and built steel autoclave almost 80 feet long. The
amount of MSW that can be processed will be based on the weight and volume of
the MSW. It is anticipated that each Vessel operation will be optimized to
handle over 20 tons of MSW with a density of 8 pounds per cubic foot per cycle.
CUSTOMERS
Recycling Agreement with Taormina Industries
WWT has signed a 10-year agreement with Taormina Industries, LLC, a
wholly-owned subsidiary of Republic Services Inc., the third largest MSW company
in the U.S., with three options to renew the agreement, each for a five-year
period. The agreement provides for Taormina Industries to initially deliver to
WWT 500 tons per day of RMSW to its facility located in Anaheim, California.
9
Phase Two of the agreement calls for Taormina Industries to deliver 2,000 tons
per day of RMSW to WWT's facility to be located and developed at a mutually
agreeable location in Orange County, California. The agreement also grants
Taormina Industries a right of first refusal to contract with WWT for processing
facilities in an additional 10 counties throughout California where Republic
Services has operations.
Cellulose Fiber
WWT has a process to recover unbleached fiber from residual MSW. The
process involves two principal phases. After the residual MSW is treated by
WWT's proprietary process, the cellulose that is extracted is further processed
using conventional pulp screening and cleaning equipment to yield fiber suitable
for use in the manufacturing of paperboard.
Within a 100 mile radius of the proposed site of the WWT facility in
Anaheim, there are 12 major facilities that use recycled fiber to produce
paperboard, corrugating medium, or linerboard. When WWT builds its first 2,000
ton per day facility in Southern California, total production of WWT fiber in
the region is anticipated to be approximately 1,500 ton per day, which
represents less than one-quarter of the available market.
COMPETITION
The approximate $36 billion Municipal Solid Waste industry in the
United States is dominated by three firms: Waste Management, Inc. (32% market
share, with $11.5 billion in revenues); Allied Waste Industries, Inc. (15%
market share, with $5.25 billion in revenues); and Republic Services, Inc. (7%
share, with $2.52 billion in revenues). There are also smaller regional
companies and municipalities in the waste handling business. The management of
WWT does not view MSW haulers as competitors, but rather as consumers for the
services WWT plans to provide. MSW haulers have many options for treating and
disposing of MSW which include MRFs, compositing, incineration and landfilling.
Most states require a percentage of all incoming MSW to be recycled with
California having the highest standard of requiring 50% of all incoming MSW to
be recycled. Management believes that the trend in state law is to migrate
toward the California standard of 50%. The competitors in WWT's industry are
primarily comprised of waste handlers who could choose to make capital
investments in material recovery facilities, incineration, composting, or
landfills rather than outsourcing through WWT. Management of WWT believes that
the primary competitive factors in this industry are price, reliability of
service, and quality of recycling programs.
LEGAL PROCEEDINGS
On December 11, 2003, Reid and Simi Jilek (the "Jileks") filed a
complaint against Steve Racoosin, World Waste of California, Inc., World Waste
International, Inc., and Environmental Technologies Corporation ("ETC") in the
Superior Court of California, County of San Diego, Central Judicial District,
alleging breach of contract, securities violations, and fraud and seeking
monetary damages and injunctive relief. The Jileks amended their complaint to
eliminate the securities violations cause of action and on March 22, 2004 filed
a second amended complaint to name additional parties, Thomas L. Collins and
Darren Pederson, and to add additional causes of action of breach of the
covenant of fair dealing, conspiracy, and specific performance for delivery of a
10
warrant. The suit stems from an alleged oral and written arrangements providing
for the rent of the Jileks' house to Mr. Racoosin with an option to buy the
house which option was to be exercised with warrants to purchase five percent
(5%) of the shares of ETC. Mr. Racoosin vacated the premises in early January
2004 and the Jileks' sold the house in 2004. Defendants World Waste of
California, Inc., World Waste International, Inc., and ETC demurred to the
second amended complaint. The court granted the demurrer in whole, with leave to
amend and the Jileks filed a third amended complaint on August 5, 2004. The
defendants will continue to pursue the defense of this case aggressively,
however there can be no assurance that there will be a favorable result in the
case.
RISK FACTORS
The following risk factors relating to WWT should be carefully
considered. Any of the following risks could materially harm the business of
WWT.
A Development Stage Company.
WWT is in the development stage and is subject to all the business
risks associated with a new enterprise, including uncertainties regarding
product development, constraints on WWT's financial and personnel resources, and
dependence on and need for third party relationships. WWT has had no revenues to
date and there can be no assurance as to when or whether it will be able to
develop sources of revenue or that its operations will become profitable, even
if it is able to begin generating revenue. WWT has not yet sold any products or
services or otherwise generated revenue. WWT will need to raise additional
finances to be able to further its development plans. It has raised
approximately $4.5 million prior to the closing of the Merger which will be used
for working capital purposes. However, there can be no assurances that this
amount will be sufficient to sustain the company for any specified period of
time and it will likely need to raise additional funds. There can be no
assurances that WWT will be able to do any of the foregoing.
Further Financing Cannot be Guaranteed.
WWT needs to raise additional capital in order to meet its business
plan, and the required additional financing may not be available on terms
acceptable to WWT, or at all. There can be no assurances that WWT's anticipated
future financings will occur, or that such financings will be available on
acceptable terms. WWT's Placement Agent has committed to assisting it in raising
additional capital, but neither the Placement Agent, nor any of WWT's
affiliates, nor any other person has made a binding commitment for an investment
of additional funds in WWT, and a number of factors beyond their control and
WWT's control make any future financings uncertain. No one should rely on the
prospect of future financings in evaluating WWT. Prior to the Merger, WWT has
also received approximately $1.1 million in additional subscriptions based on
same terms of the private placement completed immediately prior to the Merger.
There can be no assurance as to when these subscriptions will be funded, if at
all.
11
Ability to Obtain or Sustain Market Acceptance for Services and Products.
WWT does not intend to engage in advertising during its development
phase. Failure to establish a brand and presence in the marketplace on a timely
basis could adversely affect the financial condition and operating results of
WWT. Moreover, WWT cannot be sure that it will successfully complete the
development and introduction of new products or product enhancements or that any
new products developed will achieve acceptance in the marketplace. It may also
fail to develop and deploy new products and product enhancements on a timely
basis.
The Market for Services and Products in the Solid Waste Processing and Recycling
Industry is Competitive; WWT may not be Able to Compete Successfully.
The market for services and products in the solid waste processing
industry is highly competitive. Most of these competitors have longer operating
histories and significantly greater financial, technical, marketing and other
resources than WWT, and may be able to respond more quickly than WWT can to new
or changing opportunities and customer requirements. Also, the competitors have
greater name recognition and more extensive customer bases that they can
leverage to gain market share. These competitors are able to undertake more
extensive promotional activities, adopt more aggressive pricing policies and
offer more attractive terms to purchasers than WWT can.
Requirement for a Significant Supply of Solid Waste and Timely Payment for that
Solid Waste.
If WWT does not obtain a supply of solid waste at quantities and
qualities that are sufficient to operate its facilities at the expected
operating levels, or if third parties do not promptly pay for the solid waste
they deliver, the financial condition and operating results could adversely be
affected and significantly impacted. One or more of the following factors could
impact the price and supply of waste:
o defaults by waste suppliers under their contracts;
o a decline in solid waste supply due to increased recovery by
material recovery facilities;
o composting of municipal solid waste;
o incineration of municipal solid waste;
o legal prohibitions against processing of certain types of solid
waste in its facilities; or
o increased competition from landfills and recycling facilities.
Loss of Key Executives and Failure to Attract Qualified Management could limit
Growth and Negatively Impact Operations.
WWT depends highly upon its senior management team. It will continue to
depend on operations management personnel with waste handling and pulp industry
experience. At this time, WWT does not know the availability of such experienced
management personnel or how much it may cost to attract and retain such
12
personnel. The loss of the services of any member of senior management or the
inability to hire experienced operations management personnel could have a
material adverse effect on the operations and financial condition of WWT.
Results of Operations may be Affected by Changing Resale Prices or Market
Requirements for Recyclable Materials.
WWT's results of operations may be affected by changing resale prices
or market requirements for recyclable materials, some of which are priced on a
commodity basis. The resale, and market demand for, these materials can be
volatile due to numerous factors beyond WWT's control, which may cause
significant variability in its period-to-period results of operations.
Results of Operations will Fluctuate.
WWT's revenues and results of operations will vary from quarter to
quarter in the future. A number of factors, many of which are outside its
control, may cause variations in its results of operations, including:
o demand and price for products;
o the timing and recognition of product sales;
o unexpected delays in developing and introducing products;
o increased expenses, whether related to marketing, product
development or administration or otherwise;
o the mix of revenues derived from products;
o the hiring, retention and utilization of personnel;
o the waste collection companies are impacted by seasonal changes that
may adversely affect the business and operations of WWT;
o general economic factors; and
o changes in the revenue recognition policies required by generally
accepted accounting principles.
Failure to Obtain Required Permits.
WWT has not yet obtained the permits required to operate its business
and there can be no assurance that it will successfully obtain the such permits.
Permits to operate waste processing facilities have become increasingly
difficult and expensive to obtain. Permits may take years to obtain as a result
of numerous hearings and compliance with zoning, environmental and other
regulatory measures. Required permits include, but are not limited to, solid
waste facility permits, air quality management district permits, and building
permits. These permits may be subject to resistance from citizen or other groups
and other political pressures. The failure to obtain the required permits to
operate its facilities could have a material negative effect on future results
of operations.
13
WWT's Initial Facility may not be Completed on a Timely Basis, Within Budget, or
at all.
No assurance can be given that WWT's currently planned facility under
lease in Anaheim, California will be completed on a timely basis, within budget,
or at all. Even if completed, no assurances can made that the facility will be
adequate for WWT's needs or work without difficulties or down times. WWT
currently anticipates that it will need to construct additional facilities to
serve its needs and anticipated growth and that such future facilities will
require additional capital. Unforeseen difficulties in the planning or
completion of the initial or any future facility may lead to significant delays
in production and the subsequent generation of revenue.
A Substantial Portion of WWT's Revenues will be Generated from its Agreement
with Taormina Industries.
The management of WWT anticipates that a substantial portion of its
revenues will be generated from its agreement with Taormina Industries for the
foreseeable future. If this agreement is terminated for any reason or if WWT is
unable to extend this agreement on terms favorable to it or at all after it
expires, its business, financial condition and results of operations would be
materially harmed.
Exposure to Litigation.
Since WWT personnel are expected to routinely handle solid waste
materials, WWT may be subject to liability claims by employees, customers and
third parties. WWT currently has insurance in place, however, there can be no
assurance that any liability insurance WWT has or purchases will be adequate to
cover claims asserted against WWT or that WWT will be able to maintain such
insurance in the future. Management believes WWT intends to adopt or has adopted
prudent risk management programs to reduce these risks and potential
liabilities; however, there can be no assurance that such programs if, and when
adopted, will fully protect WWT. Adverse rulings in any legal matters,
proceedings and other matters could have a material adverse effect on WWT.
Other Companies may Claim Infringement of their Intellectual Property or
Proprietary Rights.
WWT does not believe that its products or processes violate third party
intellectual property rights. Nevertheless, there is no guarantee that such
rights are not being, and will not be, violated. If any of the products or
processes are found to violate third party intellectual property rights, WWT may
be required to re-engineer one or more of those products or processes or seek to
obtain licenses from third parties to continue offering its products or
processes without substantial re-engineering, and such efforts may not be
successful.
In addition, future patents may be issued to third parties upon which
WWT's technology may infringe. WWT may incur substantial costs in defending
against claims under any such patents. Furthermore, parties making such claims
may be able to obtain injunctive or other equitable relief, which effectively
could block WWT's ability to further develop or commercialize some or all of its
products in the U.S. and could result in the award of substantial damages
against WWT. In the event of a claim of infringement, WWT may be required to
14
obtain one or more licenses from third parties. There can be no assurance that
it will be able to obtain such licenses at a reasonable cost, if at all. Defense
of any lawsuit or failure to obtain any such license could have a material
adverse effect on WWT.
Success Depends on the Ability to Protect Proprietary Technology.
WWT's success depends, to a significant degree, upon the protection of
its, and that of its licensors', proprietary technologies. While WWT currently
has a license in the U.S. within the scope of its anticipated business to
exploit a number of U.S. patents that protect its processes, the need to pursue
additional protections for its intellectual property is likely as new products
and techniques are developed and as existing products are enhanced, and there is
no guarantee that such protections will be attained in a timely manner, or at
all. Legal fees and other expenses necessary to obtain and maintain appropriate
patent protection in the U.S. could be material. Insufficient funding may
inhibit the ability of WWT to obtain and maintain such protection. Additionally,
if WWT must resort to legal proceedings to enforce its intellectual property
rights, the proceedings could be burdensome and expensive and could involve a
high degree of risk to its proprietary rights if it is unsuccessful in, or
cannot afford to pursue, such proceedings.
WWT also relies on trade secrets and contract law to protect certain of
its proprietary technology. There can be no assurance that any such contract
will not be breached, or that if breached, it will have adequate remedies.
Furthermore, there can be no assurance that any of WWT's trade secrets will not
become known or independently discovered by third parties.
There can be no assurance that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to WWT's trade secrets and know-how. In addition, WWT may be
required to obtain licenses to patents or other proprietary rights from third
parties. There can be no assurance that any licenses required under any patents
or proprietary rights would be made available on acceptable terms, if at all. If
WWT does not obtain required licenses, it may encounter delays in product
development or find that the development, manufacture or sale of products
requiring such licenses could be foreclosed. Additionally, it may, from time to
time, support and collaborate in research conducted by universities and
governmental research organizations. There can be no assurance that it will have
or be able to acquire exclusive rights to the inventions or technical
information derived from such collaborations, or that disputes will not arise
with respect to rights in derivative or related research programs conducted by
WWT or collaborators.
WWT may Face Delays in the Development of its Technology and its Technology may
not Work as well as Expected or be Economically Viable.
The steam classification and processing technology has not yet been
widely applied within the municipal solid waste industry and may not work as
well as expected or be economically viable. The successful application of the
technology at large scale and high volumes to create commercially usable
cellulose fiber has yet to be conclusively proven. Any inability under WWT's
current plan to produce large volumes of commercially usable cellulose fiber may
require additional investment in capital equipment and/or increased operating
expenses beyond currently contemplated business and construction plans.
15
Unforeseen difficulties in the development or acceptance of this cellulose fiber
may lead to significant delays in production and the subsequent generation of
revenue.
The License Agreement with Bio-Products International, Inc. has Certain
Requirements to Maintain Exclusivity.
The license agreement with Bio-Products International, Inc. ("BPI") is
generally exclusive in the United States. However, there are certain limitations
to WWT's general exclusivity and also additional requirements necessary to
maintain the license. As a general limitation on the license granted by BPI,
applications in which the cellulosic product of waste, including municipal solid
waste, processed utilizing the licensed technology is either used directly as a
fuel source or converted into an end product for energy production are excluded
from the license, meaning that WWT can use the licensed technology for these
types of applications, but also that BPI may license third parties to use the
technology for the production of marketable solid combustion fuel end products.
In addition, in order to maintain exclusivity, the license requires that on a
regular schedule WWT must continue to improve the first facility or construct
new facilities in order to increase overall capacity and therefore usage of the
licensed technology.
Failure to meet the above requirements with respect to the generally
exclusive license may lead to the license being changed to a non-exclusive
license, in which case BPI would be free to grant similar non-exclusive licenses
to third parties. The failure to maintain exclusivity of the license could have
a material adverse effect on WWT's business, financial condition and results of
operations.
Failure to Implement New Technologies.
WWT expects to utilize proprietary steam classification technology in
its processing facilities and to adopt other technologies from time to time.
WWT's future growth is partially tied to its ability to improve its knowledge
and implementation of waste processing technologies. Inability to successfully
implement commercially viable waste processing technologies in response to
market conditions in a manner that is responsive to its customers' requirements
could have a material adverse effect on WWT.
RISKS RELATED TO THE MUNICIPAL SOLID WASTE PROCESSING INDUSTRY
Strong Competition from Larger more Experienced Companies.
Many of WWT's potential competitors are large, well-established
companies with substantially larger operating staffs and greater capital
resources than it. WWT may not be able to successfully conduct its operations in
this highly competitive environment. Such companies may be able to expend
greater resources on the existing and changing technologies that WWT believes
are and will be increasingly important to attaining success in the industry.
Environmental Regulations and Litigation could Subject WWT to Fines, Penalties,
Judgments and Limitations on its Ability to Expand.
WWT is subject to potential liability and restrictions under
environmental laws, including those relating to handling, recycling, treatment,
16
storage of wastes, discharges to air and water, and the remediation of
contaminated soil, surface water and groundwater. The waste management industry
has been, and will continue to be subject to regulation, including permitting
and related financial assurance requirements, as well as to attempts to further
regulate the industry through new legislation. WWT's business is subject to a
wide range of federal, state and, in some cases, local environmental, odor and
noise and land use restrictions and regulations. If it is not able to comply
with the requirements that apply to a particular facility or if it operates
without necessary approvals, it could be subject to civil, and possibly
criminal, fines and penalties, and it may be required to spend substantial
capital to bring an operation into compliance or to temporarily or permanently
discontinue, and/or take corrective actions. WWT may not have sufficient
insurance coverage for its environmental liabilities. Those costs or actions
could be significant to it and significantly impact its results of operations,
as well as its available capital.
In addition to the costs of complying with environmental laws and
regulations, if governmental agencies or private parties brought environmental
litigation against WWT, it would likely incur substantial costs in defending
against such actions. WWT may be, in the future, a defendant in lawsuits brought
by parties alleging environmental damage, personal injury, and/or property
damage. A judgment against WWT, or a settlement by WWT, could harm its business,
its prospects and its reputation.
Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
Immediately following the completion of the Merger, all of the existing
members of VPTI's board of directors and all of its executive officers resigned
and new appointees comprised VPTI's board of directors as set forth in Item 5.01
of this Current Report on Form 8-K, which is incorporated by reference into this
Item 5.02.
Thomas L. Collins is employed under an employment agreement pursuant to
which he will receive a minimum salary of $174,000 for calendar year 2004. Mr.
Collins was originally hired to act as Executive Vice President and in February
2004, the Board of Directors elected Mr. Collins as the Chief Executive Officer.
The term of the contract is until January 19, 2008. The agreement provides
discretion to the board of directors for additional salary based upon Mr.
Collins' performance. The agreement also provides for salary continuance for one
year after death. The agreement provides for indemnification of Mr. Collins for
decisions made in good faith while performing services for WWT.
Steven Racoosin is employed under an employment agreement pursuant to
which he will receive a minimum salary of $175,000 for calendar year 2004. The
term of the contract is until December 31, 2007. The agreement provides
discretion for the board of directors to additional salary based upon Mr.
Racoosin's performance. The agreement also provides for salary continuance for
one year after death. The agreement provides for indemnification of Mr. Racoosin
for decisions made in good faith while performing services for WWT.
Fred Lundberg is employed under an employment agreement pursuant to
which he will receive a minimum salary of $152,000 for March 1, 2004 to February
28, 2005. The term of the contract is until February 28, 2009. The agreement
provides discretion for the board of directors to additional salary based upon
17
Mr. Lundberg's performance. The agreement also provides for salary continuance
for one year after death. The agreement provides for indemnification of Mr.
Lundberg for decisions made in good faith while performing services for WWT.
Item 8.01 Other Events
As a result of the Merger, VPTI has moved its principal executive
offices to 13520 Evening Creek Drive, Suite 130, San Diego, California 92128.
Immediately following all required filings with governmental
authorities, VPTI changed its name to "World Waste Technologies, Inc." and it
has obtained a new trading symbol on the OTC Bulletin Board "WDWT.OB".
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statement of Businesses Acquired.
The financial statements as of and for the year ended December 31, 2003
and December 31, 2002 of WWT appear beginning on page F-1 of this Current Report
on Form 8-K and are hereby incorporated by reference herein. The required
interim financial statements will be filed by amendment to this report not later
than 71 days after the date this Current Report on form 8-K is required to be
filed.
(b) Pro Forma Financial Information.
The pro forma financial information required by Article 11 of
Regulation S-X has not been presented because VPTI had no operations at the time
of the merger.
(c) Exhibits.
2.1 Agreement and Plan of Reorganization dated as of March 25,
2004 among VPTI, V-CO Acquisition, Inc. and WWT (filed as an
exhibit to VPTI's Current Report on Form 8-K dated March 25,
2004, which was filed with the Securities and Exchange
Commission on March 29, 2004, and incorporated herein by
reference into this Report on Form 8-K).
2.2 Amendment No. 1 dated August 24, 2004 to Agreement and Plan
of Reorganization dated as of March 25, 2004 among VPTI, V-CO
Acquisition, Inc. and WWT,
10.1 Employment Agreement between WWT and Steven Racoosin dated
January 1, 2003.
10.2 Employment Agreement between WWT and Thomas L. Collins dated
January 20, 2003.
10.3 Employment Agreement between WWT and Fred Lundberg dated
March 1, 2004.
10.4 Lease Agreement dated July 14, 2004 between Taormina
Industries, LLC and WWT.
18
10.5 Waste Recycle Agreement dated June 27, 2003 between World
Waste of Anaheim,inc. and Taormina Industries, LLC.
10.6 Amended and Restated Technology License Agreement dated June
21, 2004, between Bio-Products International, Inc. and World
Waste Technologies, Inc.
10.7 Form of Registration Rights Agreement.
10.8 Stock Purchase Warrant issued to Thomas L. Collins.
10.9 Stock Purchase Warrant issued to Steve Racoosin.
10.10 Stock Purchase Warrant issued to Fred Lundberg.
10.11 Stock Purchase Warrant issued to Dr. Michael Eley.
10.12 Stock Purchase Warrant issued to Don Malley.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WORLD WASTE TECHNOLOGIES, INC.
Date: August 30, 2004 By: /s/ Thomas L. Collins
-------------------------------------
Thomas L. Collins, Chief Executive Officer
20
EXHIBIT INDEX
Exhibit No. Description
- ----------
2.1 Agreement and Plan of Reorganization dated as of March 25, 2004
among VPTI, V-CO Acquisition, Inc. and WWT (filed as an exhibit
to VPTI's Current Report on Form 8-K dated March 25, 2004, which
was filed with the Securities and Exchange Commission on March
29, 2004, and incorporated herein by reference into this Report
on Form 8-K).
2.2 Amendment No. 1 dated August 24, 2004 to Agreement and Plan of
Reorganization dated as of March 25, 2004 among VPTI, V-CO
Acquisition, Inc. and WWT,
10.1 Employment Agreement between WWT and Steven Racoosin dated
January 1, 2003.
10.2 Employment Agreement between WWT and Thomas L. Collins dated
January 20, 2003.
10.3 Employment Agreement between WWT and Fred Lundberg dated
March 1, 2004.
10.4 Lease Agreement dated July 14, 2004 between Taormina Industries,
LLC and WWT.
10.5 Waste Recycle Agreement dated June 27, 2003 between World Waste
of Anaheim,inc. and Taormina Industries, LLC.
10.6 Amended and Restated Technology License Agreement dated June 21,
2004, between Bio-Products International, Inc. and World Waste
Technologies, Inc.
10.7 Form of Registration Rights Agreement.
10.8 Stock Purchase Warrant issued to Thomas L. Collins.
10.9 Stock Purchase Warrant issued to Steve Racoosin.
10.10 Stock Purchase Warrant issued to Fred Lundberg.
10.11 Stock Purchase Warrant issued to Dr. Michael Eley.
10.12 Stock Purchase Warrant issued to Don Malley.
21
World Waste Technologies, Inc.
(Formerly World Waste of America, Inc.)
Financial Statements
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
WORLD WASTE, TECHNOLOGIES, INC.
(Formerly World Waste of America, Inc.)
Poway, California
We have audited the accompanying consolidated balance sheets of World
Waste of America, Inc. and Subsidiaries (Formerly World Waste of America, Inc.)
(a development stage company) as of December 31, 2003 and 2002, and the related
consolidated statements of operations, stockholders' deficit and cash flows for
the year ended December 31, 2003, and for the periods from June 18, 2002
(inception) to December 31, 2002 and 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of World
Waste Technologies, Inc. and Subsidiaries (a development stage company) as of
December 31, 2003 and 2002, and the consolidated results of their operations and
their consolidated cash flows for the year ended December 31, 2003 and for the
periods from June 18, 2002 (inception) to December 31, 2002 and 2003, in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As discussed in Note 2 to
the consolidated financial statements, the Company incurred a net loss of
$804,605 for 2003 and had an accumulated deficit of $1,231,494 as of December
31, 2003. These factors, among others, raise substantial doubt about its ability
to continue as a going concern. However, management's plans in regard to these
matters are also described in Note 2. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Levitz, Zacks & Ciceric
San Diego, California
April 5, 2004
F-1
World Waste Technologies, Inc. and Subsidiaries
(Formerly World Waste of America, Inc.)
(A Development Stage Company)
Consolidated Balance Sheets
December 31 December 31
2003 2002
------------- -------------
ASSETS:
Current Assets: $ $
Cash 167,619 1,897
Prepaid Expenses 18,676
Employee Receivables 409
Note Receivable 12,336
------------ ------------
Total Current Assets 199,040 1,897
Equipment, net 28,674 34,455
Other Assets:
Patent License 350,000 350,000
------------ ------------
TOTAL ASSETS $ 577,714 $ 386,352
============ ============
F-2
World Waste Technologies, Inc. and Subsidiaries
(Formerly World Waste of America, Inc.)
(A Development Stage Company)
Consolidated Balance Sheets
(Continued)
December 31 December 31
2003 2002
------------- -------------
LIABILITIES AND STOCKHOLDERS DEFICIT:
LIABILITIES:
Current Liabilities: $ $
Accounts Payable 12,500 73,570
Accrued Salaries Payable 122,830 58,296
Accrued Interest Payable 73,032 12,032
Accrued Advisory Services 30,000
License Fee Payable 167,500
Accrued Other Liabilities 800 22,068
Current portion of Note Payable 4,943 4,573
Amount Due to Employees 10,256
Convertible Promissory Notes Payable 1,177,000
------------ ------------
Total Current Liabilities 1,588,605 180,795
------------ ------------
Long Term Liabilities:
Convertible Promissory Notes Payable 364,500
License Fee Payable 167,500
Note Payable, less current portion 22,367 27,310
------------ ------------
Total Long Term Liabilities 22,367 559,310
------------ ------------
TOTAL LIABILITIES 1,610,972 740,105
------------ ------------
STOCKHOLDERS' DEFICIT:
Common Stock - $.00001 par value:50,000,000
shares authorized, 10,000,000 shares
issued and outstanding at December 31,
2003 and 2002 100 100
Additional Paid-in-Capital 73,136 73,036
Common Stock Subscription 125,000
Deficit Accumulated during development stage (1,231,494) (426,889)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIT (1,033,258) (353,753)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 577,714 $ 386,352
============ ============
F-3
World Waste Technologies, Inc. and Subsidiaries
(Formerly World Waste of America, Inc.)
(A Development Stage Company)
Consolidated Statements of Operations
June 18, 2002 June 18, 2002
Year Ended (Inception) to (Inception) to
December 31 December 31 December 31
2003 2002 2003 *
------------ ------------- ------------
EXPENSES: $ $ $
Research and Development (208,829) (23,910) (232,739)
General and Administrative:
Salaries (333,850) (108,173) (442,023)
Professional Fees (53,510) (56,870) (110,380)
Legal Fees (14,924) (83,137) (98,061)
Rent (48,000) (31,000) (79,000)
Marketing (8,668) (8,540) (17,208)
Travel (20,180) (12,817) (32,997)
Other (53,318) (22,143) (75,461)
----------- ------------ -----------
Loss from Operations (741,279) (346,590) (1,087,869)
----------- ------------ -----------
OTHER EXPENSES:
Interest Expense (63,326) (12,773) (76,099)
----------- ------------ -----------
Total Other Expenses (63,326) (12,773) (76,099)
----------- ------------ -----------
Net Loss $ (804,605) $ (359,363) $(1,163,968)
=========== ============ ===========
Basic and diluted Net Loss per share $ (0.08) $ (0.04) $ (0.12)
=========== ============ ===========
Weighted average number of shares
outstanding used in calculation 10,000,000 10,000,000 10,000,000
=========== ============ ===========
*Approximately $67,526 in Consulting and Travel expenses incurred prior to
inception of the business on June 18, 2002 are not included.
F-4
World Waste Technologies, Inc. and Subsidiaries
(Formerly World Waste of America, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flow
June 18, 2002 June 18, 2002
Year Ended (Inception) to (Inception) to
December 31 December 31 December 31
2003 2002 2003
------------- ------------ -------------
$ $ $
Cash Flow from Operating Activities:
Net Loss (804,605) (359,363) (1,163,968)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 5,781 2,412
Changes in operating assets and
liabilities:
Prepaid Expenses (18,676) (18,676)
Employee Receivable (409)
Accounts Payable (61,070) 73,570 12,500
Accrued Salaries 64,534 58,296 122,830
Accrued Interest 61,000 12,032 73,032
Accrued Advisory Services 30,000 30,000
Accrued Other Liabilities (21,268) 22,068 800
------------ ----------- ------------
Net Cash used in Operating Activities (744,713) (190,985) (935,698)
------------ ----------- ------------
Cash flows from investing activities:
Purchase of vehicle (4,000) (4,000)
Purchase of intangible (182,500) (182,500)
Note Receivable (12,336) (12,336)
------------ ----------- ------------
(12,336) (186,500) (198,836)
------------ ----------- ------------
F-5
World Waste Technologies, Inc. and Subsidiaries
(Formerly World Waste of America, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flow
June 18, 2002 June 18, 2002
Year Ended (Inception) to (Inception) to
December 31 December 31 December 31
2003 2002 2003
------------- ------------ -------------
$ $ $
Cash flows from financing activities:
Amount Due to Employees (10,256) 10,256 -
Note Payable on Vehicle (4,573) (984) (5,557)
Convertible Promissory Notes Payable 812,500 296,974 1,109,474
Common Stock Subscription 125,000 125,000
Common Stock and Additional Paid in
Capital 100 73,236 73,136
------------ ----------- ------------
922,771 379,382 1,302,153
------------ ----------- ------------
Net Increase in Cash 165,722 1,897 167,619
Beginning Cash 1,897 0 0
------------ ----------- ------------
Ending Cash $ 167,619 $ 1,897 $ 167,619
============ =========== ============
Interest Paid $ 2,326 $ 741 $ 3,067
Income Taxes Paid $ - 0 - $ - 0 - $ - 0 -
Non-Cash Investing and Financing Activities:
During 2002, the Company acquired a vehicle for $36,867 with Debt Finance
totaling $32,867. The Company acquired its Technology License Agreement from
Bio-Products for an up-front payment of $182,500 and a second payment of
$167,500 due in June of 2004.
During 2002, the Company issued $67,526 of Convertible Promissory Notes payable
for preformation funds received and expended prior to Inception.
F-6
World Waste Technologies, Inc. and Subsidiaries
(Formerly World Waste of America, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Deficit
Common Stock Additional
------------------ Paid in Common Stock
Shares Dollars Capital Subscription Deficit * Total
---------- ------- --------- ------------ ------------ ------------
$ $ $ $ $
Preformation Expenses (67,526) (67,526)
Formation - June 18, 2002 10,000,000 100 73,036 73,136
Net Loss - 2002 (359,363) (359,363)
---------- ------- --------- ------------ ----------- -----------
December 31, 2002 10,000,000 100 73,036 (426,889) (353,753)
Additional Paid in Capital
100 100
Common Stock Subscribed 125,000 125,000
Net Loss - 2003 (804,605) (804,605)
---------- ------- --------- ------------ ----------- -----------
December 31, 2003 10,000,000 $ 100 $ 73,136 $ 125,000 $(1,231,494) $(1,033,258)
========== ======= ========= ============ =========== ===========
*Accumulated during development stage
F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003 and 2002
Note 1. DESCRIPTION OF BUSINESS
The accompanying Consolidated Financial Statements include the accounts
of World Waste of America, Inc. and its wholly owned subsidiaries World
Waste of Anaheim, Inc. and World Waste of California, Inc. All
significant inter-company accounts and transactions have been
eliminated upon consolidation. World Waste of America, Inc., a
California corporation, (the Company) was formed on June 18, 2002. The
Company holds the U.S. license from Bio-Products International, Inc.
with respect to patented technology developed at the University of
Alabama in Huntsville, which technology was designed to convert
Municipal Solid Waste into commodities. It is anticipated that
additional value will be realized through the capture of inorganic,
recyclable materials such as aluminum, steel, plastic bottles and
low-grade plastics. The Company intends to generate revenue from
receiving the waste (tipping fees) and from selling cellulose and
recyclable materials.
Note 2. GOING CONCERN
The accompanying Consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.
As shown in the financial statements, the Company incurred a net loss
of $804,605 for 2003, and had an accumulated deficit of $1,231,494 as
of December 31, 2003. Furthermore, the Company does not have the funds
necessary to repay the $1,177,000 of Convertible Promissory Notes
payable, which are due December 31, 2004 and there is no assurance that
the Note holders will convert these notes into common stock. The
Company expects to incur substantial additional costs and capital
expenditures to complete the initial facility and through the initial
year of processing. The ability to complete and operate the facility is
subject to the Company obtaining funding and obtaining equipment
financing. If this funding is not obtained the Company will be unable
to continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the
amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The
Company's continuation as a going concern is dependent upon its ability
to generate sufficient cash flow to meet its obligations on a timely
basis, to obtain additional financing as may be required, and
ultimately to attain successful operations. Management is continuing
its efforts to obtain additional funds so that the Company can meet its
obligations.
During December 2003 the Company received $125,000 for a subscription
for 125,000 shares of the Company's common stock ($1.00 per share). The
shares were not issued as of December 31, 2003 and the $125,000 of
F-8
funds received are included on the accompanying consolidated balance
sheet as common stock subscription.
In March 2004, the Company merged with a wholly-owned subsidiary of
Waste Solutions, Inc., a California corporation, to create World Waste
Technologies, Inc. (WWTI). WWTI received proceeds from convertible debt
of $750,000 at the time of the merger and an additional $250,000 in
April 2004. WWTI issued a warrant for the purchase of 133,333 shares of
its common stock in connection with these additional funds.
WWTI believes that its existing funds will be sufficient to fund its
operating expenses and capital requirements into the third quarter of
2004. WWTI intends to raise additional debt and/or equity financing to
sustain its operations and to complete its capital expenditures,
although there can be no assurance that it will be able to raise such
funds on terms acceptable to WWTI, or at all.
Note 3. SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
---------------------
The accompanying consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United
States of America. The Company is a new enterprise in the development
stage as defined by Statement No. 7 of the Financial Accounting
Standards Board, since it has derived no revenues from its activities
to date.
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
----------------------------
The Company maintains its cash balances in a financial institution.
Cash balances at the institution are insured by the Federal Deposit
Insurance Corporation up to $100,000.
Equipment
---------
Equipment is stated at cost. Depreciation is computed on the
straight-line method over the estimated useful asset lives. At December
31, 2003 and 2002 the only equipment of the Company was a truck which
is secured as collateral to a note payable. It is being depreciated
over an estimated life of six years. Repairs and maintenance are
charged to expense as incurred.
F-9
Intangibles
-----------
Intangible assets are recorded at cost. At December 31, 2003 and 2002,
the Company's only intangible asset was the License to the patented
technology. The Company will begin amortizing this intangible asset
upon completion of the first facility on a straight-line basis over the
remaining life of the License. The Company's policy regarding
intangible assets is to review such intangible assets for impairment
whenever events or changes in circumstances indicate that its carrying
amount may not be recoverable. If the review indicates that intangible
assets are not recoverable (i.e. the carrying amount is less than the
future projected undiscounted cash flows), its carrying amount would be
reduced to fair value. The Company carried no goodwill on its books at
either December 31, 2003 or December 31, 2002. Further, during fiscal
2003 and 2002, the Company had no material impairment of its intangible
asset.
Research and Development
------------------------
Research and development costs are charged to operations when incurred.
Income Taxes
------------
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, " Accounting for
Income Taxes." In accordance with SFAS No. 109, the Company records a
valuation allowance against net deferred tax assets if, based upon the
available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable
income and when temporary differences become deductible. The Company
considers, among other available information, uncertainties surrounding
the recoverability of deferred tax assets, scheduled reversals of
deferred tax liabilities, projected future taxable income, and other
matters in making this assessment.
Segment Reporting
-----------------
The Company currently operates in a single segment. In addition,
financial results are prepared and reviewed by management as a single
operating segment. The Company continually evaluates its operating
activities and the method utilized by management to evaluate such
activities and will report on a segment basis when appropriate to do
so.
Fair Value of Financial Instruments
-----------------------------------
The carrying values of cash, note receivable, note payable, accounts
payable and other accrued liabilities approximate fair value due to
either their short-term nature or interest rates which approximate
market rates. It was not practicable to estimate the fair value of the
convertible promissory notes payable due to the equity conversion
provision embodied in the notes.
F-10
New Accounting Pronouncements
-----------------------------
The Company does not expect the adoption of any issued, but not yet
effective, accounting pronouncements to have a material effect, if any,
on its financial position or results of operations.
Note 4. License Agreement
On June 21, 2002, the Company entered into a U.S. technology license
agreement with Bio-Products International, Inc., an Alabama
corporation, with respect to patented methods and processes developed
by Dr. Michael H. Eley in conjunction with the University of Alabama in
Huntsville. The patented technology was designed to provide for the
processing and separation of material contained in Municipal Solid
Waste (MSW). This unique process, known as pressurized steam
classification, treats MSW with a combination of time, temperature and
pressure. Temperatures of several hundred degrees sterilize the
material and the pressure, and agitation causes a pulping action. This
combination is designed to result in a large volume reduction, yielding
high-density, sterilized product that is ready for market. The most
recent patent includes the capturing of all Volatile Organic Compounds
and was granted by the United States Patent and Trademark Office in
October 2001.
The University of Alabama in Huntsville currently holds the patent for
the technology. This patent was licensed to Bio-Products, Inc. and this
license was assigned to the Company for the United States.
The license extends for a period of 20 years from the effective date of
the agreement. The agreement shall be automatically extended until the
expiration date of the last patent issued to Bio-Products and/or the
University of Alabama in Huntsville covering the Technology.
For the license, the Company paid a one-time fee of $350,000 paid in
several installments, the final installment of $167,500, is due in June
2004, two years after the signing of the agreement. The Company has
recorded an intangible asset at $350,000 and has recorded a payable for
the outstanding balance.
In addition, the Company is obligated to pay a royalty for every ton of
waste processed using the licensed technology as follows:
Rate Tons processed per day
---- ----------------------
$0.50 1 - 2,000
$1.00 2,000 - 10,000
$1.50 10,000 and up
In addition, the Company is obligated to pay a bonus to Bio-Products of
two and one half percent (2.5%) of the gross sales price in excess of
ten dollars ($10.00) per ton for the cellulosic product produced from
MSW, utilizing the Technology.
F-11
As additional consideration and for their experience and know-how
regarding the Technology, the Company agreed to pay Bio-Products a
monthly payment for technical services of ten thousand dollars
($10,000) per month from January, 2003 to May 2004 and twenty thousand
dollars ($20,000) thereafter.
Due to the proprietary nature of the vessel design utilized in the
process, the Company also agreed that Bio-Products shall maintain the
exclusive right of vessel manufacture, and the Company shall purchase
all required process vessels exclusively from Bio-Products at a
purchase price of cost plus 15%.
In 2003, the Company loaned an officer of Bio-Products $12,336. The
amount is shown as current note receivable on the Company's balance
sheet. This note was repaid in April 2004.
Note 5. SIGNIFICANT CONTRACT
In June 2003, the Company signed a 25-year contract with Taormina
Industries, a wholly-owned division of Republic Services (Republic)
whereby Republic will deliver 2,500 tons per day of waste to the
Company for processing. The initial facility will be located on the
campus of Republic in Anaheim, California and will be capable of
processing 500 tons per day. The second phase calls for the Company to
build a 2,000 ton per day plant in the Anaheim area. It is estimated
that the initial facility will cost the Company approximately $8.6
million and it is projected to be completed in December, 2004, if the
Company is successful in raising the necessary funds. It is estimated
that the second phase will cost the Company approximately $35 million,
excluding land and building, and it is projected to be completed in
early 2006, if the Company is successful in raising the necessary
funds. The agreement also grants Republic a Right of First Refusal for
an additional 10 counties throughout California where Republic has
operations. Under the terms of this first contract, Republic will pay
an initial tipping fee of $30 per ton to the Company. The ultimate
success of the Company is highly dependent on the ability of both
parties to the contract to fulfill their obligations, of which there
can be no assurance.
Also, as part of the Republic contract, the Company has agreed to enter
into a lease with Republic for the initial facility on Republic's
campus. The specifics of this lease and its commencement date have not
been finalized. The Company will also be required to lease facilities
to complete the second phase of the contract.
Note 6. NOTE PAYABLE
Note payable is comprised as follows:
F-12
December 31,
2003 2002
---- ----
Note Payable, monthly installments
of $575, with interest at 7.8%,
secured by a vehicle $ 27,310 $ 31,883
Less Current portion 4,943 4,573
------- -------
$ 22,367 $ 27,310
====== ======
The following is a summary of principal maturities of the Note Payable
for years ending December 31:
2004 $ 4,943
2005 5,342
2006 5,774
2007 6,241
2008 5,010
--------
$ 27,310
========
Note 7. CONVERTIBLE PROMISSORY NOTES PAYABLE
Convertible Promissory Notes Payable are convertible into common stock
of World Waste of Anaheim, Inc. until 90 days after the first plant is
fully operational. The number of shares shall be equal in value to the
outstanding balance of the note and shall constitute 0.01% ownership in
World Waste of Anaheim, Inc. for each $1,000 of the Note Payable. The
Notes accrue interest at eight percent (8%) per annum. Unconverted
promissory notes payable plus accrued interest are due and payable
December 31, 2004.
Note 8. INCOME TAXES
The Company has a deferred tax asset of approximately $459,000 related
to net operating loss carryforwards of approximately $1,164,000
expiring through 2023, which has been fully reserved due to
uncertainties as to its realizability. The valuation allowance
increased by $315,000 in 2003 and $144,000 in 2002. The availability of
the operating loss carryforwards to offset future taxable income may be
limited or curtailed resulting from changes in the Company's
stockholders subsequent to December 31, 2003.
The provision for income taxes differs from the amount using the
statutory federal income tax rate of 34% as follows:
F-13
2003 2002
---- ----
Federal tax benefit at statutory rate $ 269,000 $ 123,000
State tax benefit, net 46,000 21,000
Increase in valuation allowance (315,000) (144,000)
--------- ---------
Provision for Income Taxes $ -0- $ -0-
========= =========
Note 9. COMMITMENT AND CONTINGENCIES
As of April 2004, the Company has entered into purchase commitments
related to the construction of the initial phase of the Republic
contract of $1,757,340 against which payments of $419,375 have been
made.
Certain affiliates and the principal shareholders and officers of the
Company are named defendants in a lawsuit alleging breach of contract,
fraud, and misrepresentation related to the breach of a residential
real estate lease and a potentially "detachable" warrant to purchase 5%
of the Company. It is probable that the Company will also be named in
this lawsuit. The principals have and intend to continue to defend
themselves on the merits of the case vigorously. The Company does not
believe that a settlement, if any, or the cost to defend will have a
material impact on the operations of the Company. It is the Company's
policy to expense legal costs as incurred.
Note 10. RELATED PARTY TRANSACTIONS
Transactions with the Placement Agent
-------------------------------------
In December 2003, in connection with the anticipated offering of Shares
in a Private Placement offering, the Company entered into an agreement
with Cagan McAfee Capital Partners, LLC and its affiliated broker
dealer Peyton, Chandler & Sullivan, Inc., the Placement Agent, to
provide the Company with investment banking advisory and consulting
services. The Placement Agent will receive a fee of cash and stock in
connection with this offering and a monthly retainer for advisory
services.
Other Related Party Transactions
--------------------------------
In March 2004, Steve Racoosin, the Company's President, entered into an
agreement with Cagan McAfee Capital Partners, LLC for the purpose of
retaining them to act as his agent to assist in the sale of 500,000
shares of Common Stock of World Waste Technologies, Inc. at $1.00 per
share and the cancellation of 500,000 shares for no consideration.
F-14
Note 11. EMPLOYMENT CONTRACTS
The Company entered into employment contracts with two members of its
senior executive management. The employment contracts have a term of
five years and expire on December 31, 2007 and January 17, 2008. The
executives may only be terminated for cause. The employment contracts
cover the executives' duties and annual salaries.
Note 12. EARNINGS PER SHARE
The Company has adopted Statement of Financial Accounting Standards No.
128, "Earnings per Share" (SFAS No. 128). SFAS No. 128 provides for the
calculation of basic and diluted earnings per share. Basic earnings per
share includes no dilution and is computed by dividing income available
to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the
potential dilution of securities that could share in the earnings of an
entity, such as stock options, warrants or convertible securities.
Potential common shares related to convertible promissory notes payable
were not included in the calculation of diluted earnings per share in
2003 and 2002 because of their antidilutive effect.
Note 13. SUBSEQUENT EVENTS
In March 2004, the Company received a net of $16,500 of financing in
the form of additional Convertible Promissory Notes Payable.
In March 2004, World Waste of America, Inc., merged with a wholly-owned
subsidiary of Waste Solutions, Inc., a California corporation, to
create World Waste Technologies, Inc. (WWTI). Cagan McAfee Capital
Partners, LLC, the Placement Agent, and its affiliates were the
controlling shareholders of Waste Solutions, Inc. Waste Solutions, Inc.
is a shell with no material operations. As part of the merger, WWTI
obtained an additional $750,000 for the issuance of a convertible
secured promissory note at the time of the merger and an additional
$250,000 in April 2004. WWTI issued a warrant for the purchase of
133,333 shares of its common stock in connection with these additional
funds. The transaction will be accounted for as a reverse merger.
Accordingly, the Company will be considered the accounting acquirer and
assets and liabilities of the Company will not be adjusted as a result
of the merger.
Later in March, 2004, WWTI entered into an Agreement and Plan of
Reorganization with Voice Powered Technologies International, Inc., a
California corporation ("VPTI"), to merge with and into VPTI. VPTI is a
publicly-traded company trading under the stock symbol VPTI.OB. VPTI is
a shell corporation with no material operations. Assuming the
satisfactory completion of all closing conditions, including, but not
limited to, regulatory approval, the Merger is expected to close in
June 2004. As part of the merger agreement WWTI shareholders will
receive approximately 95% of the outstanding shares of VPTI. Upon
completion of the Merger, VPTI plans to change its name to World Waste
Technologies, Inc. The transaction will be accounted for as a reverse
merger. Accordingly, WWTI will be considered the accounting acquirer
F-15
and assets and liabilities of WWTI will not be adjusted as a result of
the merger.
In March, 2004, the Company entered into a lease for office space in
San Diego. The lease term is for two years commencing April 1, 2004.
Annual rent is $54,943.20 for year one and $56,633.76 for year 2.
Note 14. PRO FORMA DISCLOSURES (UNAUDITED)
Waste Solutions, Inc. and VPTI had immaterial assets and liabilities as
of December 31, 2003 and immaterial revenue and expenses for the year
ended December 31, 2003. Consequently, pro forma condensed financial
information for the Company, Waste Solutions, Inc. and VPTI combined as
of December 31, 2003, for the year ended December 31, 2003 would be
substantially the same as that reported in the accompanying financial
statements.
F-16
Exhibit 2.2
FIRST AMENDMENT TO THE
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.,
V-CO ACQUISITION, INC.
AND
WORLD WASTE TECHNOLOGIES, INC.
THIS FIRST AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER (the
"Amendment") is dated as of August 24, 2004, by and between Voice Powered
Technology International, Inc. ("VPTI"), V-CO Acquisition, Inc. ("V-CO") and
World Waste Technologies, Inc. ("WW"). This Amendment is amends that certain
Agreement and Plan of Merger (the "Agreement") between VPTI and WW, dated March
25, 2004. RECITALS
A. WW and VPTI signed the Agreement on March 25, 2004.
B. The Agreement provides for the merger of WW into V-CO, a
wholly-owned subsidiary of VPTI
C. The parties desire to amend the Agreement to further ensure the
closing of the transaction.
AMENDMENT
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged the parties agree to amend the Agreement as
follows:
1. The fourth WHEREAS is hereby deleted in its entirety and replaced with
the following language:
"WHEREAS, WW has an authorized capitalization consisting
of 50,000,000 shares of common stock, $0.00001 par value
("WW Common Stock"), of which, 20,063,706 shares are
currently issued and outstanding, as of the date hereof
(giving effect to the conversion of the promissory notes,
but excluding warrants exercisable for WW Common Stock, as
described herein)."
2. Section 2(d)(3) is hereby deleted in its entirety and replaced with the
following language:
"Upon the Closing, WW shall deliver to V-CO an unaudited
Balance Sheet, dated as of no more than seven (7) days
prior to the Closing, showing not less than $1,000,000
cash and a net worth of no less than $2,700,000. Such
Balance Sheet shall be certified to as true and accurate
in all material respects by the Chief Executive Officer
and Secretary of WW."
3. Section 2(d)(4) is hereby deleted in its entirety and replaced with the
following language:
Exhibit 2.2 - 1
"As of the Closing and excluding the outstanding warrants
to purchase up 1,067,021 shares of WW Common Stock (the
"WW Warrants"), WW shall have no more than 20,063,706
shares of its Common Stock issued and outstanding. Upon
the Effective Date of the Merger and excluding the WW
Warrants, V-CO shall have no more than approximately
1,200,000 shares of Common Stock issued and outstanding."
4. Section 4(a) is hereby deleted in its entirety and replaced with the
following language:
"As of the date hereof, excluding the WW Warrants and
giving effect to the conversion of the promissory notes
described Section 9(k) below, the total number of shares
of WW Common Stock issued and outstanding is 20,063,706.
Excluding the WW Warrants, the WW capital stock that will
be issued and outstanding as of the Effective Date shall
not exceed 20,825,000 shares."
5. Section 6 is hereby deleted in its entirety and replaced with the
following language:
"The Closing of the transactions contemplated herein shall
take place on such date (the "Closing") as mutually
determined by the parties hereto when all conditions
precedent have been met and all required documents have
been delivered, which Closing is expected to occur on or
about August 3, 2004. The "Effective Date" of the Merger
shall be that date and time specified in the Articles of
Merger as the date on which the Merger shall become
effective."
6. Section 9(g) is hereby deleted in its entirety and replaced with the
following language:
"The capitalization of WW shall be the same as described
in Section 4(a), except that the number of outstanding
shares shall not exceed 20,825,000 shares, excluding the
WW Warrants and giving effect to the conversion of the
promissory notes described Section 9(k) below."
7. Section 9(l) is hereby deleted in its entirety and replaced with the
following language:
"V-CO shall have received from substantially all of the WW
shareholders a letter commonly known as an "investment
letter" (or a representation with similar effect) agreeing
that the shares of V-CO common stock (the "Shares") to be
converted in the merger are, among other things, being
acquired for investment purposes and not with a view to
public resale, are being acquired for the investor's own
account, that the investor is an "accredited" individual
or entity as defined under Regulation D of the Securities
Act of 1933, and that the Shares are restricted and may
not be resold without registration, except in reliance of
Exhibit 2.2 - 2
an exemption therefrom under the Securities Act of 1933.
Notwithstanding anything to the contrary herein, up to
thirty-five (35) of WW's shareholders may be
unaccredited."
8. Except as hereby amended, the Agreement shall remain in full force and
effect.
[signature page follows]
Exhibit 2.2 - 3
IN WITNESS WHEREOF, this Amendment has been approved by each of the
parties as of the date first above written.
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
/s/ Rob Larcara
------------------------------------------------
Rob Larcara, President
V-CO ACQUISITION, INC.
/s/ Rob Larcara
-----------------------------------------------
Rob Larcara, President
WORLD WASTE TECHNOLOGIES, INC.
/s/ Thomas L. Collins
-----------------------------------------------
Thomas L. Collins, Chief Executive Officer
Exhibit 2.2 - 4
EXHIBIT 10.1
WORLD WASTE OF AMERICA, INC.
EMPLOYMENT CONTRACT FOR
STEVEN RACOOSIN
This employment Agreement is effective as of the 1st day of January 1,
2003 by and between World Waste of America, Inc. (hereinafter "Employer")
located at 5567 Calumet Avenue, La Jolla, California 92037 and Steven Racoosin
(hereinafter "Executive") residing at 5567 Calumet Ave., La Jolla, California
92037.
A. Employer desires assurance of the continued association and services
of Executive in order to retain his experience, abilities, and
knowledge, and is therefore willing to engage his services on the
terms and conditions set forth below.
B. Executive desires to continue in the employ of Employer and is
willing to do so on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the above recitals and of the mutual
promises and conditions in this Agreement, it is agreed as follows:
1. Term of Employment. Subject to earlier termination as provided in this
Agreement, Executive shall be employed for a term beginning on January 1, 2003
through December 31, 2007. It is intended that upon termination of this
Agreement Executive will continue in the employ of Employer on an at-will basis.
2. Place of Employment. Unless the parties agree otherwise, during the
employment term Executive shall perform the services he is required to perform
under this Agreement at Employer's offices, which are currently located at 5567
Calumet Avenue, La Jolla, California 92037, provided, however, that Employer may
move its primary office location and may require Executive to travel temporarily
to other locations on Employer's business.
3. Executive's Duties and Authority. Executive shall be World Waste of America's
President, with full power and authority to manage and conduct all the day to
day business of Employer, subject to the directions and policies of Employer's
board of directors as they may be, from time to time, stated either orally or in
writing. Executive shall not however, take any of the following actions on
behalf of Employer without the approval of the board of directors:
3.1. Borrowing or obtaining credit in any amount or executing any
guaranty;
3.2. Expending funds for major capital equipment;
3.3 Selling or transferring capital assets exceeding Fifty Thousand
Dollars ($50,000.00) in market value;
3.4. Executing any contract or making any commitment for the purchase
or sale of Employer's products or facilities in an amount exceeding
Five Hundred Thousand Dollars ($500,000);
3.5. Executing any lease of real or personal property providing for an
annual rent in excess of One Hundred Thousand Dollars ($100,000.00);
3.6. Exercising any discretionary authority or control over the
management of any employee welfare or pension benefit plan or over the
disposition of the assets of any such plan;
3.7. Hiring or firing any employee with annual compensation exceeding,
One Hundred Thousand Dollars ($100,000.00).
EXHIBIT 10.1 - 1
4. Reasonable Time and Effort Required. During his employment, Executive shall
devote such time, interest, and effort to the performance of services as
delineated in this Agreement as may be fairly and reasonably necessary.
5. Annual Salary. Annual Salary shall be as follows:
2003 - $126,000.00 (One Hundred Twenty Six Thousand Dollars)
2004 - $175,000.00 (One Hundred Seventy Five Thousand Dollars)
2005 - $225,000.00 (Two Hundred Twenty Five Thousand Dollars)
2006 - Salary subject to board approval
2007 - Salary subject to board approval
Annual salary shall be payable in bi-weekly installments, subject to all
applicable withholdings and deductions.
6. Salary Adjustments. In addition to the Annual Salary as set forth above,
Executive may also be entitled to an additional salary increase based upon
Executive's performance in his position, the amount of time which the position
requires, and any other such considerations as the Board of Directors may deem
appropriate. Employer's board of directors shall review Executive's Annual
Salary in year three and annually thereafter. Following such review, the board
may in its discretion increase (but shall not be required to increase)
Executive's salary or any other benefits, but may not decrease Executives' Base
or Adjusted Salary during the Term of this Agreement without the written consent
of all Parties.
7. Benefits. The board shall approve the purchase or leasing of a vehicle for
Executive's use commensurate with his position within the company. Employer
shall assume all operating expenses, liability insurance and maintenance
expenses associated with the operation of said vehicle. Additionally, Employer
shall obtain, at Employer's expense, a policy of insurance covering the health
care needs of Executive. Such policy shall contain provisions for major medical
expense coverage, and outpatient physician PPO services, as well as coverage for
prescription drugs. Such policy shall be placed with a reputable source for such
insurance in Employer's geographic region.
8. Indemnification. Employer shall, to the maximum extent permitted by law, and
its bylaws, indemnify and hold Executive harmless for any acts or decisions made
in good faith while performing services for Employer. To the same extent,
Employer will pay, and subject to any legal limitations, advance all expenses,
including reasonable attorney fees and cost of court-approved settlements,
actually and necessarily incurred by Executive in connection with the defense of
any action, suit or proceeding and in connection with any appeal, which has been
brought against Executive by reason of his service as an officer or agent of
Employer.
9. Termination.
9.1 TERMINATION FOR CAUSE. Employers Board of Directors may terminate this
Agreement at any time without notice if Executive commits any material act of
dishonesty or moral turpitude, is guilty of disloyalty or fraud, or gross
misconduct under this Agreement or with respect to any subsidiary or affiliate
of Employer. In the event of Executive's termination for cause, Executive shall
not be entitled to any sums beyond those accrued for his employment up to the
time of termination.
EXHIBIT 10.1 - 2
9.2. TERMINATION ON RESIGNATION. Executive may terminate this Agreement by
giving Employer three (3) months prior notice of resignation, and Executive
covenants to remain in his position until a replacement executive is found at
the discretion of the Board of Directors.
9.3. TERMINATION BECAUSE OF DISABILITY. If, at the end of any calendar month
during the term of this Agreement, Executive is and has been for the three (3)
consecutive full calendar months then ending, or for thirty percent (30%) or
more of the normal working days during the twelve (12) consecutive full calendar
months then ending, unable due to mental or physical illness or injury to
perform duties under this Agreement in his normal and regular manner, this
Agreement may then be terminated by Employer's Board of Directors.
9.4. TERMINATION ON DEATH. If Executive dies during the initial term or during
any renewal term of this Agreement, the salary provisions of this Agreement
shall be terminated twelve (12) months thereafter, notwithstanding the
provisions of Sections 9, 10, 11 and 12 of this Agreement which shall survive
Executives death.
9.5. RIGHTS AND OBLIGATIONS AFTER NOTICE OF TERMINATION. If Executive gives
notice of termination of this Agreement under Section 11, or if it becomes known
that this Agreement will otherwise terminate in accordance with its provisions,
Employer's Board of Directors may, in its sole discretion and subject to its
other obligations under this Agreement, relieve Executive of his duties under
this Agreement and assign Executive other reasonable duties and responsibilities
to be performed until the termination becomes effective.
10. Resolution of Disputes.
10.1. ARBITRATION. Any dispute, controversy or claim arising out of, involving,
affecting or related in any way to this Agreement or a breach of this Agreement,
or in any way arising out of, involving, affecting or related to Executive's
employment or the conditions of employment or the termination of employment, or
in any way arising out of, involving or affecting or related to any assignment
or termination of any assignment with any Client of Employer, including but not
limited to disputes, controversies or claims arising out of or related to the
actions of Employer's other employees, Employer's Clients and/or Client's
employees, under Federal, State and/or local laws, shall be resolved by final
and binding arbitration, in accordance with the applicable rules of JAMS in the
state where Executive is or was last employed by Employer. The arbitrator shall
be entitled to award reasonable attorney's fees and costs to the prevailing
party. The award shall be in writing, signed by the arbitrator, and shall
provide the reasons for the award. Judgment upon the arbitrator's award may be
filed in and enforced by any court having competent jurisdiction. This Agreement
to Arbitrate disputes does not prevent Executive from filing a charge or claim
with any governmental administrative agency as permitted by applicable law.
Notwithstanding the above, in the event that Executive commits a material breach
of this Agreement, or commits an intentional tort against Employer, it's agents,
employees, officers or directors, Employer may, without notice, elect to forgo
arbitration and may seek all equitable or contractual remedies available to it,
including prosecution for collection of all attorneys fees and costs occasioned
by the breach or tort.
EXHIBIT 10.1 - 3
10.2. SPECIFIC ENFORCEMENT. In addition to any monetary award, the arbitrator
may order a party to perform any act required by this Agreement or to refrain
from performing any act contrary to this Agreement. This Agreement to arbitrate
shall be specifically enforceable by any court of competent jurisdiction.
10.3. VENUE. The venue for arbitration proceeding will be San Diego County,
California.
10.4. COSTS AND EXPENSES. Initially, each party shall bear its own costs and
expenses in any arbitration proceedings; however, costs and reasonable
attorneys' fees shall be awarded to the prevailing party and paid by the
non-prevailing party.
11. General Provisions.
11.1. NOTICES. Notices between the parties shall be in writing and shall be
sufficient if delivered in any of the following methods:
A. personally delivered to the other party
B. sent by facsimile to the other party followed by a hard copy of the notice
sent as otherwise provided in this section
C. delivered by a major commercial delivery service (e.g., Federal Express, UPS)
D. mailed by certified or registered mail (return receipt requested) to the
party.
Each party's designated address is the address below that party's signature
block. If not received sooner, notices by mail shall be deemed received five (5)
days after deposit in the United States mail or delivery to the commercial
delivery service.
11.2. ASSIGNMENT. Neither party shall assign their rights and obligations under
this Agreement without the prior written consent of the other party.
11.3. ENTIRE AGREEMENT. This Agreement contains the entire understanding between
the parties relating to the rights granted and obligations assumed herein. This
Agreement supersedes all proposals, negotiations, conversations, or discussions
between the parties and all past dealing or industry custom. This Agreement
shall control if provisions of any subordinate documents conflict with this
Agreement.
11.4. BINDING ON SUCCESSORS. This Agreement shall bind and accrue to the benefit
of Executive's heirs, executors, administrators or assigns, and Employers
successors, assigns and licensees.
11.5. AMENDMENT AND WAIVER. The parties may amend any provision of this
Agreement or the observance of any provision may be waived or excused only with
the written consent of both parties. Either party's failure to enforce any
provisions of this Agreement shall not be construed as a waiver of that party's
right to enforce such provisions.
11.6. GOVERNING LAW. Regardless of the place of its physical execution, this
Agreement shall in all respects be interpreted, construed and governed by the
laws of the State of California. The venue for any action or proceeding
concerning, involving, or relating to this Agreement shall be San Diego County,
California.
EXHIBIT 10.1 - 4
11.7. SEVERABILITY. If any provision of this Agreement is held to be invalid,
illegal, or unenforceable by a court having valid jurisdiction, that provision
will be limited or eliminated to the minimum extent necessary so that this
Agreement shall otherwise remain enforceable.
11.8. FORCE MAJEURE. A party shall be temporarily excused from performing under
this Agreement if any force majeure or other occurrence beyond the reasonable
control of either party makes such performance impossible. The delayed party
shall resume performance of its obligations with due diligence after the
delaying event has subsided.
11.9. CONSTRUCTION. Headings and captions are for convenience only and not to be
used in the interpretation of this Agreement. Whenever the context requires,
words used in the singular shall be construed to include the plural and vice
versa, and pronouns of any gender shall be deemed to include the masculine,
feminine, or neuter gender. No provision of this Agreement shall be construed
against and interpreted to the disadvantage of any party because that party
drafted this Agreement.
11.10. COUNTERPART COPIES. This Agreement may be signed in counterpart copies,
each of which represents an original document, and all of which constitute a
single document.
The parties, through their authorized representatives, execute this Agreement as
of the date first written above.
EXECUTIVE: EMPLOYER:
By: /s/ Steven Racoosin By: /s/ Darren Pedersen
----------------------------- ---------------------------
Steven Racoosin, Darren Pedersen
5567 Calumet Avenue World Waste of America, Inc.
La Jolla, California 92037 5567 Calumet Avenue
La Jolla, California 92037
EXHIBIT 10.1 - 5
EXHIBIT 10.2
WORLD WASTE OF AMERICA, INC.
EMPLOYMENT CONTRACT FOR
THOMAS L. COLLINS
This employment Agreement is effective as of this 20th day of January,
2003, by and between World Waste of America, Inc. (hereinafter "Employer")
located at 5567 Calumet Avenue, La Jolla, California 92037 and Thomas L. Collins
(hereinafter "Executive") residing at 13205 Vinter Way, Poway, California 92064.
A. Employer desires assurance of the continued association and services
of Executive in order to retain his experience, abilities, and
knowledge, and is therefore willing to engage his services on the
terms and conditions set forth below.
B. Executive desires to continue in the employ of Employer and is
willing to do so on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the above recitals and of the mutual
promises and conditions in this Agreement, it is agreed as follows:
1. Term of Employment. Subject to earlier termination as provided in this
Agreement, Executive shall be employed for a term beginning on January 20, 2003
through January 19, 2008. It is intended that upon termination of this Agreement
Executive will continue in the employ of Employer on an at-will basis.
2. Place of Employment. Unless the parties agree otherwise, during the
employment term Executive shall perform the services he is required to perform
under this Agreement at Employer's offices, which are currently located at 5567
Calumet Avenue, La Jolla, California 92037, provided, however, that Employer may
from time to time require Executive to travel temporarily to other locations on
Employer's business.
3. Executive's Duties and Authority. Executive shall be World Waste of America's
Executive Vice President, with full power and authority to manage and conduct
all the day to day business of Employer, subject to the directions and policies
of Employer's board of directors as they may be, from time to time, stated
either orally or in writing. Executive shall not however, take any of the
following actions on behalf of Employer without the approval of the board of
directors:
3.1. Borrowing or obtaining credit in any amount or executing any
guaranty;
3.2. Expending funds for major capital equipment;
3.3 Selling or transferring capital assets exceeding Fifty Thousand
Dollars ($50,000.00) in market value;
3.4. Executing any contract or making any commitment for the
purchase or sale of Employer's products or facilities in an amount
exceeding Five Hundred Thousand Dollars ($500,000.00);
3.5. Executing any lease of real or personal property providing for
an annual rent in excess of One Hundred Thousand Dollars
($100,000.00);
3.6. Exercising any discretionary authority or control over the
management of any employee welfare or pension benefit plan or over
the disposition of the assets of any such plan;
3.7. Hiring or firing any employee with annual compensation
exceeding, One Hundred Thousand Dollars ($100,000.00).
EXHIBIT 10.2 - 1
4. Reasonable Time and Effort Required. During his employment, Executive shall
devote such time, interest, and effort to the performance of services as
delineated in this Agreement as may be fairly and reasonably necessary.
5. Annual Salary. Annual Salary shall be as follows:
Jan. 20, 2003-Jan.19, 2004 : $112,000.00 (One Hundred Twelve
Thousand Dollars)
Jan. 20, 2004-Jan. 19, 2005: $174,000.00 (One Hundred Seventy
Four Thousand Dollars)
Jan. 20, 2005-Jan. 19, 2006: $224,000.00 (Two Hundred Twenty
Four Thousand Dollars)
Jan. 20, 2006-Jan. 19, 2007 salary subject to board approval
Jan. 20, 2007-Jan. 19, 2008 salary subject to board approval
Annual salary shall be payable in bi-weekly installments, subject to all
applicable withholdings and deductions.
6. Salary Adjustments. In addition to the Annual Salary as set forth above,
Executive may also be entitled to an additional salary increase based upon
Executive's performance in his position, the amount of time which the position
requires, and any other such considerations as the Board of Directors may deem
appropriate. Employer's board of directors shall review Executive's Annual
Salary in year four and annually thereafter. Following such review, the board
may in its discretion increase (but shall not be required to increase)
Executive's salary or any other benefits, but may not decrease Executives' Base
or Adjusted Salary during the Term of this Agreement without the written consent
of all Parties.
7. Stock Award. Upon execution of this Agreement, Employer will authorize the
sale of fifty (50) shares of common stock of World Waste of America, Inc.
(representing a five percent (5%) interest in Employer) to Executive at the
nominal price of $0.10 per share. The Shares, when issued, will be fully vested
and will be voting shares. Executive's vested percentage of the outstanding
stock of Employer shall be non-dilutable unless Executive agrees to dilute his
interest in Employer, in a writing, signed by Executive and a majority of
shareholders of Employer
8. Indemnification. Employer shall, to the maximum extent permitted by law, and
its bylaws, indemnify and hold Executive harmless for any acts or decisions made
in good faith while performing services for Employer. To the same extent,
Employer will pay, and subject to any legal limitations, advance all expenses,
including reasonable attorney fees and cost of court-approved settlements,
actually and necessarily incurred by Executive in connection with the defense of
any action, suit or proceeding and in connection with any appeal, which has been
brought against Executive by reason of his service as an officer or agent of
Employer.
9. Termination.
9.1 TERMINATION FOR CAUSE. Employers Board of Directors may terminate this
Agreement at any time without notice if Executive commits any material act of
dishonesty or moral turpitude, is guilty of disloyalty or fraud, or gross
misconduct under this Agreement or with respect to any subsidiary or affiliate
EXHIBIT 10.2 - 2
of Employer. In the event of Executive's termination for cause, Executive shall
not be entitled to any sums beyond those accrued for his employment up to the
time of termination.
9.2. TERMINATION ON RESIGNATION. Executive may terminate this Agreement by
giving Employer three (3) months prior notice of resignation, and Executive
covenants to remain in his position until a replacement executive is found at
the discretion of the Board of Directors.
9.3. TERMINATION BECAUSE OF DISABILITY. If, at the end of any calendar month
during the term of this Agreement, Executive is and has been for the three (3)
consecutive full calendar months then ending, or for thirty percent (30%) or
more of the normal working days during the twelve (12) consecutive full calendar
months then ending, unable due to mental or physical illness or injury to
perform duties under this Agreement in his normal and regular manner, this
Agreement may then be terminated by Employer's Board of Directors.
9.4. TERMINATION ON DEATH. If Executive dies during the initial term or during
any renewal term of this Agreement, the salary provisions of this Agreement
shall be terminated twelve (12) months thereafter, notwithstanding the
provisions of Sections 9, 10, 11 and 12 of this Agreement which shall survive
Executives death.
9.5. RIGHTS AND OBLIGATIONS AFTER NOTICE OF TERMINATION. If Executive gives
notice of termination of this Agreement under Section 11, or if it becomes known
that this Agreement will otherwise terminate in accordance with its provisions,
Employer's Board of Directors may, in its sole discretion and subject to its
other obligations under this Agreement, relieve Executive of his duties under
this Agreement and assign Executive other reasonable duties and responsibilities
to be performed until the termination becomes effective.
10. Resolution of Disputes.
10.1. ARBITRATION. Any dispute, controversy or claim arising out of, involving,
affecting or related in any way to this Agreement or a breach of this Agreement,
or in any way arising out of, involving, affecting or related to Executive's
employment or the conditions of employment or the termination of employment, or
in any way arising out of, involving or affecting or related to any assignment
or termination of any assignment with any Client of Employer, including but not
limited to disputes, controversies or claims arising out of or related to the
actions of Employer's other employees, Employer's Clients and/or Client's
employees, under Federal, State and/or local laws, shall be resolved by final
and binding arbitration, in accordance with the applicable rules of JAMS in the
state where Executive is or was last employed by Employer. The arbitrator shall
be entitled to award reasonable attorneys fees and costs to the prevailing
party. The award shall be in writing, signed by the arbitrator, and shall
provide the reasons for the award. Judgment upon the arbitrator's award may be
filed in and enforced by any court having competent jurisdiction. This Agreement
to Arbitrate disputes does not prevent Executive from filing a charge or claim
with any governmental administrative agency as permitted by applicable law.
Notwithstanding the above, in the event that Executive commits a material breach
of this Agreement, or commits an intentional tort against Employer, it's agents,
employees, officers or directors, Employer may, without notice, elect to forgo
arbitration and may seek all equitable or contractual remedies available to it,
including prosecution for collection of all attorneys fees and costs occasioned
by the breach or tort.
EXHIBIT 10.2 - 3
10.2. SPECIFIC ENFORCEMENT. In addition to any monetary award, the arbitrator
may order a party to perform any act required by this Agreement or to refrain
from performing any act contrary to this Agreement. This Agreement to arbitrate
shall be specifically enforceable by any court of competent jurisdiction.
10.3. VENUE. The venue for arbitration proceeding will be San Diego County,
California.
10.4. COSTS AND EXPENSES. Initially, each party shall bear its own costs and
expenses in any arbitration proceedings; however, costs and reasonable
attorneys' fees shall be awarded to the prevailing party and paid by the
non-prevailing party.
11. General Provisions.
11.1. NOTICES. Notices between the parties shall be in writing and shall be
sufficient if delivered in any of the following methods:
A. personally delivered to the other party
B. sent by facsimile to the other party followed by a hard copy of the notice
sent as otherwise provided in this section
C. delivered by a major commercial delivery service (e.g., Federal Express, UPS)
D. mailed by certified or registered mail (return receipt requested) to the
party.
Each party's designated address is the address below that party's signature
block. If not received sooner, notices by mail shall be deemed received five (5)
days after deposit in the United States mail or delivery to the commercial
delivery service.
11.2. ASSIGNMENT. Neither party shall assign their rights and obligations under
this Agreement without the prior written consent of the other party.
11.3. ENTIRE AGREEMENT. This Agreement contains the entire understanding between
the parties relating to the rights granted and obligations assumed herein. This
Agreement supersedes all proposals, negotiations, conversations, or discussions
between the parties and all past dealing or industry custom. This Agreement
shall control if provisions of any subordinate documents conflict with this
Agreement.
11.4. BINDING ON SUCCESSORS. This Agreement shall bind and accrue to the benefit
of Executive's heirs, executors, administrators or assigns, and Employers
successors, assigns and licensees.
11.5. AMENDMENT AND WAIVER. The parties may amend any provision of this
Agreement or the observance of any provision may be waived or excused only with
the written consent of both parties. Either party's failure to enforce any
provisions of this Agreement shall not be construed as a waiver of that party's
right to enforce such provisions.
11.6. GOVERNING LAW. Regardless of the place of its physical execution, this
Agreement shall in all respects be interpreted, construed and governed by the
laws of the State of California. The venue for any action or proceeding
concerning, involving, or relating to this Agreement shall be San Diego County,
California.
EXHIBIT 10.2 - 4
1217. SEVERABILITY. If any provision of this Agreement is held to be invalid,
illegal, or unenforceable by a court having valid jurisdiction, that provision
will be limited or eliminated to the minimum extent necessary so that this
Agreement shall otherwise remain enforceable.
11.8. FORCE MAJEURE. A party shall be temporarily excused from performing under
this Agreement if any force majeure or other occurrence beyond the reasonable
control of either party makes such performance impossible. The delayed party
shall resume performance of its obligations with due diligence after the
delaying event has subsided.
11.9. CONSTRUCTION. Headings and captions are for convenience only and not to be
used in the interpretation of this Agreement. Whenever the context requires,
words used in the singular shall be construed to include the plural and vice
versa, and pronouns of any gender shall be deemed to include the masculine,
feminine, or neuter gender. No provision of this Agreement shall be construed
against and interpreted to the disadvantage of any party because that party
drafted this Agreement.
11.10. COUNTERPART COPIES. This Agreement may be signed in counterpart copies,
each of which represents an original document, and all of which constitute a
single document.
The parties, through their authorized representatives, execute this Agreement as
of the date first written above.
EXECUTIVE: EMPLOYER:
By: /s/ Thomas L. Collins By: /s/ Steven Racoosin
-------------------------------- ------------------------------
Thomas L. Collins Steven Racoosin
13205 Vinter Way Chairman, World Waste of America, Inc.
Poway, California 92064 5567 Calumet Avenue
La Jolla, California 92037
EXHIBIT 10.2 - 5
EXHIBIT 10.3
WORLD WASTE OF AMERICA, INC.
EMPLOYMENT CONTRACT FOR
FRED V. LUNDBERG
This employment Agreement is effective as of this 1st day March 2004,
by and between World Waste of America, Inc. (hereinafter "Employer") located at
3849 Pala Mesa Dr, California 92028 and Fred V. Lundberg (hereinafter
"Executive") residing at 1095 N. Desert Deer Pass, Green Valley, AZ. 85614-5528
A. Employer desires assurance of the continued association and
services of Executive in order to retain his experience,
abilities, and knowledge, and is therefore willing to engage
his services on the terms and conditions set forth below.
B. Executive desires to be employed by Employer and is willing to
do so on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the above recitals and of the mutual
promises and conditions in this Agreement, it is agreed as follows:
1. Term of Employment. Subject to earlier termination as provided in this
Agreement, Executive shall be employed for a term beginning on March 1, 2004
through February 28, 2009. It is intended that upon termination of this
Agreement Executive may continue in the employ of Employer on an at-will basis.
2. Place of Employment. Unless the parties agree otherwise, during the
employment term Executive shall perform the services he is required to perform
under this Agreement at his home office or at Employer's offices, which are
currently located at 3849 Pala Mesa Dr., Fallbrook, California 92028, provided,
however, that Employer may from time to time require Executive to travel
temporarily to other locations on Employer's business.
3. Executive's Duties and Authority. Executive shall be World Waste of America's
Senior Vice President, with full power and authority to manage and conduct all
the day to day business of Employer, subject to the directions and policies of
Employer's board of directors as they may be, from time to time, stated either
orally or in writing. Executive shall not however, take any of the following
actions on behalf of Employer without the approval of the board of directors:
3.1. Borrowing or obtaining credit in any amount or executing any
guaranty;
3.2. Expending funds for major capital equipment;
3.3 Selling or transferring capital assets exceeding Fifty Thousand
Dollars ($50,000.00) in market value;
3.4. Executing any contract or making any commitment for the purchase
or sale of Employer's products or facilities in an amount exceeding
Five Hundred Thousand Dollars ($500,000.00);
3.5. Executing any lease of real or personal property providing for an
annual rent in excess of One Hundred Thousand Dollars ($100,000.00);
3.6. Exercising any discretionary authority or control over the
management of any employee welfare or pension benefit plan or over the
disposition of the assets of any such plan;
3.7. Hiring or firing any employee with annual compensation exceeding,
One Hundred Thousand Dollars ($100,000.00).
10.3-1
4. Reasonable Time and Effort Required. During his employment, Executive shall
devote such time, interest, and effort to the performance of services as
delineated in this Agreement as may be fairly and reasonably necessary.
5. Annual Salary. Annual Salary shall be as follows:
March 1, 2004--February 28, 2005: $152,000.00 (One Hundred Fifty-two
Thousand Dollars)
March 1, 2005--February 28, 2006: $202,000.00 (Two Hundred Two Thousand
Dollars)
March 1, 2006--February 28, 2007: salary subject to board approval
March 1, 2007--February 28, 2008: salary subject to board approval
March 1, 2008--February 28, 2009: salary subject to board approval
Annual salary shall be payable in bi-weekly installments, subject to all
applicable withholdings and deductions.
6. Salary Adjustments. In addition to the Annual Salary as set forth above,
Executive may also be entitled to an additional salary increase based upon
Executive's performance in his position, the amount of time which the position
requires, and any other such considerations as the Board of Directors may deem
appropriate. Employer's board of directors shall review Executive's Annual
Salary in year three and annually thereafter. Following such review, the board
may in its discretion increase (but shall not be required to increase)
Executive's salary or any other benefits, but may not decrease Executives' Base
or Adjusted Salary during the Term of this Agreement without the written consent
of all Parties.
7. Stock Award. On or before the execution of this Agreement, Steve Racoosin,
President and Founder of the Company will sell sixty six (66) shares of common
stock of World Waste of America, Inc. (representing a six point six percent
(6.6%) interest in Employer) to Executive at the nominal price of $0.10 per
share. The Shares, when issued, will be fully vested and will be voting shares.
Executive's vested percentage of the outstanding stock of Employer shall be
non-dilutable unless Executive agrees to dilute his interest in Employer, in
writing.
8. Indemnification. Employer shall, to the maximum extent permitted by law, and
its bylaws, indemnify and hold Executive harmless for any acts or decisions made
in good faith while performing services for Employer. To the same extent,
Employer will pay, and subject to any legal limitations, advance all expenses,
including reasonable attorney fees and cost of court-approved settlements,
actually and necessarily incurred by Executive in connection with the defense of
any action, suit or proceeding and in connection with any appeal, which has been
brought against Executive by reason of his service as an officer or agent of
Employer.
9. Termination.
9.1 TERMINATION FOR CAUSE. Employers Board of Directors may terminate this
Agreement at any time without notice if Executive commits any material act of
dishonesty or moral turpitude, is guilty of disloyalty or fraud, or gross
misconduct under this Agreement or with respect to any subsidiary or affiliate
of Employer. In the event of Executive's termination for cause, Executive shall
not be entitled to any sums beyond those accrued for his employment up to the
time of termination.
10.3-2
9.2. TERMINATION ON RESIGNATION. Executive may terminate this Agreement by
giving Employer three (3) months prior notice of resignation, and Executive
covenants to remain in his position until a replacement executive is found at
the discretion of the Board of Directors.
9.3. TERMINATION BECAUSE OF DISABILITY. If, at the end of any calendar month
during the term of this Agreement, Executive is and has been for the three (3)
consecutive full calendar months then ending, or for thirty percent (30%) or
more of the normal working days during the twelve (12) consecutive full calendar
months then ending, unable due to mental or physical illness or injury to
perform duties under this Agreement in his normal and regular manner, this
Agreement may then be terminated by Employer's Board of Directors.
9.4. TERMINATION ON DEATH. If Executive dies during the initial term or during
any renewal term of this Agreement, the salary provisions of this Agreement
shall be terminated twelve (12) months thereafter, notwithstanding the
provisions of Sections 9, 10, 11 and 12 of this Agreement which shall survive
Executives death.
9.5. RIGHTS AND OBLIGATIONS AFTER NOTICE OF TERMINATION. If Executive gives
notice of termination of this Agreement under Section 11, or if it becomes known
that this Agreement will otherwise terminate in accordance with its provisions,
Employer's Board of Directors may, in its sole discretion and subject to its
other obligations under this Agreement, relieve Executive of his duties under
this Agreement and assign Executive other reasonable duties and responsibilities
to be performed until the termination becomes effective.
10. Resolution of Disputes.
10.1. ARBITRATION. Any dispute, controversy or claim arising out of, involving,
affecting or related in any way to this Agreement or a breach of this Agreement,
or in any way arising out of, involving, affecting or related to Executive's
employment or the conditions of employment or the termination of employment, or
in any way arising out of, involving or affecting or related to any assignment
or termination of any assignment with any Client of Employer, including but not
limited to disputes, controversies or claims arising out of or related to the
actions of Employer's other employees, Employer's Clients and/or Client's
employees, under Federal, State and/or local laws, shall be resolved by final
and binding arbitration, in accordance with the applicable rules of JAMS in the
state where Executive is or was last employed by Employer. The arbitrator shall
be entitled to award reasonable attorney's fees and costs to the prevailing
party. The award shall be in writing, signed by the arbitrator, and shall
provide the reasons for the award. Judgment upon the arbitrator's award may be
filed in and enforced by any court having competent jurisdiction. This Agreement
to Arbitrate disputes does not prevent Executive from filing a charge or claim
with any governmental administrative agency as permitted by applicable law.
Notwithstanding the above, in the event that Executive commits a material breach
of this Agreement, or commits an intentional tort against Employer, it's agents,
employees, officers or directors, Employer may, without notice, elect to forgo
arbitration and may seek all equitable or contractual remedies available to it,
including prosecution for collection of all attorneys fees and costs occasioned
by the breach or tort.
10.3-3
10.2. SPECIFIC ENFORCEMENT. In addition to any monetary award, the arbitrator
may order a party to perform any act required by this Agreement or to refrain
from performing any act contrary to this Agreement. This Agreement to arbitrate
shall be specifically enforceable by any court of competent jurisdiction.
10.3. VENUE. The venue for arbitration proceeding will be San Diego County,
California.
10.4. COSTS AND EXPENSES. Initially, each party shall bear its own costs and
expenses in any arbitration proceedings; however, costs and reasonable
attorneys' fees shall be awarded to the prevailing party and paid by the
non-prevailing party.
11. General Provisions.
11.1. NOTICES. Notices between the parties shall be in writing and shall be
sufficient if delivered in any of the following methods:
A. personally delivered to the other party
B. sent by facsimile to the other party followed by a hard copy of the notice
sent as otherwise provided in this section
C. delivered by a major commercial delivery service (e.g., Federal Express, UPS)
D. mailed by certified or registered mail (return receipt requested) to the
party.
Each party's designated address is the address below that party's signature
block. If not received sooner, notices by mail shall be deemed received five (5)
days after deposit in the United States mail or delivery to the commercial
delivery service.
11.2. ASSIGNMENT. Neither party shall assign their rights and obligations under
this Agreement without the prior written consent of the other party.
11.3. ENTIRE AGREEMENT. This Agreement contains the entire understanding between
the parties relating to the rights granted and obligations assumed herein. This
Agreement supersedes all proposals, negotiations, conversations, or discussions
between the parties and all past dealing or industry custom. This Agreement
shall control if provisions of any subordinate documents conflict with this
Agreement.
11.4. BINDING ON SUCCESSORS. This Agreement shall bind and accrue to the benefit
of Executive's heirs, executors, administrators or assigns, and Employers
successors, assigns and licensees.
11.5. AMENDMENT AND WAIVER. The parties may amend any provision of this
Agreement or the observance of any provision may be waived or excused only with
the written consent of both parties. Either party's failure to enforce any
provisions of this Agreement shall not be construed as a waiver of that party's
right to enforce such provisions.
11.6. GOVERNING LAW. Regardless of the place of its physical execution, this
Agreement shall in all respects be interpreted, construed and governed by the
laws of the State of California. The venue for any action or proceeding
concerning, involving, or relating to this Agreement shall be San Diego County,
California.
10.3-4
11.7. SEVERABILITY. If any provision of this Agreement is held to be invalid,
illegal, or unenforceable by a court having valid jurisdiction, that provision
will be limited or eliminated to the minimum extent necessary so that this
Agreement shall otherwise remain enforceable.
11.8. FORCE MAJEURE. A party shall be temporarily excused from performing under
this Agreement if any force majeure or other occurrence beyond the reasonable
control of either party makes such performance impossible. The delayed party
shall resume performance of its obligations with due diligence after the
delaying event has subsided.
11.9. CONSTRUCTION. Headings and captions are for convenience only and not to be
used in the interpretation of this Agreement. Whenever the context requires,
words used in the singular shall be construed to include the plural and vice
versa, and pronouns of any gender shall be deemed to include the masculine,
feminine, or neuter gender. No provision of this Agreement shall be construed
against and interpreted to the disadvantage of any party because that party
drafted this Agreement.
11.10. COUNTERPART COPIES. This Agreement may be signed in counterpart copies,
each of which represents an original document, and all of which constitute a
single document.
The parties, through their authorized representatives, execute this Agreement as
of the date first written above.
EXECUTIVE: EMPLOYER:
- --------- --------
By: /s/ Fred V. Lundberg By: /s/ Thomas L. Collins
--------------------------- --------------------------------------
Fred V. Lundberg Thomas L. Collins
Chief Executive Officer
Date: Date:
------------------------- ------------------------------------
By: /s/ Steve Racoosin
--------------------------------------
Steve Racoosin
President and Founder
Date:
------------------------------------
10.3-5
Exhibit 10.4
LEASE AGREEMENT
---------------
1. Basic Provisions ("Basic Provisions").
1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
July 14th, 2004 is made by and between Taormina Industries, LLC, a Delaware
limited liability company ("Lessor") and World Waste of Anaheim, Inc. , a
California corporation ("Lessee'), (collectively the "Parties," or individually
a "Party").
1.2 Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, located at
2740 E. Coronado Street, Anaheim, located in the County of Orange, State of
California, and generally described as an approximately 30,000 SF industrial
building, more particularly described on Exhibit "A" attached hereto and
incorporated herein.
1.3 Term: Ten (10) years ("Original Term") commencing July 26th, 2004
("Commencement Date") and ending July 25th, 2014, unless terminated sooner
pursuant to the terms of this Lease ("Expiration Date"). Notwithstanding
anything to the contrary set forth herein, this Lease shall automatically
terminate upon the expiration or termination of the "Recycle Agreement" (as
defined in the Addendum). (See also Paragraph 3).
1.4 Intentionally Deleted.
1.5 Base Rent: $15,900 per month ("Base Rent"), payable on the 1st day
of each month commencing July 26th, 2004. (See also Paragraph 4) Base Rent of
$3,077.42 for the period of July 26, 2004 - July 31, 2004, shall be due and
payable on July 26, 2004. |X| If this box is checked, there are provisions in
this Lease for the Base Rent to be adjusted.
1.6 Base Rent and Other monies Paid Upon Execution:
(a) Deposit: $63,600.00 Prepaid Rent, $31,800.00 Security Deposit
(collectively, the "Security Deposit"). (See also Paragraph 5 and Addendum)
(b) Total Due Upon Execution of this Lease: $95,400.00
1.7 Agreed Use: Material Processing, in accordance with the Recycle
Agreement" (See also Paragraph 6)
1.8 Insuring Party: Lessor is the "Insuring Party". (See also Paragraph
8)
1.9 Intentionally Deleted.
1.10 Intentionally Deleted.
1.11 Attachments: Attached hereto are the following, all of which
constitute a part of this Lease.
|X| Exhibit "A" - Plot plan depicting the Premises
|X| Exhibit "B" - Recycle Agreement
10.4-1
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating Rent, is an approximation which the Parties agree is
reasonable and any payments based thereon are not subject to revision whether or
not the actual size is more or less. Note: Lessee is advised to verify the
actual size prior to executing this Lease.
2.2 Condition. Lessor shall deliver the Premises to Lessee broom clean
and free of debris on the Commencement Date or the Early Possession Date,
whichever first occurs ("Start Date"). EXCEPT AS OTHERWISE EXPRESSLY SET FORTH
---------------------------------------
IN THIS LEASE, LESSEE AGREES THAT NEITHER LESSOR NOR ANY AGENT OF LESSOR HAS
- ----------------------------------------------------------------------------
MADE ANY REPRESENTATION OR WARRANTY AS TO THE SUITABILITY OF THE PREMISES FOR
- -----------------------------------------------------------------------------
LESSEE'S USE. LESSEE AGREES THAT NEITHER LESSOR NOR LESSOR'S AGENTS HAVE MADE
- -----------------------------------------------------------------------------
ANY REPRESENTATIONS OR PROMISES WITH RESPECT TO THE PHYSICAL CONDITION OF THE
- -----------------------------------------------------------------------------
PREMISES OR ANY OTHER MATTER OR THING AFFECTING OR RELATED TO THE PREMISES, AND
- -------------------------------------------------------------------------------
NO RIGHTS, EASEMENTS OR LICENSES ARE ACQUIRED BY LESSEE BY IMPLICATION OR
- -------------------------------------------------------------------------
OTHERWISE. LESSEE HAS INSPECTED THE PREMISES AND IS THOROUGHLY ACQUAINTED WITH
- ------------------------------------------------------------------------------
THEIR CONDITION, AND EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS LEASE,
- ---------------------------------------------------------------------------
AGREES TO TAKE THE SAME "AS IS", AND ACKNOWLEDGES THAT THE TAKING OF POSSESSION
- -------------------------------------------------------------------------------
OF THE PREMISES BY LESSEE SHALL BE CONCLUSIVE EVIDENCE THAT THE PREMISES AND THE
- --------------------------------------------------------------------------------
PREMISES WERE IN GOOD AND SATISFACTORY CONDITION AT THE TIME SUCH POSSESSION WAS
- --------------------------------------------------------------------------------
SO TAKEN.
- ---------
2.3 Acknowledgements. Lessee acknowledges that: (a) it has been advised
by Lessor to satisfy itself with respect to the condition of the Premises
(including but not limited to the electrical, HVAC and fire sprinkler systems,
security, environmental aspects, and compliance with Applicable Requirements and
the Americans with Disabilities Act, and their suitability for Lessee's intended
use, (b) Lessee has made such investigation as it deems necessary with reference
to such matters and assures all responsibility therefore as the same relate to
its occupancy of the Premises, and (c) neither Lessor nor Lessor's agents, have
made any oral or written representations or warranties with respect to said
matters, except as expressly set forth in this Lease.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
10.4-2
3.2 Delivery of Premises. Lessor agrees to deliver possession of the
Premises to Lessee by the Commencement Date.
3.3 Lessee Compliance. Lessor shall not be required to deliver
possession of the Premises to Lessee until Lessee complies with its obligation
to provide evidence of insurance (Paragraph 8.5). Pending delivery of such
evidence, Lessee shall be required to perform all of its obligations under this
Lease from and after the Start Date, including the payment of Rent,
notwithstanding Lessor's election to withhold possession pending receipt of such
evidence of insurance. Further, if Lessee is required to perform any other
conditions prior to or concurrent with the Start Date, the Start Date shall
occur but Lessor may elect to withhold possession until such conditions are
satisfied.
4. Rent.
4.1 Rent Defined. All monetary obligations of Lessee to Lessor under
the terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").
4.2 Payment Lessee shall cause payment of Rent to be received by Lessor
in lawful money of the United States on or before the day on which it is due,
without offset or deduction . Rent for any period during the term hereof which
is for less than one full calendar month shall be prorated based upon the actual
number of days of said month. Payment of Rent shall be made to Lessor at its
address stated herein or to such other persons or place as Lessor may from time
to time designate in writing. Acceptance of a payment which is less than the
amount then due shall not be a waiver of Lessor's rights to the balance of such
Rent, regardless of Lessor's endorsement of any check so stating. In the event
that any check, draft, or other instrument of payment given by Lessee to Lessor
is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 in
addition to any Late Charge and Lessor, at its option, may require all future
payments to be made by Lessee to be by cashier's check. Payments will be applied
first to accrued late charges and attorney's fees, second to accrued interest,
then to Base Rent and Operating Expense increase, and any remaining amount to
any other outstanding charges or costs.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request
therefor deposit monies with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease. If the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional moneys with Lessor so that the total amount of the Security Deposit
shall at all times bear the same proportion to the increased Base Rent as the
initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a Sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent reasonably necessary, in Lessor's reasonable
judgment, to account for any increased wear and tear that the Premises may
10.4-3
suffer as a result thereof. If a change in control of Lessee occurs during this
Lease and following such change the financial condition of Lessee is, in
Lessor's reasonable judgment, significantly reduced, Lessee shall deposit such
additional monies with Lessor as shall be sufficient to cause the Security
Deposit to be at a commercially reasonable level based on such change in
financial condition. Lessor shall not be required to keep the Security Deposit
separate from its general accounts. Within 14 days after the expiration or
termination of this Lease, if Lessor elects to apply the Security Deposit only
to unpaid Rent, and otherwise within 30 days after the Premises have been
vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of
the Security Deposit not used or applied by Lessor. No part of the Security
Deposit shall be considered to be held in trust, to bear interest or to be
prepayment for any monies to be paid by Lessee under this Lease.
6. Use; Hazardous Substances.
6.1 Use. Lessee shall use and occupy the Premises only for the Agreed
Use, and for no other purpose. Lessee shall not use or permit the use of the
Premises in a manner that is unlawful, creates damage, waste or a nuisance, or
that disturbs occupants of or causes damage to neighboring premises or
properties. Lessor shall not unreasonably withhold or delay its consent to any
written request for a modification of the Agreed Use, so long as the same will
not impair the structural integrity of the Improvements on the Premises or the
mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall
within 7 days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in the Agreed
Use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release, either by
itself or in combination with other materials expected to be on the Premises,is
either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Lessee shall not engage in any activity in or on the Premises which
constitutes a Reportable Use of Hazardous Substances without the express prior
written consent of Lessor and timely compliance (at Lessee's expense) with all
Applicable Requirements. "Reportable Use" shall mean (i) the installation or use
of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements require that a notice be given to persons
entering or occupying the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use or process any ordinary and customary materials
reasonably required to be used in the normal course of the Agreed Use, ordinary
office supplies (copier toner, liquid paper, glue, etc.) and common household
cleaning materials, so long as such use is in compliance with all Applicable
10.4-4
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or expose
Lessor to any liability therefor. In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environmental against damages, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination of protective modifications (such as concrete
easements) and/or increasing the Security Deposit.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.
(c) Lessee Remediation. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under, or about the
Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee's expense, comply with all Applicable Requirements and take
all investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought on to the Premises or
neighboring properties, that was caused or materially contributed to by Lessee,
or pertaining to or involving any Hazardous Substance brought on to the Premises
during the term of this Lease, by or for Lessee, or any third party.
(d) Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all rents and/or damages, liabilities, judgments, claims,
expenses, penalties, and attorneys' and consultants' fees arising directly out
of any Hazardous Substances brought onto the Premises by or for Lessee
(provided, however, that Lessee shall have no liability under this Lease with
respect to underground migration of any Hazardous Substance under the Premises
from adjacent properties not caused or contributed to by Lessee or from "escape"
and like of Hazardous Substances from a previous tenant of the Premises).
Lessee's obligations shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances, unless specifically so agreed by Lessor in
writing at the time of such agreement.
(e) Lessor Indemnification. Lessor shall indemnify, defend and hold
Lessee, its directors, agents, employees, lenders, if any, harmless from and
against any and all rents and/or damages, liabilities, judgments, claims,
expenses, penalties, and attorneys' and consultants' fees arising directly out
of any Hazardous Substances brought onto the Premises by or for Lessor or any
previous tenant of the Premises. Lessor's obligations shall include, but not be
limited to, the effects of any contamination or injury to person, property or
the environment created or suffered by Lessee, and the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease. No termination, cancellation or release
10.4-5
agreement entered into by Lessee and Lessor shall release Lessor from its
obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessee in writing at the time of such Agreement.
6.3 Lessee's Compliance with Applicable Requirements. Except as
otherwise provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to the such Requirements, without regard to whether
such Requirements are now in effect or become effective after the Start Date.
Lessee shall, within 10 days after receipt of Lessor's written request, provide
Lessor with copies of all permits and other documents, and other information
evidencing Lessee's compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements.
6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in
Paragraph 30) and consultants shall have the right to enter into Premises at any
time, in the case of an emergency, and otherwise at reasonable times after
reasonable notice, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Lessee with this Lease. The cost of any such
inspections shall be paid by Lessor, unless a material violation of Applicable
Requirements, or a Hazardous Substance Condition (see paragraph 9.1) is found to
exist or be imminent, or the inspection is requested or ordered by a
governmental authority. In the event Lessee is not in material compliance with
the terms of this Lease, Lessee shall upon request reimburse Lessor for the
reasonable cost of such inspection, so long as such inspection is directly
related to the violation or contamination. In addition, Lessee shall provide
copies of all relevant material safety data sheet (MSDS) to Lessor within 10
days of the receipt of a written request therefor.
7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.
7.1 Lessee's Obligations.
(a) In General. Lessee shall, at Lessee's sole expense, keep the
Premises, Utility Installations (intended for Lessee's exclusive use, no matter
where located), and Alterations in good order, condition and repair (whether or
not the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion of the Premises), including, but not limited
to, all equipment or facilities, such as plumbing, HVAC equipment, electrical,
lighting facilities, boilers, pressure vessels, fire protection system,
fixtures, walls (interior and exterior), ceilings, floors, windows, doors, plate
glass, skylights, landscaping, driveways, parking lots, fences, retaining walls,
signs, sidewalks and parkways located in or on the Premises. Lessee is also
responsible for keeping the roof and roof drainage clean and free of debris.
Lessee shall keep the surface and structural elements of the roof, foundations,
and bearing walls in good repair (see paragraph 7.2). Lessee, in keeping the
Premises in good order, condition and repair, shall exercise and perform good
maintenance practices, specifically including the procurement and maintenance of
the service contracts required by Paragraph 7.1(b) below. Lessee's obligations
10.4-6
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair. Lessee shall, during the term of this Lease, keep the
exterior appearance of the Building in a first-class condition consistent with
the exterior appearance of other similar facilities of comparable age and size
in the vicinity, including, when necessary, the exterior repainting of the
Building.
(b) Service Contracts. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure
vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) clarifiers, (vi) basic
utility feed to the perimeter of the Building, and (viii) any other equipment,
if reasonably required by Lessor. However, Lessor reserves the right, upon
written notice to Lessee and the expiration of any cure period, to procure and
maintain any or all of such service contracts, and if Lessor so elects, Lessee
shall reimburse Lessor, upon demand, for the cost thereof.
(c) Failure to Perform. If Lessee fails to perform Lessee's
obligations under this Paragraph 7.1. Lessor may enter upon the Premises after
any applicable notice and cure period (except in the case of an emergency, in
which case no notice shall be required), perform such obligations on Lessee's
behalf, and put the Premises in good order, condition and repair, and Lessee
shall promptly pay to Lessor a sum equal to 115% of the cost thereof.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 9
(Damage or Destruction) and 14 (Condemnation), it is intended by the Parties
hereto that Lessor have no obligation, in any manner whatsoever, to repair and
maintain the Premises, or the equipment therein, all of which obligations are
intended to be that of the Lessee. It is the intention of the Parties that the
terms of this Lease govern the respective obligations of the Parties as to
maintenance and repair of the Premises, and they expressly waive the benefit of
any statute now or hereafter in effect to the extent it is inconsistent with the
terms of this Lease.
7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions. The term "Utility Installations" refers to all
floor and window coverings, air and/or vacuum lines, power panels, electrical
distribution, security and fire protection systems, communication cabling,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery and equipment that
Lessee brought onto and installed at the Premises for the operation of Lessee's
business. The term "Alterations" shall mean any modification of the
improvements, other than Utility Installations or Trade Fixtures, whether by
addition or deletion. "Lessee Owned Alterations and/or Utility Installations"
are defined as Alterations and/or Utility Installations made by Lessee that are
not yet owned by Lessor pursuant to Paragraph 7.4(a).
(b) Consent. Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor's prior written consent. Lessee
may, however, make non-structural Alterations and Utility Installations to the
interior of the Premises (excluding the roof) without such consent but upon
notice to Lessor, as long as they are not visible from the outside, do not
involve purchasing, remodeling or removing the roof or any existing walls, and
10.4-7
will not adversely affect the electrical, plumbing, HVAC, and/or life safety
systems. Notwithstanding the foregoing, Lessee shall not make or permit any roof
penetrations and/or install anything on the roof without the prior written
approval of Lessor. Lessor may, as a pre condition to granting such approval,
require Lessee to utilize a contractor chosen and/or approved by Lessor. Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i)
acquiring all applicable governmental permits, (ii) furnishing Lessor with
copies of both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with as-built plans and specifications.
(c) Liens; Bonds. Lessee shall pay, when due, all claims for labor
or materials furnishing or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than 10 days notice prior to the commencement of any work
in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any such lien, claim
or demand, then Lessee shall, at its sole expense defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof. If
Lessor shall require, Lessee shall furnish a surety bond in an amount equal to
150% of the amount of such contested lien, claim or demand, indemnifying Lessor
against liability for the same. If Lessor elects to participate in any such
action, Lessee shall pay Lessor's attorneys' fees and costs.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require removal or
elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered a
part of the Premises. Lessor may, at any time, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises.
(b) Removal. By delivery to Lessee of written notice from Lessor
not earlier than 90 and not later than 30 days prior to the end of the term of
this Lease, Lessor may require that any or all Lessee Owned Alterations or
Utility Installations be removed by the expiration or termination of this Lease.
Lessor may require the removal at any time of all or any part of any Lessee
Owned Alterations or Utility Installations made without the required consents.
(c) Surrender; Restoration. Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear and
preconditions excepted. "Ordinary wear and tear" shall not include any damage or
deterioration that would have been prevented by good maintenance practice.
Lessee shall repair any damage occasioned by the installation, maintenance or
removal of Trade Fixtures, Lessee owned Alterations and/or Utility
Installations, furnishings, and equipment as well as the removal of any storage
10.4-8
tank installed by or for Lessee. Lessee shall completely remove from the
Premises any and all Hazardous Substances brought onto the Premises by or for
Lessee, or any third party (except Hazardous Substances which were deposited via
underground migration from areas outside of the Premises, or if applicable, the
Project) even if such removal would require Lessee to perform or pay for work
that exceeds statutory requirements. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. Lessee shall repair any damage caused by
such removal, at its expense. Any personal property of Lessee not removed on or
before the Expiration Date or any earlier termination date shall be deemed to
have been abandoned by Lessee and may be disposed of or retained by Lessor as
Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant
to this Paragraph 7.4(c) without the express written consent of Lessor shall
constitute a holdover under the provisions of Paragraph 26 below.
8. Insurance; Indemnity.
8.1 Liability Insurance. Lessee shall obtain and keep in force a
commercial General Liability policy of insurance protecting Lessee and Lessor as
an additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all goods appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $1,000,000 per occurrence with an annual aggregate of not less than
$2,000,000, an "Additional Insured-Managers or Lessors of Premises Endorsement"
and contain the "Amendment of the Pollution Exclusion Endorsement" for damage
caused by heat, smoke or fumes from a hostile fire. The policy shall not contain
any intra-insured exclusions as between insured persons or organizations, but
shall include coverage for liability assumed under this Lease as an "Insured
contract" for the performance of Lessee's indemnity obligation under this Lease.
The limits of said insurance shall not, however, limit the liability of Lessee
nor relieve Lessee of any obligation hereunder. All insurance carried by Lessee
shall be primary to and not contributory with any similar insurance carried by
Lessor, whose insurance shall be considered excess insurance only.
8.2 Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor, with loss payable to
Lessor, any ground-lessor, and to any Lender insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lender, but in no event more than the commercially reasonable
and available insurable value thereof. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's
personal property shall be insured by Lessee under Paragraph 8.4 rather than by
Lessor. If the coverage is available and commercially appropriate, such policy
or policies shall insure against all risks of direct physical loss or damage
(except the perils of flood and/or earthquake unless required by a lender or
included in the Base Premium), including coverage for debris removal and the
enforcement of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
10.4-9
Labor Consumer Price Index for All Urban Consumers for the city nearest to where
the Premises are located. If such insurance coverage has a deductible clause,
the deductible amount shall not exceed $1,000 per occurrence, and Lessee shall
be liable for such deductible amount in the event of an Insured Loss.
(b) Rental Value. Lessee shall obtain and keep in force a policy or
policies in the name of Lessor with loss payable to Lessor and any Lender,
insuring the loss of the full Rent for one year with an extended period of
indemnity for an additional 180 days ("Rental Value Insurance"). Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next 12 month period. Lessee shall be
liable for any deductible amount in the event of such loss.
(c) Adjacent Premises. If the Premises are part of a larger
building or of a group of buildings owned by Lessor which are adjacent to the
Premises, the Lessee shall pay for any increase in the premiums for the property
insurance of such building or buildings if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.
8.3 Lessee's Property; Business Interruption Insurance
(a) Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $1,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force.
(b) Business Interruption. Lessee shall obtain and maintain loss of
income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.
(c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.
8.4 Insurance Policies. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+. V. as set forth in the most current issue of "Best's
Insurance Guide", or such other rating as may be required by a Lender. Lessee
shall not do or permit to be done anything which invalidates the required
insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor
certified copies of policies of such insurance or certificates evidencing the
existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after 30 days prior written notice
to Lessor. Lessee shall, at least 30 days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or "insurance binders"
evidencing renewal thereof, or Lessor may order such insurance and charge the
cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon
demand. Such policies shall be for a term of at least one year or the length of
the remaining term of this Lease, whichever is less. If either Party shall fail
to procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.
10.4-10
8.5 Waiver of Subrogation Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to its property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.
8.6 Indemnity. Except for Lessor's gross negligence of willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be defended or indemnified. Except
for Lessee's gross negligence of willful misconduct, Lessor shall indemnify,
protect, defend and hold harmless the Lessee from and against any and all
claims, loss of rents and/or damages, liens, judgments, penalties, attorneys'
and consultants' fees, expenses and/or liabilities arising out of, involving, or
in connection with, the gross negligence or willful misconduct of Lessor. If any
action or proceeding is brought against Lessee by reason of any of the foregoing
matters, Lessor shall upon notice defend the same at Lessor's expense by counsel
reasonably satisfactory to Lessee and Lessee shall cooperate with Lessor in such
defense. Lessee need not have first paid any such claim in order to be defended
or indemnified.
8.7 Exemption of Lessor from Liability. Except in the event of Lessor's
negligence, misconduct, or breach of this Lease, Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor nor from
the failure of Lessor to enforce the provisions of any other lease in the
Project. Except in the event of Lessor's negligence, misconduct or breach of
this Lease, Lessor shall under no circumstances be liable for injury to Lessee's
business or for any loss or income or profit therefrom.
9. Damages or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to
the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, which can reasonably be repaired in 6 months or less from
10.4-11
the date of the damage or destruction. Lessor shall notify Lessee in writing
within 30 days from the date of the damage or destruction as to whether or not
the damage is Partial or Total.
(b) "Premises Total Destruction" shall mean damage or destruction
to the Premises, other than Lessee Owned Alterations and Utility Installations
and Trade Fixtures, which cannot reasonably be repaired in 6 months or less from
the date of the damage or destruction. Lessor shall notify Lessee in writing
within 30 days from the date of the damage or destruction as to whether or not
the damage is Partial or Total.
(c) "Insured Loss" shall mean damage or destruction to improvements
on the Premises, other than Lessee Owned Alterations and Utility Installations
and Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depreciation.
(e) Hazardous Substance Conditions" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a) in, on, or under the Premises
which requires repair, remediation, or restoration.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is
an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixture, or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $15,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee's responsibility) as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 30 days following
receipt of written notice of such shortage and request therefor. If Lessor
received said funds or adequate assurance thereof within said 30 day period, the
party responsible for making the repairs shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within 10 days thereafter to: (i) make such restoration
and repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled
to reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but
the net proceeds of any insurance shall be made available for the repairs if
made by either Party.
10.4-12
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
30 days after receipt by Lessor of knowledge of the occurrence of such damage.
Such termination shall be effective 60 days following the date of such notice.
In the event Lessor elects to terminate this Lease, Lessee shall have the right
within 10 days after receipt of the termination notice to give written notice to
Lessor of Lessee's commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days after making such commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this Lease
shall terminate as of the date specified in the termination notice.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate 30 days following
such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.5. If
the damage or destruction was caused by the gross negligence or willful
misconduct of Lessor, Lessee shall have the right to recover Lessee's damages
from Lessor, except as provided in Paragraph 8.5.
9.5 Damage Near End of Term. If at any time during the last 6 months of
this Lease there is damage for which the cost to repair exceeds one month's Base
Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective
60 days following the date of occurrence of such damage by giving a written
termination notice to Lessee within 30 days after the date of occurrence of such
damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable
option to extend this Lease or to purchase the Premises, the Lessee may preserve
this lease by, (a) exercising such option and (b) providing Lessor with any
shortage in insurance proceeds (or adequate assurance thereof) needed to make
the repairs on or before the earlier of (i) the date which is 10 days after
Lessee's receipt of Lessor's written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor's commercially reasonable expense, repair such damage as soon
as reasonably possible and this Lease shall continue in full force and effect.
If Lessee fails to exercise such option and provide such funds or assurance
during such period, then this Lease shall terminate on the date specified in the
termination notice and Lessee's option shall be extinguished.
9.6 Abatement of Rent; Lessee's Remedies.
(a) Abatement. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value Insurance. All other
10.4-13
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.
(b) Remedies. If Lessor shall be obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such repair
or restoration within 90 days after such obligation shall accrue or if Lessor
does not complete such work within 180 days from date of damage, Lessee may, at
any time prior to the commencement of such repair or restoration (if
applicable), give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee's election to terminate this Lease on a date not
less than 60 days following the giving of such notice. If Lessee gives such
notice and such repair or restoration is not commenced within 30 days
thereafter, this Lease shall terminate as of the date specified in said notice.
If the repair or restoration is commenced within such 30 days, this Lease shall
continue in full force and effect. "Commence" shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.
9.7 Termination; Advance Payments. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base rent and any other advance payments made by Lessee
to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's
Security Deposit as has not been, or is not then required to be, used by Lessor.
9.8 Waive Statutes. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.
10. Real Property Taxes.
10.1 Definition. As used herein, the term "Real Property Taxes" shall
include any form of assessment, real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income or
estate taxes); improvement bond; and/or license fee imposed by or levied against
any legal or equitable interest of Lessor in the Premises or the Project,
Lessor's right to other income therefrom, and/or Lessor's business of leasing,
by any authority having the direct or indirect power to tax and where the funds
are generated with reference to the Building address and where the proceeds so
generated are to be applied by the city, county or other local taxing authority
of a jurisdiction within which the Premises are located. Real Property Taxes
shall also include any tax, fee, levy, assessment or charge, or any increase
therein: (i) imposed by reason of events occurring during the term of this
Lease, including but not limited to, a change in the ownership of the Premises,
and (ii) levied or assessed on machinery or equipment provided by Lessor to
Lessee pursuant to this Lease.
10.2 Taxes.
(a) Payment of Taxes. Lessor shall pay the Real Property Taxes
applicable to the Premises.
(b) Additional Improvements. Notwithstanding anything to the
contrary in this Paragraph 10.2. Lessee shall pay to Lessor upon demand therefor
the entirety of any increase in real Property Taxes assessed by reason of
Alterations on Utility Installations placed upon the Premises by Lessee or at
Lessee's request.
10.4-14
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Tax Increase for all
of the land and improvements included within the tax parcel assessed, such
proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.
10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency,
all taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause its Lessee Owned Alterations and
Utility Installations, Trade Fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property of
Lessor. If any of Lessee's said property shall be assessed with Lessor's real
property, Lessee shall pay Lessor the taxes attributable to Lessee's property
within 10 days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.
11. Utilities and Services. Lessee shall pay for all water, gas, heat, light,
power, telephone, trash disposal and other utilities and services supplied to
the Premises, together with any taxes thereon. If any such services are not
separately metered or billed to Lessee, Lessee shall pay a proportion to be
reasonably determined by Lessor, of all charges jointly metered or billed. There
shall be no abatement of rent and Lessor shall not be liable in any respect
whatsoever for the inadequacy, stoppage, interruption or discontinuance of any
utility or service due to riot, strike, labor dispute, breakdown, accident,
repair or other cause beyond Lessor's reasonable control or in cooperation with
governmental request or directions.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent, which consent shall not be unreasonably
withheld.
(b) Unless Lessee is a corporation and its stock is publicly
traded on a national stock exchange, a "change in the control" of Lessee shall
constitute an assignment requiring consent. A "change in control" shall mean and
shall be deemed to have taken place if: (i) any individual, entity or group
(within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934 (the "Exchange Act") becomes the beneficial owner of shares of
Lessee and/or Lessee's ultimate parent having 50% or more of the total number of
votes that may be cast for the election of directors of Lessee and/or Lessee's
ultimate parent (or 20% in the event such individual, entity or group is engaged
in the solid waste collection, transfer and/or disposal business in competition
with Lessor or Lessor's parent or subsidiaries), other than as a result of any
acquisition through a bona fide sale of shares of Lessee and/or Lessee's
ultimate parent to the public, or (ii) a change in the composition of the Board
of Directors of Lessee and/or Lessee's ultimate parent (the "Board") such that
the individuals who, as of the date of this Lease, constitute the Board (the
Board as of such date shall be hereafter referred to as the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board; provided
however, for purposes of this Paragraph, that any individual who becomes a
member of the Board subsequent to the date hereof whose election, nomination for
10.4-15
election by Lessee's or Lessee's ultimate parent's shareholders, was approved by
a vote of at least a majority of those individuals who are members of the Board
and who were also members of the Incumbent Board (or deemed to be pursuant to
this proviso) shall be considered as though such individual was a member of the
Incumbent Board; but provided further, that any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board shall
not be so considered as a member of the Incumbent Board.
(c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merge, sale, acquisition, financing, transfer,
leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25%
of such Net Worth as it was represented at the time of the execution of this
Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, whichever was or is greater, shall be considered an
assignment of this Lease to which Lessor may withhold its consent. "Net Worth of
Lessee" shall mean the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles.
(d) An assignment or subletting without consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable
Breach without the necessity of any notice and grace period. If Lessor elects to
treat such nonapproved assignment or subletting as a noncurable Breach, Lessor
may either: (i) terminate this Lease, or (ii) upon 30 days written notice,
increase the monthly Base rent to 110% of the Base Rent then in effect. Further,
in the event of such Breach and rental adjustment all fixed and non-fixed rental
adjustments scheduled during the remainder of the Lease term shall be increased
to 110% of the scheduled adjusted rent.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, no assignment or subletting
shall: (i) be effective without the express written assumption by such assignee
of the obligations of Lessee under this Lease or without such Sublessee
acknowledging that its sublease is subject to this Lease (ii) release Lessee of
any obligations hereunder, or (iii) alter the primary liability of Lessee for
the payment of Rent or for the performance of any other obligations to be
performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for assessed Default or Breach.
(c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee or anyone else responsible for the performance
of Lessee's obligations under this Lease, including any assignee or Sublessee,
without first exhausting Lessor' remedies against any other person or entity
responsible therefor to Lessor, or any security held by Lessor.
(e) Each request for consent to an assignment or subletting shall
be in writing, accompanied by information relevant to Lessor's determination as
to the financial and operational responsibility and appropriateness of the
10.4-16
proposed assignee or Sublessee, including but not limited to the determination
as to the financial and operational responsibility and appropriateness of the
proposed assignee or Sublessee, including but not limited to the intended use
and/or required modification of the Premises, if any, together with a fee of
$500 as consideration for Lessor's considering and processing said request.
Lessee agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested. (See also Paragraph 36).
(f) Any assignee of, or Sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed to
have assumed (or been made subject to) and agreed to conform and comply with
each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.
(g) Lessor's consent to any assignment or subletting shall not
transfer to the assignee or Sublessee any Option granted to the original Lessee
by this Lease unless such transfer is specifically consented to by Lessor in
writing. (See Paragraph 39.2).
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein;
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided, however,
that until a Breach shall occur in the performance of Lessee's obligations,
Lessee may collect said Rent. In the event that the amount collected by Lessor
exceeds Lessee's obligations any such excess shall be refunded to Lessee. Lessor
shall not, by reason of the foregoing or any assignment of such sublease, nor by
reason of the collection of Rent, be deemed liable to the Sublessee for any
failure of Lessee to perform and comply with any Lessee's obligations to such
Sublessee. Lessee hereby irrevocably authorized and directs any such Sublessee,
upon receipt of a written notice from Lessor stating that a Breach exists in the
performance of Lessee's obligations under this Lease, to pay to Lessor all Rent
due and to become due under the sublease. Sublessee shall rely upon any such
notice from Lessor and shall pay all Rents to Lessor without any obligation or
right to inquire as to whether such Breach exists, notwithstanding any claim
from Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its option,
require Sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the Sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
Sublessee to such Sublessor or for any prior Defaults or Breaches of such
Sublessor.
(c) Any matter requiring the consent of the Sublessor under a
sublease shall also require the consent of Lessor, if Lessor's consent for such
matter would be required hereunder.
(d) No Sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach
by Lessee to the Sublessee, who shall have the right to cure the Default of
Lessee within the Grace period, if any, specified in such notice. The Sublessee
shall have a right of reimbursement and offset from and against Lessee for any
such Defaults cured by the Sublessee.
10.4-17
13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" is defined as a failure by the Lessee
to comply with or perform any of the terms, covenants, or conditions under this
Lease, as well as a failure by the Lessee to comply with or perform any of the
terms, covenants, obligations or conditions under the "Recycle Agreement" (as
defined in Exhibit "B" attached hereto and incorporated herein). A breach is
defined as the occurrence of one or more of the following Defaults, and the
failure of Lessee to cure such Default within any applicable grace period
(provided, however, that Lessor shall not be required to provide more than three
(3) written notices of Default and a cure period in any twelve (12) month period
during the Term or more than one (1) written notice of Default and a cure period
in the event such Default may adversely affect Lessor's permits and approvals):
(a) The abandonment of the Premises; or the vacating of the
Premises.
(b) The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, where such failure continues for a period of 30 days following
written notice to Lessee, or to fulfill any obligation under this Lease or the
Recycle Agreement which endangers or threatens life or property, where such
failure continues for a period of 3 business days following written notice to
Lessee.
(c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) an
Estoppel Certificate, (v) a requested subordination, (vi) any document requested
under Paragraph 42, (vii) material safety data sheets (MSDS), or (viii) any
other documentation or information which Lessor may reasonably require of Lessee
under the terms of this Lease, where any such failure continues for a period of
10 days following written notice to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, other than those described in subparagraphs 13.1(a),
(b) or (c) above, where such Default continues for a period of 30 days after
written notice (except in the event any such Default may adversely affect
Lessor's permits or approvals for its operations, in which event the period
shall be five (5) days or such shorter period of time set forth in any notice of
violation from a governmental entity).
(e) The occurrence of any of the following events: (i) the making
of any general arrangement or assignment for the benefit of creditors; (ii)
becoming a "debtor" as defined in 11 U.S.C. ss.101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within 60 days); (iii) the appointment of a trustee or receiver to
take possession of substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease, where possession is not restored to
Lessee within 30 days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where such seizure is not discharged within 30
days; provided, however, in the event that any provision of this subparagraph
(e) is contrary to any applicable law, such provision shall be of no force or
effect, and not affect the validity of the remaining provisions.
(f) The discovery that any financial statement of Lessee given to
Lessor was materially false.
(g) A Default by Lessee as to the terms, covenants, conditions or
provisions of the Recycle Agreement, where such Default continues beyond any
applicable notice and cure period.
10.4-18
13.2 Remedies. If Lessee fails to perform any of its affirmative duties
or obligations, within any notice and cure period provided herein (or in case of
an emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, Insurance policies, or governmental licenses, permit
or approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs
and expenses incurred by Lessor in such performance upon receipt of an invoice
therefore. In the event of a Breach, Lessor may, with or without further notice
or demand, except as otherwise required by this Paragraph, and without limiting
Lessor in the exercise of any right or remedy which Lessor may have by reason of
such Breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent. Efforts by Lessor to mitigate damages
caused by Lessee's Breach of this Lease shall not waive Lessor's right to
recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.2 was
not previously given a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.
(b) Continue the Lease and Lessee's right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or assign,
subject only to reasonable limitations. Act of maintenance, efforts to relet,
and/or the appointment of a receiver to protect the Lessor's interests, shall
not constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available under the
laws or judicial decisions of the state wherein the Premises are located,
including any rights available to Lessor under California Civil Code section
1954.2. The expiration or termination of this Lease and/or the termination of
10.4-19
Lessee's right to possession shall not relieve the Lessee from liability under
any indemnity provisions of this Lease as to matters occurring or accruing
during the Term hereof or by reason of Lessee's occupancy of the Premises.
13.3 Intentionally Deleted.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
may include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 10 days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall immediately pay
to Lessor a one-time late charge equal to 5% of each such overdue amount or
$100, whichever is greater. The Parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of such late payment. Acceptance of such late charge by Lessor shall in
no event constitute a waiver of Lessee's Default or Breach with respect to such
overdue amount, nor prevent the exercise of any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder, whether
or not collected, for 3 consecutive installments of Base Rent, then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at
Lessor's option, become due and payable quarterly in advance.
13.5 Interest. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within 30 days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the 31st day after it was due as to non-scheduled
payments. The interest ("Interest") charged shall be computed at the rate of 10%
per annum but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided for in
Paragraph 13.4
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than 10% of the Building, or more than 25% of that portion
of the Premises not occupied by any building, is taken by Condemnation, Lessee
may, at Lessee's option, to be exercised in writing within 10 days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within 10 days after the condemning authority shall have taken
possession) terminates this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
10.4-20
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefore. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.
15. Brokerage Fees. Lessee and Lessor each represent and warrant to the other
that it has had no dealings with any person, firm, broker of finder in
connection with this Lease, and that no one is entitled to any commission or
finder's fee in connection herewith. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the Indemnifying Party, including any costs, expenses, attorneys' fees
reasonably incurred with respect thereto.
16. Estoppel Certificates.
(a) Lessee (as "Responding Party") shall within 10 days after
written notice from the Lessor (the "Requesting Party") execute, acknowledge and
deliver to the Requesting Party a statement in writing in form similar to the
then most current "Estoppel Certificate" form published by the American
Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
(b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such 10 day period, the Requesting Party may execute
an Estoppel Certificate stating that: (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party, (ii)
there are no uncured defaults in the Requesting Party's performance and (iii) if
Lessor is the Requesting Party, not more than one month's rent has been paid in
advance. Prospective purchasers and encumbrancers may rely upon the Requesting
Party's Estoppel Certificate, and the Responding Party shall be stopped from
denying the truth of the facts contained in said Certificate.
(c) If Lessor desire to finance, refinance, or sell the Premises,
or any part thereof, Lessee shall deliver to any potential lender or purchaser
designated by Lessor such financial statements as may be reasonably required by
such lender or purchaser, including but not limited to Lessee's financial
statements for the past 3 years. All such financial statements shall be received
by Lessor and such lender or purchaser and shall be used only for the purposes
herein set forth, and shall be kept confidential at all times.
17. Definition of Lessor. The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises. In the event
of a transfer of Lessor's title or interest in the Premises or this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon
such transfer or assignment and delivery of the Security Deposit, as aforesaid,
the prior Lessor shall be relieved of all liability with respect to the
obligations and/or covenants under this Lease thereafter to be performed by the
Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease
to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
10.4-21
19. Days. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability. The obligations of Lessor under this Lease shall
not constitute personal obligations of Lessor or its partners, members,
directors, officers or shareholders, and Lessee shall look to the Premises, and
to no other assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease, and shall not seek recourse against Lessor's
partners, members, directors, officers or shareholders, or any of their personal
assets for such satisfaction.
21. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease and the "Recycle
Agreement" (hereinafter defined) is the entire agreement between the Parties
with respect to any matter mentioned herein, and no other prior or
contemporaneous agreement of understanding shall be effective.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this
Lease or applicable law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular, certified or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, and shall be deemed
sufficiently given if served in a manner specified in this Paragraph 23. The
addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notice. Either Party may by written
notice to the other specify a different address for notice, except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.
23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given 48 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal
Service or courier. If notice is received on a Saturday, Sunday or legal
holiday, it shall be deemed received on the next business day.
24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of any estoppel to enforce the provision
or provisions of this Lease requiring such consent. The acceptance of Rent by
Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by
Lessee may be accepted by Lessor on account of moneys or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessor at or
before the time of deposit of such payment, and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.
10.4-22
25. Intentionally Deleted.
26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
150% of the Base Rent applicable immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by Lessor to
any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. Covenants and Conditions; Construction of Agreement. All provisions of this
Lease to be observed or performed by Lessee are both covenants and conditions.
In construing this Lease, all headings and titles are for the convenience of the
Parties only and shall not be considered a part of this Lease. Whenever required
by the context, the singular shall include the plural and vice versa. This Lease
shall not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole, as if both Parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Devices"), now or
hereinafter placed upon the Premises, to any and all advances made on the
security hereof, and to all renewals, modifications, and extensions thereof.
Lessee agrees that the holders of any such Security Devices (in this Lease
together referred to as "Lender") shall have no liability or obligation to
perform any of the obligations of Lessor under this Lease. Any Lender may elect
to have this Lease and/or any Option granted hereby superior to the lien of its
Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding
the relative dates of the documentation or recordation thereof.
30.2 Attornment. In the event that Lessor transfer title to the
Premises, or the Premises are acquired by another upon the foreclosure or
termination of a Security Device to which this Lease is subordinated (i) Lessee
shall attorn to the term hereof, or, at the election of such new owner, this
Lease shall automatically become a new Lease between Lessee and such new owner,
upon all of the terms and conditions hereof, for the remainder of the term
hereof, and (ii) Lessor shall thereafter be relieved of any further obligations
hereunder and such new owner shall assume all of Lessor's obligations hereunder,
except that such new owner shall not (a) be liable for any act or omission of
any prior lessor or with respect to events occurring prior to acquisition of
ownership; (b) be subject to any offsets or defenses which Lessee might have
against any prior lessor, (c) be bound by prepayment of more than one month's
rent or (d) be liable for the return of any security deposit paid to any prior
lessor.
10.4-23
30.3 Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.
30.4 Request for Nondisturbance Agreement. With respect to each
Security Device that may encumber the Premises at or after the commencement of
the Term, Lessor agrees that following its receipt of a written request by
Lessee, Landlord will ask the holder of the Security Device to grant to Lessee a
"nondisturbance agreement" in the usual form of such holder. The term
"nondisturbance agreement" as used herein shall mean, in general, an agreement
that as long as Lessee is not in default under this Lease, this Lease will not
be terminated if such holder acquires title to the Premises by reason of
foreclosure proceedings or acceptance of a deed in lieu of foreclosure, provided
that Lessee attorns to the holder in accordance with its requirements. Except
for making such request, Landlord will be under no duty or obligation hereunder,
nor will the failure or refusal of such holder to grant a nondisturbance
agreement render Lessor liable to Lessee, or affect this Lease, in any manner.
Lessee shall bear all costs and expenses, including reasonable attorneys' fees
and costs, of such holder in connection with a nondisturbance agreement.
31. Attorney's Fees. If any Party brings an action or proceeding involving the
Premises whether founded in tort, contract or equity, or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding is pursued to decision or judgment. The term
"Prevailing Party" shall include, without limitation, a Party who substantially
obtains or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party of its claim or
defense. The attorneys' fees award shall not be computed in accordance with any
court fee schedule, but shall be such as to fully reimburse all attorneys' fees
reasonably incurred. In addition, Lessor shall be entitled to attorneys' fees,
costs and expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach ($200
is a reasonable minimum per occurrence for such services and consultation).
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises, at any time in the case of an emergency,
and otherwise at reasonable times after reasonable prior notice, for the purpose
of showing the same to prospective purchasers, lenders, or tenants, and making
such alterations, repairs, improvements or additions to the Premises as Lessor
may deem necessary or desirable and the erecting, using and maintaining of
utilities, services, pipes and conduits through the Premises and/or other
premises so long as there is no material adverse effect to Lessee's use of the
Premises. All such activities shall be without abatement of rent or liability to
Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction
upon the Premises without Lessor's prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
permit an auction.
10.4-24
34. Signs. Lessor may place on the Premises ordinary "For Sale" signs at any
time and ordinary "For Lease" signs during the last 6 months of the term hereof.
Lessee shall not place any sign upon the Premises without Lessor's prior written
consent. All signs must comply with all Applicable Requirements.
35. Termination; Merger. Unless specifically stated in writing by Lessor, the
voluntary or other surrender of this Lease by Lessee, the mutual termination or
cancellation hereof, or a termination hereof by Lessor for Breach by Lessee,
shall automatically terminate any sublease or lesser estate in the Premises;
provided, however, that Lessor may elect to continue any one or all existing
subtenancies. Lessor's failure within 10 days following any such event to elect
to the contrary by written notice to the holder of any such lesser interest,
shall constitute Lessor's election to have such event constitute the termination
of such interest.
36. Consents. Except as otherwise provided herein, whenever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs
and expenses (including but not limited to architects', attorneys', engineers'
and other consultants' fees) incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent, including but not limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefore. Lessor's consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any then existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent. The failure to specify herein any particular
condition to Lessor's consent shall not preclude the imposition by Lessor at the
time of consent of such further contract conditions as are then reasonable with
reference to the particular matter for which consent is being given.
37. Intentionally Deleted.
38. Quiet Possession. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.
39. Options. If Lessee is granted an Option, as defined below, then the
following provisions shall apply:
39.1 Definition. "Option" shall mean: the right to extend the term of
this Lease.
39.2 Options Personal To Original Lessee. Any Option granted to Lessee
in this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.
39.3 Multiple Options. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised unless
the prior Options have been validly exercised.
10.4-25
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option: (i)during
the period commencing with the giving of any notice of Default and continuing
until said Default is cured, (ii) during the period of time any Rent is unpaid
(without regard to whether notice thereof is given Lessee), (iii) during the
time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has
been given 3 or more notices of separate Default, whether or not the Defaults
are cured, during the 12 month period immediately preceding the exercise of the
Option.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or
effect, notwithstanding Lessee's due and timely exercise of the Option, if,
after such exercise and prior to the commencement of the extent or term or
completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days
after such Rent becomes due (without any necessity of Lessor to give notice
thereof, or (ii) if Lessee commits a Breach of this Lease.
40. Multiple Buildings. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by and conform to all
reasonable rules and regulations which Lessor may make from time to time to the
management, safety, and care of said properties, including the care and
cleanliness of the grounds and including the parking, loading and unloading of
vehicles, and to cause its employees, suppliers, shippers, customers,
contractors and invitees to so abide and conform. Lessee also agrees to pay its
fair share of common expenses incurred in connection with such rules and
regulations.
41. Security Measures. Lessee hereby acknowledges that the Rent payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. Reservations. Lessor reserves to itself the right from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause their recordation of
parcel maps and restrictions, so long as such easements, rights, dedications,
maps and restrictions do not unreasonably interfere with the use of the Premises
by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. Force Majeure. In the event that either party hereto shall be delayed,
hindered or prevented from the performance required hereunder (other than the
payment of Rent) by reason of any "Force Majeure" (hereinafter defined) event,
such party shall be excused for the period of time equivalent to the delay
caused by such event. "Force Majeure" shall mean any event or condition having a
material and adverse effect on the rights, duties and obligations of either
party hereunder, or on the Premises, the design, construction, equipping,
start-up, operation, ownership or possession of any or all of them, if such
event or condition is beyond the reasonable control, and not the result of
willful or negligent action or omission or a lack of reasonable diligence, of
the party asserting the Force Majeure; provided that the contesting in good
faith of any event or condition constituting a change in law shall not
10.4-26
constitute or be construed as a willful or negligent action or a lack of
reasonable diligence of such party. The foregoing provisions shall not be
construed to require that either party observe a higher standard of conduct than
required by the usual and customary standards of the industry in question, as a
condition to claiming the existence of a Force Majeure. Such events or
conditions constituting a Force Majeure event may include, but shall not be
limited to, circumstances of the following kind: an act of God, epidemic,
landslide, lightning, hurricane, earthquake, fire, explosion, storm, flood or
similar occurrence, an act of war, terrorism, effects of nuclear radiation,
blockade, insurrection, riot, civil disturbance or similar occurrences, strikes,
lockouts, work slowdowns or stoppages, or similar labor difficulties affecting
either party hereunder, or the operation of the leased Premises, or otherwise
affecting or impacting the performances of either party's contractors and
suppliers; or a change in law, including, without limitation, a change in
California Law AB 939 which modifies or affects Lessor's obligations with
respect to recycling or disposal of recyclable materials.
44. Authority; Multiple Parties; Execution.
(a) If either party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
fully authorized to execute and deliver this Lease on its behalf. Each party
shall, within 30 days after request, deliver to the other party satisfactory
evidence of such authority.
(b) If this Lease is executed by more than one person or entity as
"Lessee", each such person or entity shall be jointly and severally liable
hereunder. It is agreed that any one of the named Lessees shall be empowered to
execute any amendment to this Lease, or other document ancillary thereto and
bind all of the named Lessees, and Lessor may rely on the same as if all of the
named Lessees had executed such document.
(c) This Lease may be executed by the Parties in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument. A facsimile copy of any signature hereto
shall be deemed an original.
45. Conflict. Any conflict between the printed provisions of this Lease and
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
46. Other. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.
48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT
OF THIS AGREEMENT.
10.4-27
49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease is not attached to this Lease.
50. Americans with Disabilities Act. Lessor makes no warranty or representation
as to whether or not the Premises comply with ADA or any similar legislation. In
the event that Lessee's use of the Premises requires modifications or additions
to the Premises in order to be in ADA compliance, Lessee agrees to make any such
necessary modifications and/or additions at Lessee's expense.
51. Security Deposit. Upon execution of this Lease, Lessee shall pay Lessor
prepaid rent equal to four (4) months Base Rent ($63,600.00) ("Prepaid Rent")
and a security deposit equal to two (2) months Base Rent ($31,800.00) ("Security
Deposit"). Except as otherwise set forth herein, eighteen (18) months following
the date of this Lease, and upon the mutual agreement of both parties, the
Prepaid Rent ($63,600.00) will be returned to the Lessee in one lump sum, and
the Security Deposit ($31,800.00) shall be retained by Lessor.
52. Rent Increases. Base Rent shall be adjusted annually on a calendar year
basis, effective January 1, 2006 (the "Adjustment Date"), by the product of the
monthly Base Rent for the month prior to the Adjustment Date, multiplied by a
fraction, the numerator of which shall be the Consumer Price Index ("CPI") for
the month of the Adjustment Date, and the denominator shall be the CPI published
for the corresponding month of the year prior to the Adjustment Date (provided
that the denominator for the first adjustment shall be the CPI published for the
month and year of the date of this Lease). For purposes of this Paragraph, the
term CPI shall mean the "Los Angeles-Anaheim-Riverside CPI Index, All Urban
Consumer", as published by the Bureau of Labor Statistics of the United States
Department of Labor ("BLS") or any successor agency. In the event that the index
for the most recent comparison month is not available as of any Adjustment Date,
monthly Base Rent payments shall continue at the rate in effect immediately
preceding the Adjustment Date until the index for such comparison month is
available. On the monthly Base Rent payment date which follows the date that the
index for such comparison month is available, monthly Base Rent shall be
adjusted retroactively to the Adjustment Date, and any accrued monthly Base Rent
shall be immediately due and payable. It is expressly agreed that the Base Rent
shall not be lower than the amount set forth in Paragraph 1.5 of this Lease.
53. Extension Options. The Term of this agreement may be extended for three (3)
additional periods of five (5) years each, upon the mutual written agreement of
both parties, for a total potential Term of twenty-five (25) years.
Notwithstanding the foregoing, Lessor shall have the unilateral right to extend
the Original Term for the first (1st) five (5) year extension period, upon
written notice to Lessee prior to the expiration of the Original Term.
54. Hazardous Materials. Lessor represents and warrants, to its knowledge and
without investigation, that the Premises are free of Hazardous Substances.
Lessee shall not dump, discharge, allow to leak, evaporate or otherwise escape
onto the premises any noxious, poisonous or otherwise hazardous materials,
chemicals and/or gases. Lessee agrees to be strictly liable for all liability,
damage, costs (including reasonable attorneys' fees and costs) and expenses of
remediation, clean up, fines, compliance costs and/or any other damages related
to Lessee's use or storage of any hazardous materials on the Premises. Lessee
shall not be liable under this Lease in the event the escape of Hazardous
Substances are caused by Lessor.
10.4-28
55. Clarification. It is understood by both Lessor and Lessee that the following
has been discussed and is agreed to by both parties:
A. Exhibit "A" notes the main entrance to the Disposal and
Recycling Plant. Lessor acknowledges that there will be approximately 1,000 -
2,000 disposal trucks and public vehicles per day passing by the Premises.
B. Lessee shall not in any way obstruct Lessor's vehicles or
public vehicles from passing by or through the Premises.
C. Lessee shall not park vehicles in any space, except for the
parking spaces specifically designated for Lessee parking only, as noted on
Exhibit "A". Lessee shall not be allowed at any time to park in the street.
D. Lessee will activate the fire alarm system in Lessee's name and
is responsible for all of its utilities.
E. Lessor shall be responsible for the landscape throughout the
duration of the lease.
56. Recordation. Lessee shall not record this Lease, or a memorandum thereof,
without the prior written consent of Lessor, which may be withheld in Lessor's
sole discretion.
57. Recycle Agreement. Lessor and Lessee are parties to that certain Waste
Recycle Agreement dated June 27, 2003 (the "Recycle Agreement"). In the event of
a conflict between any of the terms and provisions of this Lease, and any of the
terms and provisions of the Recycle Agreement, the terms and provisions of this
Lease shall prevail. It is the intent of the parties hereto that the term of the
Recycle Agreement and the term of this Lease shall be coterminous. Upon the
expiration or earlier termination of this Lease, the Recycle Agreement shall
automatically terminate without the necessity for notice. Similarly, upon the
expiration or earlier termination of the Recycle Agreement, this Lease shall
automatically terminate without the necessity for notice.
58. Permits and Approvals. Lessee shall be solely responsible for obtaining all
required land use approvals and permits to construct any improvements or make
any alterations at the Premises, and to operate the Premises. The cost of all
permits, authorizations or approvals for the use of the Premises, including
without limitation all capital and maintenance expenditures associated with
making the Premises suitable for the implementation of the terms of the Recycle
Agreement and the Lease, shall be the sole expense of Lessee. Promptly following
the date of this Lease, Lessee shall make any necessary applications and use
commercially reasonable efforts to obtain any necessary permits or approvals for
the construction, development, use and operation of the Premises in accordance
with this Lease and the Recycle Agreement (the "Approvals"). Lessee shall
provide to Lessor copies of any applications for approvals or permits, and
status reports of the same, upon Lessor's request. Lessee shall not apply for
any change in the land use or zoning designation of the Premises without the
prior written consent of Lessor. Lessee shall provide Lessor with bi-weekly
reports on the status of all permits and approvals for the Premises and the use
and occupancy thereof by Lessee; provided, however, that the failure by Lessee
to materially comply with the requirement of providing bi-weekly status reports
shall not constitute a Breach or Default of this Lease. Lessor acknowledges that
Lessor's cooperation and assistance may be requested by Lessee, and Lessor
agrees to reasonably cooperate and assist Lessee in good faith, at no cost or
expense to Lessor.
59. RMSW. Lessee represents and warrants that it has evaluated the waste stream
to be delivered by Lessor pursuant to the Recycle Agreement, that it is familiar
10.4-29
with the composition of the "RMSW" (as defined in the Recycle Agreement) that
will be delivered to Lessee by Lessor at the Premises, and Lessee has determined
based on its investigation and evaluation that the RMSW is acceptable and
suitable to Lessee for the purposes set forth in the Recycle Agreement and this
Lease.
60. Delivery of RMSW. Promptly following Lessor's receipt of the Commencement
Notification, Lessor will deliver to Lessee at the Premises, 500 TPD of RMSW, or
such other amount as agreed to by the parties upon reasonable notice to the
other party.
Lessor shall deliver loads of RMSW to Lessee at the Premises on a 24
hour per day, six (6) day per week basis, as reasonably requested by Lessee, but
excluding Sundays and legal holidays. To the extent reasonably requested by
Lessee and reasonably agreeable to Lessor, Lessor shall provide more than 500
tons of RMSW on Fridays and Saturdays, to enable Lessee to operate on Sundays.
The RMSW shall be placed in a location on the Premises reasonably designated by
Lessor.
The composition of the RMSW may be adjusted as mutually agreed upon in
writing by Lessor and Lessee; provided, however, that nothing contained in this
Agreement shall require Lessor to sort or otherwise process the RMSW to be
delivered to Lessee in a manner which is different than the normal and customary
process used by Lessor in its operations which Lessee has evaluated and
warranted is suitable for purposes of the Recycle Agreement and this Lease.
Payment of net tipping fees, as required under the Recycle Agreement,
shall be made to Lessee in U.S. Dollars as per the reasonable direction of
Lessee. Terms of payment shall be net 30 days following Lessee's invoice date.
All amounts which are not paid by Lessor as and when due and payable shall be
subject to a late charge equal 1.5 (1.5%) percent per month (or if less, the
maximum allowed by applicable law).
61. Use of Premises. Lessor will have final approval over the plans and
specifications for the construction, use and occupancy of the Premises by
Lessee. Such approval may include the attachment of conditions to the operation
of the Premises which govern, without limitation, how vehicles enter and exit
the Premises, how "WWA Residual" (as defined in the Recycle Agreement) is picked
up/loaded, the exterior appearance of the Premises, and all regulatory
compliance issues.
62. Duties and Obligations of Lessee. Within sixty (60) days following the date
of this Lease, Lessee shall deliver to Lessor for its review and approval, plans
and specifications for any alterations or improvements to the Premises which
will be made by Lessee. Lessor will review such plans and specifications within
fifteen (15) days following the date of receipt of complete copies thereof, and
provide its approval, rejection or suggested modifications to the plans and
specifications provided by Lessee. Lessor shall have the right to attach
reasonable conditions to the approval of such plans and specifications.
Within two hundred forty (240) days following the date of this Lease
(the "Permitting and Construction Period"), Lessee shall have (a) obtained all
necessary Approvals for the construction, alteration, use and occupancy of the
Premises, and (b) completed any alterations or improvements to the Premises.
Upon Lessee's completion of items (a) and (b) above, Lessee shall send to Lessor
10.4-30
written notification that Lessee has satisfied items (a) and (b), and is ready
and able to begin accepting RMSW at the Premises in accordance with the Recycle
Agreement and this Lease (the "Commencement Notification"). In the event Lessee
does not deliver to Lessor the Commencement Notification on or before the
expiration of the Permitting and Construction Period, then Lessor shall have the
right, but not the obligation, to terminate this Lease and the Recycle Agreement
upon written notice to Lessee, delivered prior to the date Lessor receives a
Commencement Notification.
Lessee shall accept and process during the Term of this Lease and the
Recycle Agreement the RMSW delivered to the Premises from Lessor, in the amounts
set forth above. Lessor shall not allow any RMSW to accumulate at the Premises,
and shall process such amounts as the same are received. In the event Lessee
fails to process the amount of RMSW delivered to the Premises by Lessor, as
required by this Lease and the Recycle Agreement, and Lessor is required to
retrieve such amounts, then Lessee shall be responsible for any costs or
expenses incurred by Lessor in connection therewith, including, without
limitation, any fees, costs or expenses to retrieve, load and transfer (and in
any event to exclude disposal cost) the RMSW previously delivered to the
Premises which remains unprocessed. In the event Lessee fails accept and process
the RMSW as required by this Lease and the Recycle Agreement, or fails to
reimburse such costs and expenses to Lessor following any written notice and
cure period provided below, Lessor shall have the right, in addition to any
other remedy available to Lessor hereunder, to either (a) terminate this Lease
and the Recycle Agreement (in which event Lessor shall have the right to keep
any Prepaid Rent or Security Deposit), (b) suspend the delivery of RMSW to
Lessee until such time as Lessor deems it appropriate to continue, or (c) offset
any such costs and expenses incurred by Lessor from any payments due to Lessee
from Lessor hereunder.
Lessee shall store any large or bulky items inadvertently delivered in
the RMSW by Lessor which cannot be processed, on the Premises in a location and
manner reasonably acceptable to Lessor, until such materials can be removed by
Lessor.
63. Compliance. If Lessor determines that Lessee's operations are not in
compliance with any applicable law or regulation, or determines that Lessee's
continued operations would place or threaten to place Lessor's operations in
non-compliance with its permits and approvals, and such failure is not remedied
within any notice and cure period provided below, then Lessor may either (a)
terminate this Lease and the Recycle Agreement upon written notice to Lessee, or
(b) temporarily suspend delivery of RMSW to Lessee until such time as Lessor
determines that the non-compliance or potential non-compliance issue has been
addressed to Lessor's satisfaction.
64. Intentionally Deleted.
65. Additional Facility. Subject always to the satisfaction of each of the
conditions set forth in this Paragraph, and provided that Lessee is not in
default or breach of this Lease or the Recycle Agreement, and Lessor and Lessee
acknowledge a mutual desire to expand the relationship between the parties, to
an additional facility located in Orange County, California which is capable of
accepting and processing up to 2,000 TPD of Lessor's RMSW (the "Additional
Facility"). In the event Lessee locates a new facility in Orange County,
California, which is suitable for the Additional Facility, Lessee shall notify
10.4-31
Lessor and provide to Lessor all relevant information regarding the location of
the site, and the proposed design of the Additional Facility. The location of
the Additional Facility must be in Orange County, California, and the site shall
be reasonably acceptable to Lessor. Following the approval of the site by
Lessor, Lessor and Lessee shall undertake the negotiation of a new agreement for
the Additional Facility, on terms which are acceptable to both parties. The term
of such agreement shall be a declining term, equal to (x) ten (10) years, less
(y) the number of years expired under this Lease. For example, if the new
agreement is executed by the parties two (2) years from the date of this Lease,
the term of such new agreement shall be eight (8) years. In the event the site
is acceptable to Lessor, and the parties have executed a new agreement for the
Additional Facility on terms which are acceptable to each party, Lessee shall
locate, design and construct the new facility for the acceptance and processing
of Lessor's RMSW.
66. Notices. Any notice to the parties required or permitted under this Lease or
the Recycle Agreement shall be given in writing and may be delivered in person
(by hand or by courier) or may be sent by certified mail or reputable overnight
courier, to the following addresses:
If to TI: Taormina Industries, LLC
1131 North Blue Gum Street
Anaheim, CA 92806
Attn: Thomas Vogt, President
With a copy to: Republic Services, Inc.
110 S.E. 6th Street, 28th Floor
Ft. Lauderdale, FL 33301
Attn: General Counsel
If to WWA: World Waste of Anaheim
13520 Evening Creek Drive, Suite 130
San Diego, CA 92128
Attn: Thomas L. Collins, CEO
Notices sent by certified mail, return receipt requested, shall be deemed given
on the date of delivery shown on the receipt card, or if no delivery date is
shown, the postmark thereon. If sent by regular mail the notice shall be deemed
given 48 hours after the same is addressed as required herein and mailed with
postage prepaid. Notices delivered by overnight courier that guarantees next day
delivery shall be deemed given 24 hours after delivery of same to the courier.
10.4-32
67. Inventory. Lessee shall promptly remove from the Premises all material
resulting from the processing of RMSW in accordance with the Recycle Agreement
and this Lease that is suitable for beneficial reuse (the "Wet Lap"). Lessee
shall not store or retain inventory volumes of Wet Lap on the Premises which
exceeds the results from five (5) business days processing activities. Title to
all Wet Lap shall be transferred by Lessee to third parties for beneficial
reuse, as evidenced by a report delivered to Lessor by Lessee on a quarterly
basis during the Term.
68. Default by Lessee or Lessor under the Recycle Agreement. A "default" under
the Recycle Agreement is defined as a failure by either party to comply with or
perform any of the terms, covenants, conditions or obligations under the Recycle
Agreement, which default continues for a period of thirty (30) days following
written notice (except in the event any such default may adversely affect
Lessor's permits or approvals for its operations, in which case the notice and
cure period shall be five (5) days or such shorter period of time set forth in
any notice of violation from a governmental entity)). Notwithstanding the
foregoing, neither party shall be required to provide more than three (3)
written notices of default and a cure period in any twelve (12) month period (or
more than one (1) written notice of default and a cure period in any twelve (12)
month period in the event any such default may adversely affect Lessor's permits
and approvals).
In the event of a default by Lessee, Lessor shall have any or all of
the following remedies:
(a) terminate the Recycle Agreement and this Lease upon written notice
to Lessee;
(b) perform such duty or obligation on Lessee's behalf, whereupon
Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses
incurred by Lessor in such performance upon the receipt of an invoice therefore
(failing which Lessor shall have the right to offset such unpaid amount from any
amounts payable to Lessee under this Lease or the Recycle Agreement);
(c) withhold performance under this Lease or the Recycle Agreement
until such time as the default by Lessee has been cured; or
(d) pursue any other remedy now or hereafter available under the laws
or judicial decisions of the State of California.
In the event of a default by Lessor, Lessee shall have the right to
either (a) terminate this Lease and the Recycle Agreement, (b) pursue any other
remedy now or hereafter available under the laws of the State of California, or
(c) withhold performance under this Lease or the Recycle Agreement until such
time as the default by Lessor has been cured; provided, however that the remedy
set forth in item (c) shall only be available to Lessee in connection with a
default by Lessor relating to the non-payment of any amounts due to Lessee under
this Lease or the Recycle Agreement, which non-payment does not relate to a
claim of default by Lessor against amounts owed to Lessee under this Lease or
the Recycle Agreement.
69. Termination Right. If, during the first eighteen (18) months following the
date of this Lease, Lessee reasonably determines that it is unable to continue
the project in accordance with this Lease and the Recycle Agreement, and
10.4-33
provided that Lessee is not then in default under this Lease or the Recycle
Agreement, Lessee shall have the right to terminate this Lease and the Recycle
Agreement upon written notice to Lessor, provided such notice is received by
Lessor on or before the last day of the eighteenth (18th) month following the
date of this Lease. Upon receipt of Lessee's notice, this Lease and the Recycle
Agreement shall terminate, provided, however, that Lessor shall retain the
Security Deposit as consideration for the agreement to allow Lessee to
terminate. In the event Lessee fails to deliver the written notice to Lessor as
set forth herein, Lessee's right to terminate this Lease and the Recycle
Agreement pursuant to this Paragraph 69 shall be deemed waived by Lessee.
70. Confidentiality and Proprietary Information.
70.1 The parties hereto acknowledge that, in the course of performing
their respective duties under this Lease and the Recycle Agreement, they may
obtain information relating to the other party which is of a confidential and
proprietary nature ("Proprietary Information"). Such Proprietary Information may
include, without limitation, the terms of the Recycle Agreement, trade secrets,
know-how, inventions, techniques, processes, programs, algorithms, schematics,
data, solid waste pricing, materials recovery processing, information, routing
information, customer lists, financial information and sales and marketing
plans. Each party an d its employees and agents shall, at all times, both during
the terms of this Lease and the Recycle Agreement and after their termination,
keep in trust and confidence all such Proprietary Information, and shall not use
such Proprietary Information other than as reasonably required in the course of
their duties as expressly provided in this Lease or the Recycle Agreement
("Permitted Us"); nor shall either party or its employees or agents disclose any
such Proprietary Information to any person or entity without the Discloser's (as
defined herein) prior written consent. The recipient of any Proprietary
Information ("Recipient") acknowledges that any such Proprietary Information
received shall be received as a fiduciary of the disclosing party ("Discloser").
Recipient shall not be bound by this Paragraph 70 with respect to information
Recipient can document (a) is or becomes generally known to the public through
no fault or breach of this Lease or the Recycle Agreement by the Recipient; (b)
is known to the Recipient at the time of disclosure without an obligation of
confidentiality; (c) is independently developed by the Recipient without access
to or use of the Discloser's Proprietary Information; or (d) is disclosed with
the prior written approval of the Discloser.
70.2 Notwithstanding the foregoing, each party may disclose Proprietary
Information of the other party under the following limited circumstances: (a) as
required by law; (b) pursuant to the order or requirement of a court,
administrative agency, or other governmental body, provided that the disclosing
party gives at least ten (10) court days prior written notice to the other
party, or immediate notice if the period to respond to such order or requirement
is less than 21 calendar days by means of facsimile transmission, electronic
mail or other expedited delivery to allow the other party to contest such order
or requirement with the prior written consent of the other party; and (d) as
required by or deemed advisable in connection with under state and federal
securities laws.
70.3 Notwithstanding anything contrary in this Lease or in the Recycle
Agreement, no license or other right is granted, either directly or indirectly,
by implication, estoppel or otherwise, to either party with respect to any
10.4-34
patents or patent applications, trademarks, copyrights, trade secrets, computer
programs, know-how, processes, mask works or other intellectual property rights
of the other party.
70.4 Neither party shall reverse assemble, decompile, reverse engineer
or otherwise attempt to derive the underlying trade secrets, ideas, algorithms,
processes, structure or organization from the other's Proprietary Information or
from any other information of the other party's.
71. Non-Competition and Right of First Refusal for Co-Ownership of Future
Projects. Lessor and Lessee agree that notwithstanding anything to the contrary
set forth in this Lease and the Recycle Agreement, the provisions of Paragraph
I. of the Recycle Agreement shall survive any termination of this Lease or the
Recycle Agreement, until the expiration of the then-existing Term of this Lease.
For example only, if this Lease and the Recycle Agreement is terminated by
Lessee on the twelfth (12th) month following the date of this Lease pursuant to
Paragraph 69 of this Lease, then the provisions of Paragraph I. of the Recycle
Agreement shall survive such termination and be applicable during the remaining
nine (9) years of the Original Term of this Lease.
72. Rent Deferral. The parties agree to waive the "Rent Deferral" as described
in Paragraph C. of the Recycle Agreement.
73. Conflict In the event of a conflict between the terms and provisions of the
Lease, and the terms and provisions of this Addendum, the terms and provisions
of this Addendum shall prevail.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
By LESSOR: By LESSEE:
Taormina Industries, LLC World Waste of Anaheim, Inc.
By:__________________________________ By:_______________________________________
Name Printed:________________________ Name Printed:_____________________________
Title:_______________________________ Title:____________________________________
Date:________________________________ Date:_____________________________________
10.4-35
Exhibit 10.5
World Waste of Anaheim, Inc.
Taormina Industries, LLC.
Waste Recycle Agreement
This Waste Recycle Agreement (hereinafter "Agreement"), dated June 27,
2003 (the "Effective Date") is made by and between World Waste of Anaheim, Inc.,
a California Corporation, (hereinafter "WWA") having its principal offices at
5567 Calumet Avenue, La Jolla, California 92037 and Taormina Industries, L.L.C.
(hereinafter "TI" as further defined below herein) a Delaware limited liability
company having it's principal place of business at 1131 North Blue Gum Street,
Anaheim, California 92806.
A. RECITALS
1. TI operates a large volume Material Recovery Facility (MRF) and
Transfer Station in Orange County and is a leading processor and
recycler of the solid waste stream in Southern California.
2. As a solid waste collection services provider for a number of cities,
TI is responsible for implementing diversion programs to reduce the
amount of solid waste from landfill disposal in order to assist its
public agency customers to meet the diversion goals and mandates of
AB939.
3. TI currently employs many proprietary and commercially available means
to recover material from the waste stream in order to provide diversion
for its customers who utilize the facility.
4. TI is continually exploring means to enhance recovery efforts, provide
additional diversion for its existing customers and provide diversion
opportunity for future customers.
5. WWA is the exclusive licensee of a process, which recovers materials
from the waste stream beyond the recovery levels of traditional solid
waste processing.
6. WWA has worked closely with TI for several years to develop and test
the viability of its exclusive licensed patented recovery process.
7. WWA is seeking a location for their first commercially viable facility
that can receive, process and recover material from the residuals
stream of the MRF.
8. TI desires to engage WWA's services on the terms and conditions set
forth herein.
9. WWA desires to process waste materials received from TI and is willing
to do so on the terms and conditions set forth herein.
Confidential and Proprietary
Subject to Confidentiality Agreement
Prohibiting Disclosure
Exhibit 10.5 - 1
10. It is TI's intention to deliver the agreed upon average tonnage as it
is WWA's intention to receive and process the agreed upon tonnage;
however, from time to time circumstances may occur, such as holidays,
which could briefly interrupt the intended even flow of waste
materials. Both parties to this Agreement will make their best efforts
to deliver and receive the agreed upon tonnage as it is in the best
interest of both parties to do so.
THEREFORE, in consideration of the above recitals and of the mutual
promises and conditions in this agreement, it is agreed as follows:
B. TERM OF CONTRACT
The term of this agreement shall be ten (10) years, with options for
three additional extensions of five (5) years each, exercisable by mutual
agreement of the parties, for a total potential term of 25 years. TI may agree
to extend the term of this Agreement pursuant to a written notification of the
extension served on WWA pursuant to section K(11) of this Agreement.
C. LEASE OF RECYCLING FACILITY
1. During the term of this Agreement the location of the recycling
facility shall be a structure on the TI property located at 2740 East
Coronado Street, Anaheim, California, or an equivalent and compatible
building approved in writing by both parties. TI agrees to cooperate
with and assist WWA in obtaining all required land use approvals and
modifications of existing TI permits; permits for modifications to the
existing buildings, easements, utility services, and permits to
construct, install equipment and operate the WWA facility on the above
identified TI property. The costs of all permits, authorizations or
approvals for the use of the TI facility, including without limitation
all capital and maintenance expenditures associated with making the
site suitable for the implementation of the terms of this Agreement,
shall be the sole expense of WWA.
2. WWA and TI agree that WWA will lease the proposed building for a term
of ten (10) years at the rental rate of $.53 per square foot ("the Base
Rent"), adjusted annually on a calendar year basis on January 1 of each
year using 100% of the "Los Angeles-Anaheim-Riverside CPI Index, All
Urban Consumers", as determined in the month of November preceding the
January anniversary date for adjustment of the Base Rent. WWA shall
have the option to renew the lease to coincide with the TERM OF
CONTRACT as delineated in section B of this Agreement. The parties
agree that the square footage of the facility under lease shall be
approximately 30,000 square feet, with an initial Base Rent of a
minimum of $15,900.00 per month (30,000 X $.53/ft.). In addition to the
Base Rent, the parties agree that WWA shall be responsible for the
payment of any additional or supplemental real estate taxes or
incremental operating costs directly associated with the WWA operation
resulting from the leased facility. Additionally WWA shall be
responsible for monthly service costs of all utilities serving the
leased facility. At TI's option, the additional taxes and incremental
Confidential and Proprietary
Subject to Confidentiality Agreement
Prohibiting Disclosure
Exhibit 10.5 - `2
operating expenses may be assessed on a monthly basis as additional
rent in addition to the Base Rent, or may be separately invoiced to WWA
on an annual or more frequent basis.
3. TI agrees to defer the Base Rent for the first twelve months of the
lease term as an accommodation to WWA. This first year's deferred Base
Rent shall be paid in 48 equal interest-free payments spread over the
next 48 months (4 years) of the 10 year term of the lease beginning in
the 13th month of the lease term.
4. TI agrees to assist to make any necessary changes to the existing
building for accommodation of the addition of the WWA processing
facility, so long as such changes do not impair or impede the conduct
of TI's other business operations at the TI site. WWA agrees that TI
has final approval of any and all building modifications, material
flows and the overall processing which takes place on TI property.
5. TI and WWA agree that they shall enter into a standard form of
commercial lease agreement with the provisions in this section C
included, in substantially the same form as set forth in the attached
Exhibit A and incorporated by reference as though fully set forth
herein.
D. TI'S DUTIES AND OBLIGATIONS:
1. TI shall provide to WWA a mutually agreed upon mix of Residual
Municipal Solid Waste ("RMSW") on a 24 hour, 6 day per week basis as
requested by WWA. For purposes of this Agreement, RMSW shall mean the
MSW remaining after TI's sorting operation. TI will endeavor to remove
from MSW large bulky items such as pallets, engine blocks, bicycle
frames, tires, and similar types of bulky materials, which will not be
processed by WWA. RMSW may also include mixes of non-sorted commercial,
apartment and household waste as mutually agreed to by WWA and TI in
writing.
2. TI will deliver an average of 3,500 tons per week to the on-site
facility leased by WWA pursuant to this Agreement at a schedule to be
mutually agreed upon in writing by WWA and TI.
3. TI shall deliver up to an additional 14,000 tons per week on average,
adjusted for holidays, of RMSW to WWA's proposed new off-site facility
upon WWA's written notification to TI. Delivery by TI to the new
off-site facility is contingent upon TI's approval of the proposed
facility, and the facility being located within a mutually agreed upon
location, and distance from TI's Anaheim facility, as determined in a
written modification to this Agreement.
4. TI can deliver loads 24 hours per day, 6 or 7 days per week, at TI's
option, excluding major holidays.
5. The composition of the RMSW may be adjusted as mutually agreed upon in
writing by WWA and TI.
Confidential and Proprietary
Subject to Confidentiality Agreement
Prohibiting Disclosure
Exhibit 10.5 - 3
6. TI will haul away all unprocessible wastes and RMSW process residuals
(hereinafter "WWA Residual") from the WWA facility on a mutually agreed
upon commercially acceptable schedule.
7. TI will have final design review in accordance with paragraph C. 4
above on how vehicles enter and exit the facility and how WWA Residual
is picked up/loaded, as well as the exterior appearance of the facility
(if on TI's property) along with all regulatory compliance issues.
8. TI has the option in its sole discretion to remove any waste material
that is deemed by TI to be a potential threat to public or worker
health and safety, or the presence of which would cause or threaten to
cause TI to be in non-compliance with any term or condition of any
permit or entitlement for operation of TI's facility.
9. Each and every obligation of TI as set forth herein is subject to TI's
ability to maintain compliance with its permits and entitlements for
operation of the TI facility in Anaheim. Nothing in this Agreement
shall be construed to require or result in TI's non-compliance with its
permits and entitlements, or to place it in breach of any law or
regulation governing operation of the TI facility.
10. "TI" shall mean TI, its parents, other subsidiaries of TI's parent and
affiliates.
11. TI agrees that it will indemnify, defend and hold harmless WWA, its
directors, officers, employees, agents and consultants from any claims
or causes of action, including without limitation any claims for
personal injury, property damage or civil or criminal fines or
penalties arising from TI's operations pursuant to this Agreement.
E. WWA DUTIES AND OBLIGATIONS
1. WWA shall comply with all laws and regulations, which apply to the WWA
process, and the leased facility described above. WWA agrees that it
will indemnify, defend and hold harmless TI, its directors, officers,
employees, agents and consultants from any claims or causes of action,
including without limitation any claims for personal injury, property
damage or civil or criminal fines or penalties arising from WWA's
operations pursuant to this Agreement.
2. WWA shall obtain and maintain throughout the term of this Agreement
(including any extensions thereof), all permits and entitlements
required by law for operation of the leased facility as well as the
proposed new off-site facility. If, as a result of a future change in
law or a change in the interpretation of existing law as a result of a
judicial order from a federal or state court of competent jurisdiction,
the recovered materials do not qualify for full and unqualified
diversion credits under California law, then TI shall have the right to
reopen this Agreement and renegotiate the per ton tip fee in effect at
that time.
Confidential and Proprietary
Subject to Confidentiality Agreement
Prohibiting Disclosure
Exhibit 10.5 - 4
3. Upon expiration or termination of the lease, WWA shall, at TI's
election, remove all equipment and/or restore the leased facility to
leaseable condition less commercially acceptable wear and tear.
4. WWA shall obtain and maintain authorization from the California
Integrated Waste Management Board ("CIWMB") stating that operations in
the leased facility and the proposed new off-site facility constitute
material recovery operations pursuant to California laws and
regulations governing solid waste and materials recovery facilities.
WWA represents and warrants that no amendment to TI's existing solid
waste SWFP or a new solid waste facilities permit shall be required for
operation of the leased facility. WWA further represents and warrants
that it shall guarantee a WWA residual of no more than 40% by weight of
TI waste delivered to and processed at the WWA facility.
5. WWA shall provide a written report to TI annually, in January of each
year, detailing the use and re-use of the recovered materials produced
using RMSW from TI. WWA has represented that the initial anticipated
markets are pulp and LCM (loss circulation mud). Upon request, WWA
shall provide any necessary documentation to TI on the use of the WWA
recovered material as may be required for TI to comply with regulations
regarding qualification for diversion or other obligations imposed on
TI by regulatory agencies regarding the use of recovered materials.
6. If TI determines that WWA's operations are not in compliance with any
applicable law or regulation or determines that WWA's continued
operation would place or threaten to place TI's operations in
non-compliance with its permits and approvals, then TI may suspend
delivery of RMSW to WWA until such time as TI determines that WWA has
fully remedied the non-compliance or threat of non-compliance.
7. As used herein, the term "law" includes, without limitation, statutes,
regulations, administrative orders and decrees, judicial decisions and
orders of courts of the State of California and the United States.
8. WWA's facilities to be constructed and operated pursuant to this
Agreement shall be for the exclusive use of TI and its affiliate
entities, and no other person, firm or entity shall have any right or
entitlement to utilize the WWA facilities without TI's written
approval. WWA agrees that it will accept and process all of the waste
materials that TI is obligated to deliver under the terms of this
Agreement.
F. COMPENSATION
1. WWA will sell its "Standard" recyclables (steel, aluminum, plastic)
through TI under the conditions outlined below. TI will pay WWA ten
percent (10.0)% less than TI's average monthly market price. The term
"average monthly market price" means the average monthly price TI is
paid for each of the standard recycled materials in the recycled
materials market within the geographic territory of Orange County,
California.
Confidential and Proprietary
Subject to Confidentiality Agreement
Prohibiting Disclosure
Exhibit 10.5 - 5
2. Pick Up Schedule: "On Call"--WWA will call TI to pick up recyclables
from the WWA facility and deliver them to its Material Recovery
Facility. A weight ticket will be generated to record the incoming net
material weight - Gross less Tare/Empty weight. The load will be
inspected to the specifications of the commodity it is receiving. All
required commodity specifications will be agreed upon prior to the
delivery of any loads. TI shall achieve pick-ups within eight hours of
notification by WWA.
3. TI agrees to pay WWA an initial base tip fee of $30.00 per ton of Net
Processed Waste. Net Processed Waste equals the total RMSW tons
delivered to the WWA facility less the total Residual/non-processed
tons removed by TI for handling and disposal by TI. Payments will be
made monthly on total tonnage of Net Processed Waste. The initial base
tip fee of $30.00 per ton shall be increased or decreased as necessary
for the remainder of the Term such that the tip fee shall increase or
decrease on a dollar for dollar basis in accordance with any change to
the Orange County landfill disposal fees from a base year of 2003,
which is $22.00 per ton.
4. Delivery Procedures/Payment Calculation: All incoming RMSW to WWA will
be weighed on one of TI's scales or another certified scale and a
weight ticket generated. The Gross and Tare/Empty, and Net Weight will
be shown in addition to the date and truck #. A copy of the incoming
weight ticket will be given to WWA and one kept at the CVT Scalehouse.
All outgoing residual waste will be handled in the same manner. All
weight tickets need to be clearly marked as Incoming or Outgoing. At
the end of the month, the total outgoing residual net weight will be
subtracted from the Incoming RMSW weight to determine the Net Processed
weight.
G. WWA's OWNERSHIP OF INTANGIBLES
All processes, inventions, patents, copyrights, trademarks, and other
intangible rights that may be conceived or developed by WWA, either alone or
with others, during the term of this Agreement, whether or not conceived or
developed during WWA's working hours, and with respect to which the equipment,
supplies, facilities, or trade secret information of WWA was used, or that
relate at the time of conception or reduction to practice of the invention to
the business of WWA or to actual or demonstrably anticipated research and
development, or that result from any work performed by WWA shall be the sole
property of WWA.
H. CONFIDENTIALITY OF PROPRIETARY INFORMATION
TI and WWA agree that this Agreement and the contents thereof
constitute valuable trade secret information that shall not be disclosed to any
third party without the prior written consent of the Parties hereto. TI agrees
that neither it nor any agent of TI will disclose any Proprietary Information
(as hereinafter defined) to any individual or entity at any time during the term
of this Agreement, except as is necessary and appropriate in the ordinary course
of performing duties for WWA during the term of this Agreement, or unless such
Confidential and Proprietary
Subject to Confidentiality Agreement
Prohibiting Disclosure
Exhibit 10.5 - 6
disclosure is required by law. For purposes of this Agreement, the term
Proprietary Information shall mean any information that was developed by or was
assigned to WWA, and which has commercial value in WWA's business. Proprietary
Information includes, but is not limited to, trade secrets, financial
information, customer lists and information, marketing plans, strategies,
business forecasts, computer programs, source code, product plans, research and
development information, testing methods and results, inventions, improvements,
formulas, processes, techniques, designs, know-how and data. TI and WWA agree
that violation of this Section H will cause irreparable harm to TI and/or WWA,
as the case may be, therefore in addition to any and all other legal remedies
available to it, WWA or TI shall be entitled to equitable and injunctive relief.
I. NON-COMPETITION AND RIGHT OF FIRST REFUSAL FOR CO-OWNERSHIP OF FUTURE
PROJECTS
1. During the term of this Agreement, WWA will not directly or indirectly,
compete with the facilities or business opportunities of TI for any
solid waste or recyclable materials, including receipt of MSW or RMSW
within TI's market areas. WWA agrees that it will not take any action
that would impair or impede the ability of the 500 TPD and the off-site
facility to meet the performance requirements of those facilities.
2. (a) TI shall have a first right of refusal with respect to
participation with WWA as an equity partner in any Project proposed by
WWA within TI's market areas of (i) Orange County, Los Angeles County,
San Bernardino County, Riverside County, and (ii) Alameda County, Santa
Clara County, Contra Costa County, Solano County, Marin County, and San
Joaquin County. Equity participation shall mean that TI shall have an
equity share of fifty-one percent (51%) or greater in any Project
proposed by WWA, in exchange for contributing fifty-one percent (51%)
or greater of the capital funding required for the Project. "Project"
as used herein, shall mean each separate business opportunity in the TI
market area(s) set forth in this paragraph 2.(a) that WWA proposes to
engage in, which Projects shall be capitalized as separate legal
entities on a Project by Project basis. As used in (a) herein, "first
right of refusal" shall mean that TI shall have the right, at its
election, to participate in a Project within the market areas set forth
in (i) and (ii) above, after WWA has presented a bona fide proposal for
a Project to TI. Once a bona fide Project proposal is presented to TI
in writing, TI shall then have a period of ninety (90) days to
determine if it will exercise its right and elect to participate as an
equity partner in any such Project.
(b) TI will have a first right of refusal to participate with WWA, or
utilize WWA in materials processing, in any governmental solicitation
for proposals (i.e., Requests For Proposals, Invitation for Bids, etc.)
within the State of California. WWA agrees that it will consult with TI
at least forty five (45) days prior to WWA either (i) responding to any
RFP, IFB or similar process, or (ii) WWA proposing to joint venture or
otherwise collaborate with any competitor of TI in connection with any
such RFP or IFB response. As used in (b) herein, "first right of
Confidential and Proprietary
Subject to Confidentiality Agreement
Prohibiting Disclosure
Exhibit 10.5 - 7
refusal" shall mean that TI shall have the right, at its election, to
participate with WWA on a joint cooperative basis in making a proposal
in response to any governmental solicitation for proposals.
(c) As used herein, the term "bona fide proposal" means that all
material terms and conditions of a proposed agreement have been fully
and finally negotiated and memorialized in a draft written agreement as
between WWA and a third party, and presented in writing to TI for its
review.
3. During the period of this agreement TI will not utilize any of the WWA
processing technology in its operations without express written
permission from WWA.
J. INSURANCE PROVISIONS.
For purposes of this agreement WWA and TI shall carry the following
types of insurance in at least the limits (which may be a combination
of primary and excess coverage) specified below:
Coverages Minimum Limits of Liability
--------- ---------------------------
Workers' Compensation Statutory
Employer's Liability $1,000,000/occurrence
Automobile Liability $2,000,000/occurrence
Comprehensive General Liability, $2,000,000/occurrence
Including Bodily Injury, Property Damage $2,000,000/general aggregate
Excess Coverage $3,000,000/occurrence
$3,000,000/aggregate
TI and WWA shall be named as an additional insured on all policies of
insurance, and WWA agrees to provide certificates of coverage from its
carrier(s). The Comprehensive General Liability, Excess and Automobile
policies shall contain a waiver of subrogation against TI.
K. GENERAL PROVISIONS
1. Governing Law and Venue. This Agreement will be governed by and
construed in accordance with the laws of the State of California. Venue
for any dispute arising out of or from this Agreement, whether in tort,
contract or both, shall be in a State court of competent jurisdiction
in Orange County, California. This Agreement shall be subject to all
applicable laws and regulations concerning the subject matter of the
Agreement.
Confidential and Proprietary
Subject to Confidentiality Agreement
Prohibiting Disclosure
Exhibit 10.5 - 8
2. Assignment. Neither WWA or TI may assign, pledge or encumber its
interest in this Agreement or any part thereof without the prior
written consent of the other Party. The term "Assignment" shall not
include any changes (1), in corporate structure or (2), resulting in
less than a 50 percent (50%) change in the beneficial ownership of
either Party.
3. Applicability. This Agreement, unless and except where expressly
limited, inures to the benefit of and shall be binding upon the Parties
and their successors and assigns as may be authorized pursuant to
paragraph 2 above.
4. No Waiver of Breach. The failure to enforce any provision of this
Agreement will not be construed as a waiver of any such provision, nor
prevent a party thereafter from enforcing the provision or any other
provision of this Agreement. The rights granted the parties are
cumulative, and the election of one will not constitute a waiver of
such party's right to assert all other legal and equitable remedies
available under the circumstances.
5. Severability. The provisions of this Agreement are severable, and if
any provision will be held to be invalid or otherwise unenforceable, in
whole or in part, the remainder of the provisions shall be construed
and enforced so as to give effect to the remaining provisions of the
Agreement.
6. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter of this Agreement, and
supersedes all prior and contemporaneous negotiations, agreements and
understanding between the parties, oral or written.
7. Modification, Waivers, Amendment. No modification, termination,
amendment or attempted waiver of this Agreement will be valid unless in
writing, signed by both parties.
8. Fees and Expenses. If any proceeding is brought for the enforcement or
interpretation of this Agreement, or because of any alleged dispute,
breach, default or misrepresentation in connection with any provisions
of this Agreement, the prevailing party in any such proceeding shall be
entitled to recover from the other party reasonable attorney's fees and
other costs incurred in that proceeding (including expert witness fees
and costs), in addition to any other relief to which such party may be
entitled.
9. Duplicate Counterparts. This Agreement may be executed in duplicate
counterparts, each of which shall be deemed an original; provided,
however, such counterparts shall together constitute only one
instrument.
Confidential and Proprietary
Subject to Confidentiality Agreement
Prohibiting Disclosure
Exhibit 10.5 - 9
10. Drafting Ambiguities. Each party to this Agreement has had the
opportunity to consult with counsel regarding the advisability of
signing this Agreement and the meaning of the terms herein. Each party
(and, if applicable, his or its counsel) have participated fully in the
review and revision of this Agreement. Any rule of construction to the
effect that ambiguities are to be resolved against the drafting party
shall not apply to interpreting this Agreement.
11. Notices. Any notice to the parties required or permitted under this
Agreement shall be given in writing by certified mail sent to the then
principal place of business.
12. Force Majeure. "Force Majeure" shall mean any event or condition having
a material and adverse effect on the rights, duties and obligations of
either party hereunder, or on the Facility, or on the lease, design,
construction, equipping, start-up, operation, ownership or possession
of any or all of them, if such event or condition is beyond the
reasonable control, and not the result of willful or negligent action
or omission or a lack of reasonable diligence, of the party asserting
the Force Majeure; provided that the contesting in good faith of any
event or condition constituting a change in law shall not constitute or
be construed as a willful or negligent action or a lack of reasonable
diligence of such party. The foregoing provisions shall not be
construed to require that either party observe a higher standard of
conduct than required by the usual and customary standards of the
industry in question, as a condition to claiming the existence of a
Force Majeure. Such events or conditions may include, but shall not be
limited to, circumstances of the following kind: an act of God,
epidemic, landslide, lightning, hurricane, earthquake, fire, explosion,
storm, flood or similar occurrence, an act of war, effects of nuclear
radiation, blockade, insurrection, riot, civil disturbance or similar
occurrences, strikes, lockouts, work slowdowns or stoppages, or similar
labor difficulties affecting either party hereunder, or the operation
of the leased Facility, or otherwise affecting or impacting the
performances of either party's contractors and suppliers; a change in
law.
Taormina Industries, LLC World Waste of Anaheim, Inc.
/s/ Thomas Vogt /s/ Steven L. Racoosin
- ----------------------------- ------------------------------
Thomas Vogt, President Steven L. Racoosin, President
June 27, 2003 June 27, 2003
- ----------------------------- -------------------------------
Date Date
Executed by the parties as of the day and year first above written.
Confidential and Proprietary
Subject to Confidentiality Agreement
Prohibiting Disclosure
Exhibit 10.5 - 10
Exhibit 10.6
AMENDED AND RESTATED TECHNOLOGY LICENSE AGREEMENT
This Amended and Restated Technology License Agreement (the
"Agreement") is made and entered into June 21, 2004, between Bio-Products
International, Inc. ("Bio-Products"), a company incorporated under the laws of
the State of Alabama (the "Licensor"), and World Waste Technologies, Inc. (WWT),
a company incorporated under the laws of the State of California (the
"Licensee") (the Licensor and Licensee may hereinafter be either individually
referred to as the "Party" or collectively referred to as the "Parties").
PREMISES:
Whereas, Dr. Michael H. Eley ("Eley"), in his continuous capacity as an
employee of the University of Alabama in Huntsville ("UAH"), developed certain
proprietary intellectual property, patented processes, and patent pending
processes for the volume reduction, separation, recovery, and recycling of
various components of waste materials, including without limitation, Municipal
Solid Waste ("MSW"), which technology has been reduced to U.S. Patent No.
6,306,248 (the "U.S. Patent") and Patent Cooperation Treaty, International
Application No. PCT/US01/50049 (the "PCT") (collectively, the "UAH Technology").
The UAH Technology constitutes the first of the two parts of the "Technology"
(as defined herein). Eley is also a major stockholder, President and CEO of
Bio-Products;
Whereas, pursuant to that certain Amended and Restated License
Agreement, effective August 18, 2003, which supersedes and replaces the original
license agreement dated November 13, 1992, which was amended effective November
5, 1997 and amended again effective August 31, 1999, between UAH and
Bio-Products (the "Amended and Restated UAH License") (a complete copy of which
is attached as Exhibit A), UAH granted an exclusive worldwide license to
Bio-Products covering the UAH Technology, including the rights to make, have
made, use, lease and sell certain products, and to practice certain processes,
and to license some or all of the rights granted to others, such products and
processes being more specifically defined in the UAH License;
Whereas, Donald E. Malley ("Malley") developed certain proprietary
intellectual property, equipment designs, and process operating procedures
related to the UAH Technology, including the expertise and know-how for
fabrication and continuous operation of a small waste reduction process plant at
a commercial sanitary landfill for a period of eighteen months (collectively,
the "Malley Technology"). Malley has assigned all rights to the Malley
Technology to Bio-Products (a complete copy of the Amended and Restated Stock
Purchase and Assignment Agreement is attached as Exhibit B). The Malley
Technology constitutes the second of the two parts of the "Technology" (as
defined herein). Malley is also a stockholder and a Vice President of
Bio-Products;
Whereas, the original Technology License Agreement, dated June 21,
2002, was between Bio-Products and World Waste Holdings, Inc. (WWHI),
incorporated under international law in Anguilla, British West Indies, and WWHI
assigned the said Technology License Agreement to World Waste of America, Inc.
(WWA), a company incorporated under the laws of the State of California,
effective May 12, 2003 (a complete copy of which is attached as Exhibit C);
Exhibit 10.6 - 1
Whereas, WWA and all of its assets, including the June 21, 2002
Technology License Agreement with Bio-Products, was acquired by Waste Solutions,
Inc. (WSI), a California corporation, in a merger and reorganization in which
WWA became a wholly owned subsidiary of WSI, dated March 22, 2004 (a complete
copy of which is attached as Exhibit D);
Whereas, WSI filed a Certificate of Amendment of Articles of
Incorporation to the Secretary of State of the State of California changing the
name of the corporation to World Waste Technologies, Inc. (WWT) on March 24,
2004 (a complete copy of which is attached as Exhibit E);
Whereas, Bio-Products desires to enter into a license agreement with
the Licensee to provide the Technology and future improvements for the
construction and operation of commercial scale municipal solid waste processing
and recycling facilities subject to the terms and conditions set forth herein;
Whereas, the Licensee either has the financial resources, or has agreed
to use their best efforts to secure the financial resources, for the design,
engineering, and fabrication of processing equipment and facilities, acquisition
and permitting of construction sites, purchase of processing equipment,
construction and operation of processing facilities, and marketing and promotion
of commercial facilities that are compatible with the Technology;
Whereas, the Licensee desires to enter into a license agreement with
Bio-Products to use the Technology for commercial purposes upon the terms and
conditions hereinafter set forth;
Whereas, the Parties wish to amend and restate the original Technology
License Agreement, dated June 21, 2002, between the Parties as herein set forth,
which date shall remain the effective date of this Agreement; and
Now, therefore, in consideration of the premises and the mutual
covenants contained herein, the Parties hereto agree as follows:
ARTICLE I - DEFINITIONS
-----------------------
For purposes of this Agreement, the following words and phrases shall
have the following meanings:
1.1 "Technology" shall mean the inventions, technology, and proprietary
intellectual property and information developed by Bio-Products, Eley, Malley,
and UAH created or discovered prior to or after the effective date of this
Agreement, including, but not limited to, inventions, processes, process
operating procedures and discoveries, patents, patent applications, trade
secrets, developments, facility designs, equipment designs, works of authorship,
formulas, software programs, techniques, information, expertise, know-how, data,
research, mask works, all intellectual and industrial property rights of any
sort, all rights of integrity, disclosure and withdrawal, copyrights, trade
names and trademarks, which are related to the recycling, processing,
collection, storage, disposal, treatment, utilization or reduction of waste or
waste components or the conversion of cellulosic materials to fuels or other
materials or other use of cellulosic materials for the production of energy or
otherwise. Technology includes without limitation, the UAH Technology, the
Malley Technology, United States Patent Number 6,306,248 and Patent Cooperation
Treaty International Application Number PCT/US01/50049.
Exhibit 10.6 - 2
1.2 "Third Party" shall mean any person or entity other than
Bio-Products, Eley, Malley, UAH, the Licensee and sub-licensees of the Licensee.
1.3 "Operating Day" shall mean a day in which the facility (i)
processes waste equal to or in excess of the facility's daily design capacity;
or (ii) processes all of the waste brought to the facility for processing on
such day; or (iii) processes as much waste as allowed by any downstream
limitations, such as but not limited to, any limitations on the downstream
processing or disposal of the cellulosic product.
ARTICLE II - GRANT OF LICENSE
-----------------------------
2.1 Subject to the terms and conditions of this Agreement, Bio-Products
hereby grants a license to the Licensee to utilize the Technology to construct
and operate commercial scale municipal solid waste processing and recycling
facilities in the U.S.A.
(a) The license granted by Bio-Products to the Licensee under this
Agreement shall be exclusive in all of the States, territories, and
possessions of the USA with the following exceptions: (i) the State
of Arkansas shall remain exclusively licensed to Bio-Products; (ii)
Bio-Products shall retain the right to construct and operate
additional facilities utilizing the Technology in one or all of the
States of Alabama, Tennessee, Georgia, and/or South Carolina,
providing the total number of facilities in these States does not
exceed four (4); and (iii) for applications in which the cellulosic
product of waste, including Municipal Solid Waste ("MSW"),
processed utilizing the Technology is either used directly as a
fuel source or converted into an end product for energy production.
The above notwithstanding, upon written requests from the Licensee,
(i) Bio-Products shall grant site-specific sub-licenses to the
Licensee to construct and operate facilities utilizing the
Technology in the State of Arkansas, (ii) Bio-Products shall invite
the Licensee to participate in any or all of its four (4)
facilities outside of the State of Arkansas, and (iii) Bio-Products
shall grant site-specific sub-licenses to the Licensee for
applications in which the cellulosic product of waste, including
MSW, processed utilizing the Technology is either used directly as
a fuel source or converted into an end product for energy
production.
(b) For each facility to be constructed and operated under this
Agreement by the Licensee, a proposal on the economic feasibility
of the facility shall be prepared and submitted to Bio-Products for
review and comment. Bio-Products shall submit its comments in
writing to the Licensee in a timely manner, not to exceed sixty
(60) days. The Licensee shall, at its discretion, then grant a
site-specific sub-license to a USA entity (the "Sub-Licensee") that
shall own and/or operate the facility. Such sub-license agreement
shall be subject to the approval of Bio-Products, which approval
shall not be unreasonably withheld.
(c) As stated in Paragraph 2.1(a), Bio-Products shall retain the right
to construct and operate up to four (4) facilities utilizing the
Technology in the States of Alabama, Tennessee, Georgia, and South
Exhibit 10.6 - 3
Carolina. Bio-Products shall prepare and submit a proposal on the
economic feasibility of each facility to the Licensee for review
and comment, and the Licensee shall submit its comments in writing
to Bio-Products in a timely manner, not to exceed sixty (60) days.
Licensee shall at its discretion negotiate with Bio-Products either
to fully finance the Bio-Products facility, to partially
participate with a Bio-Products' Third Party financial entity in
financing the facility, or to not participate in the facility.
After negotiations are concluded, which shall not exceed sixty (60)
days from the date Bio-Products submits its proposal on the
economic feasibility, and regardless of whether the Licensee
participates, the Licensee shall, if requested by Bio-Products,
then grant site-specific sub-licenses to Bio-Products or an entity
in which Bio-Products owns controlling interest that shall own
and/or operate the facility. For Bio-Products facilities
constructed and operated under this provision and in which the
Licensee has no financial interest, Licensee shall be paid twenty
percent (20%) of any royalties paid to Bio-Products from the
operation of the facility. Bio-Products may construct and operate
up to a total of four (4) facilities in the States of Alabama,
Tennessee, Georgia, and South Carolina utilizing the Technology in
which the Licensee may have no financial interests while the
exclusivity of the Agreement with Licensee remains in force and
effect.
2.2 The term of this license shall extend from the effective date of
the original Technology License Agreement, which is June 21, 2002, for a period
of twenty (20) years, unless extended, terminated or replaced by agreement of
the Parties hereto, or unless otherwise extended or terminated, as elsewhere
provided in this Agreement. This Agreement shall be extended automatically until
the expiration date of the last patent issued to Bio-Products and/or UAH
covering the Technology.
2.3 Anything to the contrary contained elsewhere in this Agreement
notwithstanding, Bio-Products shall retain all of the exclusive rights granted
under the UAH License and all of the exclusive rights obtained by assignment
from Malley, including the worldwide exclusive right to license some or all of
its rights not granted to the Licensee under this Agreement to Third Parties to
utilize the Technology.
2.4 Subject to the terms and conditions of this Agreement, Bio-Products
hereby grants to Licensee the right to obtain an exclusive option or license to
utilize the Technology to construct and operate commercial scale MSW processing
and recycling facilities outside the United States upon the following
conditions:
(a) From the date of this Amended and Restated Technology License
Agreement, Bio-Products agrees to inform Licensee of any written
offers from a Third Party to obtain an exclusive option or license
for a foreign country not currently under an exclusive option or
license that is acceptable to Bio-Products. Licensee will be
granted a period of thirty (30) days from the date of notification
in which to elect to purchase the option or license for said
country on the same terms and conditions as contained in the
written offer from the Third party. If Licensee exercises its right
Exhibit 10.6 - 4
to purchase the option or license for said country during the
thirty (30) day period, then Bio-Products shall grant an exclusive
option or license to Licensee under the terms and conditions stated
in the written offer from the Third Party. If Licensee fails to
exercise its right to purchase the option or license within the
thirty (30) day period, then Bio-Products may grant an exclusive
option or license for said country to the Third Party making the
initial offer.
(b) The Licensee may from time to time submit a written request to
Bio-Products naming each country in which it wishes to obtain an
option for an exclusive license to utilize the Technology. If
Bio-Products has not previously granted an exclusive option or
license to or received a written offer from a Third Party for that
country, Bio-Products shall grant Licensee an option for an
exclusive license for that country upon the payment of fifteen
thousand dollars ($15,000) per country (the "Option Fee"). Said
Option Fee shall be due and payable within thirty (30) days after
Bio-Products has informed Licensee in writing that said country is
available. Licensee acknowledges that the deadline for submission
of foreign patent applications based on the PCT has expired,
therefore no patent protection can be provided to Licensee under
the PCT. However, Licensee agrees to pay all fees and expenses,
including, but not limited to, maintenance fees incurred in the
prosecution of future patents as may be necessary or useful in the
countries licensed to Licensee under this Paragraph 2.4. Such
option for an exclusive license granted to Licensee pursuant to
this Paragraph 2.4(b) shall be for a term of three (3) years from
the date that the Option Fee is paid to Bio-Products; provided the
Licensee has also paid all fees and expenses for patent prosecution
incurred during the term of the option and Licensee is in
compliance with all requirements under this Agreement for
exclusivity in the United States.
(c) At any time prior to the expiration of the term of an option for an
exclusive license to Licensee in any country under Paragraph 2.4
(b), the option may be converted to an exclusive license upon
payment by Licensee to Bio-Products of a license fee of eighty-five
thousand dollars ($85,000) per country, in addition to the above
Option Fee and any patent prosecution fees and expenses. Licensee
shall also continue to pay all fees and expenses, including, but
not limited to, maintenance fees incurred in the prosecution of
patents as may be necessary or useful in the country licensed to
Licensee under this Paragraph 2.4.
(d) For each country exclusively licensed to Licensee under this
Paragraph 2.4, the terms and conditions set forth elsewhere in this
Agreement shall apply and Licensee shall pay royalties, bonuses,
and fees to Bio-Products in accordance with Article III, excluding
Paragraph 3.1, and all waste processing facilities both in the
United States and outside the United States shall be combined on a
cumulative basis for purposes of calculating all payments due to
Bio-Products, unless another financial arrangement is mutually
agreed to by the Parties.
Exhibit 10.6 - 5
ARTICLE III - FEES, ROYALTIES, AND OTHER CONSIDERATION
------------------------------------------------------
3.1 The Licensee shall pay to Bio-Products a one time Technology
licensing fee of Three Hundred Fifty Thousand Dollars ($350,000). Bio-Products
acknowledges receipt of payments in the sum of One Hundred Eighty Two Thousand
Five Hundred Dollars ($182,500). The remaining balance of One Hundred Sixty
Seven Thousand Five Hundred Dollars ($167,500) shall be paid within twenty-six
(26) months from the effective date of this Agreement, but no later than August
21, 2004. Payments of said fee shall be by either wire transfer to a
Bio-Products bank account, cashier's check, or other bank certified negotiable
instrument on or before the date the payment becomes due and payable.
3.2 The Licensee shall pay to Bio-Products a royalty of fifty cents
($.50) for every ton of waste received and processed utilizing the Technology,
up to a maximum of two thousand (2,000) tons per day of waste processed. The
Licensee shall pay to Bio-Products a royalty of one dollar ($1.00) for every ton
of waste received and processed in excess of two thousand tons per day up to a
maximum of ten thousand (10,000) tons per day of waste processed. The Licensee
shall pay to Bio-Products a royalty of one dollar and fifty cents ($1.50) for
every ton of waste received and processed in excess of ten thousand (10,000)
tons per day. The royalty payments shall become payable on the thirtieth (30th)
day following the end of the calendar month in which such amount becomes due and
owing until this Agreement or any extension thereof expires or is terminated.
Bio-Products agrees that no royalty shall be due and payable with respect to
waste processed at any facility until such facility has been in operation for
thirty (30) Operating Days, as defined in Paragraph 1.3 (the "Operational
Date"). Bio-Products further agrees that no royalty shall be assessed on the
first facility until either the sale of the cellulose product is confirmed by a
written agreement between the Licensee and a purchaser or the facility has
operated, producing and disposing of the cellulose product, for more than ninety
(90) days after the Operational Date. Payment of said royalties shall be by wire
transfer of funds to a Bio-Products bank account or by cashier's check or other
bank certified negotiable instrument.
3.3 The Licensee shall pay to Bio-Products a bonus (the "Bonus") of two
and one half percent (2.5%) of the gross sales price in excess of ten dollars
($10.00) per ton for the cellulosic product from waste, including MSW, utilizing
the Technology. The Bonus shall become due and payable on the ninetieth (90th)
day following the end of the calendar quarter in which such recyclable product
sales are made until this Agreement or any extension thereof expires or is
terminated. The Bonus shall be paid by wire transfer of funds to a Bio-Products
bank account or by cashier's check or by other bank certified negotiable
instrument. The above notwithstanding, no Bonus shall be due and payable with
respect to the cellulosic product produced at the facility until the facility
reaches its Operational Date.
3.4 As additional consideration and for their experience and know-how
regarding the Technology, the Licensee shall pay Bio-Products a monthly fee for
technical services. Such technical services shall initially be provided by Eley
and Malley who are employees of Bio-Products, and who agree to provide whatever
technical services are reasonably requested of them by Licensee. Payments to
Bio-Products for the technical services shall be ten thousand dollars ($10,000)
per month payable on or before the first (1st) business day of each month
beginning six (6) months from the date hereof. Payments for the technical
services of Bio-Products shall be increased to twenty thousand dollars ($20,000)
Exhibit 10.6 - 6
per month commencing on the first business day of the month following the
Licensee's initial down payment for the process vessels for construction of the
Licensee's first plant and continuing each month thereafter until the first
facility reaches its Operational Date. After the Operational Date of the first
plant, the monthly technical service fee shall be reduced to fifteen thousand
dollars ($15,000). During any above period Bio-Products shall provide whatever
services are reasonably requested of it by Licensee.
If at any time Bio-Products fails to undertake technical services
requested, then Licensee may cease all payments as set forth in this Paragraph
3.4, until such time as the failure to undertake the technical services
requested is remedied.
Following the Operational Date of Licensee's first facility, Licensee
and Bio-Products shall enter into a consulting agreement on terms mutually
agreeable to both Parties for the continued provision of technical services by
Bio-Products with respect to the construction of additional facilities or the
expansion of existing facilities. Licensee agrees that said consulting agreement
shall include a minimum annual compensation of One Hundred Eighty Thousand
Dollars ($180,000) per year to be paid to Bio-Products in monthly installments
for the first five (5) years after the Operational Date of Licensee's first
facility.
3.5 Additionally, with respect to the technical services provided by
Bio-Products, the Licensee shall either provide pre-paid expense accounts or
reimburse Bio-Products employees for the reasonable transportation, lodging,
food, and other expenses incurred by Bio-Products employees in the performance
of such technical services for the Licensee. In either case, itemized expense
reports and receipts shall be submitted to the Licensee by Bio-Products
employees within ten (10) business days of completion of travel or a specific
project in which expenses are incurred. The Licensee shall establish a travel
expense policy and procedure which policy and procedure Bio-Products shall
adhere to unless the parties agree, in writing, otherwise. Any reimbursement for
expenses shall be paid by the Licensee within ten (10) business days of receipt
of such expense reports submitted by Bio-Products employees.
3.6 The Licensee may enter into research and development contracts with
UAH unrelated to the Technology, with Eley as the principal investigator, to be
defined from time to time in exchange for results, information, and a royalty
free unrestricted license to use said results and information which are
unrelated to the Technology at Licensee's facilities for the period of this
Agreement unless a separate agreement is prepared and signed by both Parties.
Such results and information which are unrelated to the Technology, including
but not limited to test results, notes, and reports regarding the work performed
as requested by the Licensee shall be turned over to the Licensee by UAH and
Eley within thirty (30) days of completion, and all such results and information
shall be kept confidential and shall not be disclosed in any form without first
obtaining approval from the Licensee. Any and all research and development
results unrelated to the Technology from contracts with Licensee are
confidential and may not be provided to Third Parties without the written
permission of Licensee. If permission is granted by Licensee for Third Parties
to use such unrelated technology then Licensee shall be compensated at the rate
of 20% of royalties received by Bio-Products for the use of the unrelated
technology by a Third Party. UAH and Eley shall allow the Licensee to visit the
UAH pilot plant facility for any purposes, including demonstrations, recyclable
Exhibit 10.6 - 7
product production, and testing upon reasonable notice by the Licensee and
mutual agreement with Eley as to the dates and times. UAH and Eley shall also
provide training for the Licensee's employees to use the licensed Technology at
the UAH pilot plant. Eley shall be compensated at a rate of five hundred dollars
($500.00) per day plus expenses for all pilot plant operations. For
demonstrations, recyclable product production, testing, and training at the UAH
pilot plant at the request of the Licensee, the Licensee shall compensate UAH
for the expenses for such demonstration and test runs as follows:
(a) For Each Series of Test Runs:
(i) Pilot Plant Preparation/Set up $500
(ii) Pilot Plant Clean-up/Shutdown $500
(b) For Each Test Run in a Series:
(i) Boiler Fuel/Water Treatment $200
(ii) Labor $800
(iii) Waste Disposal $100
(c) Follow up Costs:
(i) Small Sample Collection, Packaging & Storage $100
(ii) Large Sample Collection & Packaging $250
(iii) Dry Cellulose Product per ton $500
(iv) Shipping Containers & Shipping Costs Actual, plus 25%
(d) Additional expenses:
(i) Tractor Rental $100/day
(ii) Auto/Truck mileage for Laborers $0.40/mile
(iii) Truck towing mileage $0.80/mile
(iv) Local Lodging for Laborers $50/day
(v) Per Diem allowance for Laborers $25/day
3.7 For the first facility to be sub-licensed under this Agreement, the
Licensee agrees that the facility design, equipment designs and specifications,
equipment fabricator for the process vessel, engineering firm, construction
contractors and sub-contractors, and all facility management and labor personnel
must be approved by Bio-Products, which approval shall not be unreasonably
withheld. The Licensee also agrees to begin the facility permitting, facility
and equipment design, equipment selection, and engineering for the first
facility within six (6) months from the date of execution of this Agreement and
to begin placing orders for equipment and construction site work within one (1)
year from the date of approval of all permitting, facility and equipment design,
equipment selection, and engineering for the first facility. Notwithstanding the
foregoing, Licensee shall begin placing orders for equipment and shall commence
and diligently pursue construction and completion of the first facility no later
than thirty (30) months from the effective date of this Agreement, which would
be December 21, 2004.
3.8 Due to the proprietary nature of the process vessel design, the
Licensee agrees that Bio-Products shall maintain the exclusive right of vessel
manufacture, and the Licensee and its Sub-licensees shall purchase all required
vessels exclusively from Bio-Products. The purchase price shall be cost plus
fifteen percent (15%), not including shipping costs or taxes. All other
equipment required for construction and operation of waste processing and
recycling facilities utilizing the Technology may be purchased from other
vendors. The first two vessels are to be built to Bio-Products' specifications
in Mississippi and shipped to the requested locations. Shipping costs and
applicable taxes shall be itemized and included in the cost of vessels and shall
be invoiced to and paid by the Licensee. Thereafter, Bio-Products shall from
time to time seek the qualifications of and obtain cost quotations from
Exhibit 10.6 - 8
alternative vessel manufacturers to manufacture future process vessels as needed
such that the same may be provided to Licensee having equal or higher quality
than that established by Bio-Products from its Mississippi manufacturer and may
be transported by truck to the required facility at a cost equal to or less than
that established by Bio-Products from its Mississippi manufacturer including the
cost of shipping and taxes. If future vessels are purchased at a cost, excluding
shipping costs and taxes, below the most recent purchase price, Licensee agrees
to pay Bio-Products an amount equal to twenty-five percent (25%) of the cost
savings.
3.9 In order to maintain the exclusivity of this Agreement, the
Licensee further agrees that, within six (6) months from the Operational Date of
the first facility, the Licensee shall begin the facility permitting, facility
and equipment design, equipment selection, and engineering for construction of
one or more facilities with a combined total of at least two thousand (2,000)
tons per day. Licensee further agrees that within three (3) months after
Licensee has obtained approval of permitting, facility and equipment design,
equipment selection, and engineering, the Licensee shall begin ordering
equipment and construction site work for the one or more facilities with a
combined total of at least two thousand (2,000) tons per day, unless prevented
from doing so by a regulatory or government agency, acts of God, acts of war,
acts of terrorism, strikes, and the like. The Licensee shall expand existing
facilities and/or add new facilities with design capacity for processing at
least an average of an additional two thousand (2,000) tons per day of MSW each
year thereafter, unless prevented from doing so by a regulatory or government
agency. If Licensee fails to perform as specified under this Paragraph 3.9 for
two (2) consecutive years, then this Agreement shall convert from an exclusive
to a non-exclusive license.
3.10 The Licensee shall maintain all such books and records as are
necessary to accurately determine all amounts due and payable to Bio-Products,
Eley, and Malley under Paragraphs 3.2, 3.3, 3.4 and 3.5 of this Agreement, which
books and records the Licensee shall make reasonably available, upon the
submission of a written request from Bio-Products for inspection by Bio-Products
and/or its designated representative at a time mutually convenient to
Bio-Products and the Licensee. Bio-Products agrees to treat all such information
respecting Licensee's books and records as confidential.
3.11 All payments shall be paid to Bio-Products at the addresses set
forth in Paragraph 14.15 of this Agreement or as otherwise notified in writing
by the Parties.
ARTICLE IV - INVENTIONS AND DISCOVERIES
---------------------------------------
4.1 All rights, title, and interest in and to the Technology and all
patent applications and patents thereon or relating thereto as presently exist,
both foreign and domestic, shall remain the sole and exclusive property of
Bio-Products and/or UAH. In addition, patents and patent applications, both
foreign and domestic, with respect to the existing Technology shall be applied
for and prosecuted, and if received, shall issue solely in Bio-Products' or
UAH's name.
4.2 All right, title and interest in and to all future inventions,
processes, enhancements, improvements and other discoveries made by
Bio-Products, or any person acting for and under the direction of Bio-Products
Exhibit 10.6 - 9
or the Licensee, or any other employee or agent of Bio-Products, or the
Licensee, relating to the Technology shall be owned by Bio-Products and/or UAH.
All patent applications and patents thereon, foreign and domestic, whether made
by any of the Parties or UAH, or jointly by the Parties and UAH or jointly by at
least one employee of each Party, shall be owned exclusively by Bio-Products
and/or UAH. Bio-Products shall provide the Licensee with detailed information
concerning all such related, future inventions, processes, enhancements,
improvements and other discoveries upon request. To the extent required to
accomplish the foregoing, the Licensee shall execute any and all assignments of
patents or other documents to Bio-Products and/or UAH, if required for any such
patents to issue in Bio-Products' or UAH's name. Bio-Products hereby grants to
the Licensee an exclusive license in the USA, subject to the same exclusions and
conditions stated above in Paragraph 2.1, to utilize all such future inventions,
processes, enhancements, improvements and other discoveries at no additional
royalty or cost, except that the term of this Agreement shall be extended by
agreement of the Parties or automatically to the expiration date of any
subsequently issued patent.
4.3 The Technology of Bio-Products and/or UAH shall be maintained by
the Licensee free and clear of all liens and encumbrances or rights of any Third
Party. Neither Bio-Products nor Licensee shall sub-license, encumber, transfer
or assign the Technology of Bio-Products and/or UAH without the written consent
of the other party, except as provided in this Agreement.
4.4 The provisions of this Article shall apply to both foreign and
domestic inventions, processes, enhancements, improvements and other discoveries
relating to the Technology and to all patent applications and patents related
thereto.
4.5 The Parties shall cooperate in good faith to protect any such
invention, process, enhancement, improvement or other discovery, and to make all
necessary applications, assignments, as provided herein, and filings, including
patents, industrial designs, copyright registrations, trademark registrations
and other legal protections, necessary or helpful to protect their interests
therein.
ARTICLE V - REPRESENTATIONS AND WARANTIES
-----------------------------------------
OF BIO-PRODUCTS
---------------
Bio-Products hereby represents and warrants, as of the date hereof, as
follows:
5.1 Bio-Products is a corporation, duly organized, validly existing and
in good standing under the laws of Alabama. Bio-Products has all requisite power
and authority, corporate and otherwise, to execute, deliver, observe, and
perform its obligations under, this Agreement. The execution, delivery and
performance by Bio-Products of this Agreement have been duly authorized by all
necessary corporate action and does not and will not violate Bio-Products'
Articles of Incorporation or Bylaws or any provision of any agreement, law,
rule, regulation, order, writ, judgment, injunction, decree, determination, or
award presently in effect to which Bio-Products is a party or is subject.
Exhibit 10.6 - 10
5.2 Bio-Products possesses all such franchises, licenses, patents, or
other rights necessary to enter into, and satisfy its obligations under, this
Agreement, without (to the best of Bio-Products' knowledge) any conflict with,
or infringement of, the franchises, licenses, patents or other rights of Third
Parties.
5.3 Bio-Products has the exclusive rights to grant some or all of its
rights or licenses to Third Parties to utilize the Technology not granted to the
Licensee under this Agreement in various geographical locations worldwide.
5.4 There is no action, suit, proceeding or claim pending or, to the
knowledge of Bio-Products, threatened against Bio-Products in any way relating
to the Technology. There is no action, suit, proceeding or claim pending or, to
the knowledge of Bio-Products, threatened against Bio-Products' properties,
assets or business which might have a materially adverse effect on Bio-Products'
rights or ability to perform this Agreement in accordance with its terms. No
investigation by any governmental agency is pending or threatened against
Bio-Products or the properties, business, or goodwill of Bio-Products, which has
or might have a materially adverse effect on Bio-Products' rights or ability to
perform this Agreement in accordance with its terms. There is no outstanding
order, writ, injunction, or decree of any court, government or governmental
agency against Bio-Products or its assets, business, or goodwill. Bio-Products
is not in violation of any law or governmental regulation applicable to it, to
the Technology, or to its properties or business, including but not limited to
any applicable safety, environmental control, or similar law or regulation.
5.5 There is no claim or demand of any Third Party pertaining to, or
any proceedings, which are pending or, to the knowledge of Bio-Products,
threatened which challenge the rights of Bio-Products in respect of any of the
Technology. No technology owned, licensed or used by Bio-Products is subject to
any outstanding order, decree, judgment, or stipulation by or with any court,
arbitrator or administrative agency, or, to the best of Bio-Products' knowledge,
infringes upon the rights of Third Parties.
5.6 Bio-Products reserves the right to, but as of the effective date of
this Agreement has not, put any Third Party on notice of, and is not a party to
any suit alleging, any infringement or alleged infringement of any of the
Technology. Bio-Products is aware that there are currently bases for putting
certain Third Parties on notice and/or filing claims, action, or litigation
alleging infringement of the Technology.
ARTICLE VI - INDEMNITY AND INSURANCE
------------------------------------
6.1 (a) The Licensee shall indemnify, defend and hold Bio-Products
and UAH and their respective directors, trustees, officers and
employees harmless from and against any and all claims and
expenses, including reasonable attorneys' fees and other legal
expenses, arising out of the death or injury of any person or
persons, any damage to property, or any other claim,
proceeding, demand, expense, or liability of any kind
whatsoever resulting from, or attributable to utilization of
the Technology (see Paragraph 10.3 below and Exhibit A).
Exhibit 10.6 - 11
(b) At least ten (10) days prior to commencement of vessel
installation and operating activities on the site of each
facility of the Licensee to be constructed and utilize the
Technology pursuant to this Agreement, the Licensee or its
Sub-licensee shall provide to Bio-Products copies of
certificates evidencing the purchase of policies of insurance
against the liabilities described in Paragraph 6.1(a), naming
UAH and all of the Parties hereto as additional insureds, in
amounts not less than one million dollars ($1,000,000) per
claim.
(c) Bio-Products facilities in which the Licensee shall have no
financial interest shall provide indemnification and insurance
against the liabilities described in Paragraph 6.1 (a) and
(b), naming UAH and all of the Parties hereto as additional
insureds, in amounts not less than one million dollars
($1,000,000) per claim.
VII - PATENT INFRINGEMENT
-------------------------
7.1 (a) Bio-Products shall notify the Licensee, and the Licensee
shall notify Bio-Products, of any infringement suits that may
be brought against any Party to this Agreement within three
days after learning of the existence thereof. Bio-Products
and/or UAH shall defend at their own expense all infringement
suits relating to the existing Technology, and any future
discoveries, inventions, improvements, processes and
enhancements described in Paragraphs 4.1 and 4.2 of this
Agreement. In connection with the defense by Bio-Products
and/or UAH of any Third Party claim, the Licensee shall take
reasonable actions as are necessary or desirable to assist
Bio-Products and/or UAH in any such action. If the Licensee is
called upon to take action in a way, which require it to make
available its own personnel or to retain counsel and/or
experts, Bio-Products shall reimburse the Licensee for the
direct costs of the Licensee's personnel involved and for the
fees and disbursements incurred on account of the Licensee's
counsel and experts. Such reimbursement of the Licensee shall
be by deduction from amounts to be paid to Bio-Products by the
Licensee for use of the Technology under this Agreement.
(b) The Licensee shall at its own expense defend all infringement
suits relating to any variations, modifications and
alterations of the Technology that were made by the Licensee
without the written acknowledgement and consent of
Bio-Products to make any such variations, modifications, and
alterations of the Technology. The Licensee shall not be
entitled to any deduction from amounts due Bio-Products on
account of such expenses.
7.2 Bio-Products shall have the sole right (but not the obligation) to
take enforcement action against or settle infringement activity arising under
any of the patents covering the Technology. If Bio-Products is unable to take
enforcement action or settle infringement activity for financial reasons,
Bio-Products may request Licensee to provide financing to jointly with
Exhibit 10.6 - 12
Bio-Products take such action. Licensee shall, at its sole discretion, determine
whether to provide the financial resources for any such action. The Licensee
shall take all reasonable actions as are necessary to assist Bio-Products in any
such action. If the Licensee is called upon to take action in a way, which shall
require it to make available its own personnel or to retain counsel and/or
experts, Bio-Products shall reimburse the Licensee for the direct cost of the
Licensee's personnel involved and for the fees and disbursements incurred on
account of the Licensee's counsel and experts. Such reimbursement of the
Licensee shall be by deduction from amounts to be paid to Bio-Products by the
Licensee for use of the Technology under this Agreement.
7.3 In connection with the defense by Bio-Products of any Third Party
claims not addressed in Paragraphs 7.1 or 7.2, the Licensee shall participate
and cooperate, as Bio-Products shall, from time to time, reasonably request. If
the Licensee is called upon to take action in a way which shall require it to
make available its own personnel or to retain counsel and/or experts, the
Licensee shall be entitled to a deduction from any amounts due Bio-Products
under this Agreement. If there are no such amounts due Bio-Products under this
Agreement, then Bio-Products agrees to pay Licensee all personnel, counsel,
expert and courts costs thirty days after notification of such expenses by the
Licensee in connection with Bio-Products' defense of such suits.
ARTICLE VIII - FABRICATION AND CONSTRUCTION
-------------------------------------------
8.1 The Licensee shall use its best efforts to assure that all
construction and fabrication meets or exceeds all required safety standards of
the United States and the jurisdiction wherein the Technology shall be utilized.
8.2 Bio-Products will use its best efforts to assure that all designs,
processes, formulas, recipes, and plans to be provided to the Licensee meet or
exceed all applicable and material safety standards of the United States and any
jurisdiction wherein the Technology shall be utilized.
8.3 The Licensee shall use its best efforts to obtain, or cause to be
obtained, all material local, state and federal permits necessary for the
construction and operation of any facility that will utilize the Technology.
ARTICLE IX - CONFIDENTIALITY
----------------------------
9.1 The Parties hereto each possess confidential information of both a technical
and a non-technical nature. It is understood that it has been and may be
necessary for one to disclose same to the other, and the Parties agree such
disclosures have been and will be made under and subject to the following terms:
(a) Each Party agrees to receive and maintain in strict confidence
the confidential information disclosed to it by the other
Party and which is designated in writing as "CONFIDENTIAL" by
the Party making the disclosure. Such confidential
information, either tangible or intangible, shall not be used
in any way other than for performance of express provisions of
this Agreement, and shall not be disclosed to others without
written consent of the designating, disclosing Party.
(b) The obligations of confidentiality herein shall not apply to
prevent any Party hereto from using or otherwise disclosing
any information, tangible or intangible, which:
Exhibit 10.6 - 13
(i) it had rightfully in its possession before the disclosure
thereof by the disclosing Party;
(ii) is now in, or later comes into, the public domain
through no fault of the receiving Party; or
(iii)is disclosed to the receiving Party by a Third Party
having the right to make such a disclosure.
(c) The obligations of confidentiality herein shall extend beyond
any termination, cancellation or expiration of this Agreement
and shall include all such written information exchanged
between the Parties.
(d) The information designated as "CONFIDENTIAL" shall be
disclosed by each Party only to those employees having a need
to know same for purposes of performing the express provisions
of this Agreement, and who shall in writing agree to be bound
by the provisions of this Paragraph 9.1.
(e) The Parties to this Agreement shall take all necessary care to
maintain all "CONFIDENTIAL" information in strict confidence.
Disclosure to any Third Party shall be made only after said
Third Party has executed a "Confidentiality, Non-Disclosure,
and Non-Competition" agreement which is attached hereto as
Exhibit F, copies of which shall be maintained by the
disclosing Party and shall be subject to inspection by any of
the Parties hereto.
(f) In the event that any Party hereto becomes legally compelled
or otherwise legally obligated to disclose any confidential
information disclosed to it by another Party, the compelled
Party will provide the other Party prompt notice so that the
other Party may seek a protective order or other appropriate
remedy. Should the other Party be unable on its own behalf to
obtain such order or remedy, the compelled Party will use its
best efforts to obtain a protective order or other appropriate
remedy and if unable to do so will consult (or will cause such
person to whom such confidential information was furnished to
consult) with the other Party as to what information should
and should not be disclosed and will disclose only that
portion of the confidential information which is legally
required to be disclosed and will use its best efforts to
obtain assurances that treatment consistent with this
paragraph will be accorded to that portion of the confidential
information so disclosed. Except for expenses incurred as a
result of any breach of this Agreement relating to the
disclosure of confidential information, the other Party will
reimburse the compelled Party for its expenses incurred in
complying with the terms of this Paragraph 9.1 (f).
(g) The Parties hereto agree to collect, obtain and deliver to
each other at the expiration or earlier termination of this
Agreement, all documents, models, drawings, plans, designs,
specifications, calculations, memoranda and other materials or
records prepared in the course of their performance and duties
Exhibit 10.6 - 14
hereunder, except one record set, which may be retained by
each Party in accordance with the provisions of this Paragraph
9.1.
ARTICLE X - AGREEMENT BETWEEN BIO-PRODUCTS AND UAH
--------------------------------------------------
10.1 Bio-Products shall comply with all of the terms and conditions of,
and perform all of its obligations under, the UAH License. Bio-Products shall
not agree to any amendment or modification of the UAH License that would
materially affect the terms and conditions of this Agreement without the written
consent of Licensee.
10.2 If at any time Bio-Products defaults in its duties in connection
with, or by its conduct attempts to or actually terminates the UAH License which
default and/or termination affects or terminates the ability of Bio-Products to
grant the license contained in this Agreement, then the Licensee will be
automatically entitled to and may at its sole discretion enter into contractual
agreements with and pay directly to UAH the amounts necessary to obtain or
maintain the UAH License. If Licensee does not enter into contractual agreements
with UAH, but rather cures any financial default of Bio-Products only, then such
sums paid to UAH on behalf of Bio-Products shall be deducted from any royalties
owed to Bio-Products under this Agreement. If no such royalties are owed to
Bio-Products under this Agreement then such sums will be treated as an interest
free loan to Bio-Products.
10.3 Any provision of this Agreement to the contrary notwithstanding,
this Agreement shall be construed and interpreted so that the terms and
conditions hereof shall not be inconsistent with the terms and conditions of the
UAH License, attached hereto as Exhibit A.
ARTICLE XI - PUBLICITY OF LICENSE
---------------------------------
11.1 Upon the request of the Licensee, Bio-Products shall cooperate and
provide assistance in the development of public statements, advertising, sales
literature or promotional materials to describe or promote the Technology.
ARTICLE XII - VISITS TO PREMISES
--------------------------------
12.1 The Licensee shall, from time to time, permit Bio-Products to
bring visitors to tour any facility utilizing the Technology, provided, that
Bio-Products shall notify the Licensee at least seventy-two (72) hours in
advance of any proposed visit, that such visits shall be limited to reasonable
times and intervals, and contingent upon each visitor signing an appropriate
Confidentiality, Non-Disclosure and Non-Competition Agreement, and such visitors
shall also be subject to all relevant safety and other regulations that apply to
any other visitors to the facility. No persons other than those designated by
Bio-Products shall have the right to visit any facility utilizing the Technology
without the Licensee's express written consent.
ARTICLE XIII - EVENTS OF DEFAULT AND REMEDIES
13.1 The Licensee shall be in breach of this Agreement in the event of:
Exhibit 10.6 - 15
(a) The Licensee's failure to make any payment hereunder on or
before the date on which such payment becomes due and payable
and the continuation of such failure unremedied for thirty
(30) days after written notice thereof has been given to the
Licensee by Bio-Products;
(b) The Licensee's failure to observe or perform any covenant,
condition or agreement contained in this Agreement and the
continuation of such failure unremedied for thirty (30) days
after written notice thereof has been given to the Licensee by
Bio-Products, unless such breach can not be remedied within
such thirty (30) days for reasons beyond the Licensee's
control, in which case the Licensee shall have a reasonable
time within which to remedy such breach; or
(c) Any warranty or representation made herein by the Licensee and
contained in this Agreement, shall prove to have been false,
misleading or incorrect in any material respect as of the date
made, or shall have failed to state a fact necessary in order
to make the statements made not misleading.
No termination of this Agreement shall relieve the Licensee of the
obligation to pay to Bio-Products all royalties, fees, and other payments
accrued at the time of the termination.
13.2 Bio-Products shall be in default of this Agreement in the event
of:
(a) Bio-Products' failure to observe or perform any covenant,
condition or agreement contained in this Agreement or in the
UAH License and the continuation of such failure unremedied
for thirty (30) days after written notice thereof shall have
been given to Bio-Products by the Licensee;
(b) Any warranty or representation made herein by or on behalf of
Bio-Products, contained in this Agreement or in the UAH
License, shall prove to have been false, misleading or
incorrect in any material respect as of the date made, or
shall have failed to state a fact necessary in order to make
the statements made not misleading; or
(c) If at any time Bio-Products defaults in its duties in
connection with, or by its conduct attempts to or actually
terminates the UAH License which default and/or termination
affects or terminates the ability of Bio-Products to grant the
license contained in this Agreement, or affects or terminates
Licensee's ability to continue operation of existing plants or
build new plants.
13.3 The Licensee shall have the following remedies for breach or
default of this Agreement or the UAH License by Bio-Products:
(a) Upon Bio-Products' breach or termination of the UAH License or
this Agreement, such that the breach or termination has
affected the ability of Licensee to continue operation of
Exhibit 10.6 - 16
existing plants and preclusion of building new plants, the
Licensee may at its option terminate this Agreement and
contract directly with UAH as provided in this Agreement., The
Licensee and any sub-licensee shall utilize the Technology,
free of any royalties, fees, and other amounts accrued through
the date of such default or breach and thereafter.
(b) In addition to any other right or remedy available to the
Licensee under this Agreement or in law or equity, upon
Bio-Products' breach or default of this Agreement or the UAH
License, the Licensee shall be entitled to withhold and/or
offset any and all royalties or other fees due to Bio-Products
under this Agreement.
(c) Notwithstanding anything to the contrary in this Agreement,
the Licensee may terminate this Agreement at any time upon six
(6) months prior written notice to Bio-Products, at which time
the Licensee will cease utilizing the Technology, and pay to
Bio-Products any royalties, fees and other amounts accrued
through the date of such termination. Immediately upon
termination of this Agreement all rights, privileges and
licenses granted to the Licensee hereunder shall revert to
Bio-Products, including all sub-licenses of facilities granted
by the Licensee.
13.4 Upon the Licensees' breach of this Agreement and it's failure to
cure said breach as provided above in 13.1, Bio-Products may, at its option, (i)
terminate this Agreement, at which time Licensee shall cease utilizing the
Technology and such termination shall relieve Licensee of its obligations to pay
Bio-Products any further royalties or fees other than those fees and royalties
already accrued through the date of termination and all sub-licenses granted by
Licensee shall be assigned to Bio-Products; or (ii) Bio-Products may seeks to
recover such damages to which it may be entitled by applicable law, including
but not limited to, equitable and injunctive relief.
13.5 (a) Any claim or controversy arising out of or relating to
this Agreement, or the breach thereof, including without
limitation the right of any Party hereto to terminate this
Agreement, shall be settled by binding arbitration
administered by the American Arbitration Association in
accordance with its then current Commercial Arbitration Rules,
and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The
arbitration shall be before one neutral arbitrator to be
selected in accordance with the then current Commercial
Arbitration Rules of the American Arbitration Association. The
parties shall have all rights to pre-arbitration discovery
pursuant to the Federal Code of Civil Procedure.
(b) Neither of the Parties nor the arbitrator may disclose the
existence, content or results of any arbitration hereunder
without the prior written consent of the Parties except to
counsel, accountants, and other need to know professionals.
Exhibit 10.6 - 17
(c) All fees and expenses of the arbitration shall be born by the
Parties equally. However, each Party shall bear the expense of
its own counsel, experts, witnesses, and preparation and
presentation of proofs.
(d) In the event that a claim or controversy over the right of any
Party to terminate this Agreement shall be submitted for
arbitration, this Agreement shall continue in full force and
effect, and the termination shall be of no effect, until the
arbitrator renders a final decision.
13.6 In the event of the commencement of a voluntary case under the
Bankruptcy Code by the Licensee, or Licensee's acquiescence in an involuntary
petition under the Bankruptcy Code which voluntary or involuntary case remains
undismissed for a period of ninety (90) days or more, the right and license
conferred under this Agreement shall automatically become and shall thereafter
be null and void. The commencement of a voluntary case under the Bankruptcy Code
by Bio-Products, or Bio-Products' acquiescence in an involuntary petition under
the Bankruptcy Code, which voluntary or involuntary case remains undismissed for
a period of ninety (90) days or more, shall be treated as a material breach of
the Agreement.
ARTICLE XIV - GENERAL PROVISIONS
--------------------------------
14.1 The titles of the various articles and sections of this Agreement
are solely for convenience of reference and are not part of this Agreement for
purposes of interpreting the provisions hereof.
14.2 The Licensee may assign all of its rights and obligations under,
and all of its interest in, this Agreement, including without limitation the
license granted hereby, either (i) in a transaction accompanied by the sale or
other transfer of the Licensee's entire business, its stock, or substantially
all of its assets, or (ii) to any other entity owned by the same shareholders of
Licensee and this Agreement shall be binding upon, and inure to the benefit of,
any such successor or assign of the Licensee, provided that Bio-Products
consents in writing, such assignment shall not be unreasonably conditioned,
withheld, or delayed..
14.3 Nothing in this Agreement shall be deemed or construed to
constitute or to create a partnership, joint venture or agency between the
Parties. Except as may be otherwise provided herein, neither Party shall have
any authority to bind the other Party in any respect.
14.4 If any provision of this Agreement is or becomes unenforceable
under any law of mandatory application, it is the intent of the Parties hereto
that such provision will be deemed severed and omitted herefrom, the remaining
portions hereof to remain in full force and effect as written.
14.5 The waiver by any Party of any failure on the part of any other
Party to perform any of its obligations under this Agreement shall not be
construed as a waiver of any failure or continuing failure or failures, whether
similar or dissimilar thereto.
Exhibit 10.6 - 18
14.6 This Agreement, including the exhibits hereto, constitutes the
entire Agreement between the Parties with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements between the Parties,
whether oral or written, related to the subject matter hereof. This Agreement
may be amended or modified only by a written instrument executed by the
authorized representatives of the Parties hereto.
14.7 This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be a duplicate original, but all of which, taken
together, constitute a single document. This Agreement may be executed by each
Party on separate copies, which copies, when combined so as to include the
signatures of all Parties, shall constitute a single counterpart of this
Agreement.
14.8 This Agreement shall be governed by and construed in accordance
with the laws of the State of Alabama.
14.9 Each Party to this Agreement shall execute all instruments and
documents and take all actions as may be reasonably required to effectuate this
Agreement.
14.10 For purposes of venue and jurisdiction, this Agreement shall be
deemed made and to be performed in the City of Huntsville, Alabama.
14.11 This Agreement and all exhibits contain the entire agreement
between the Parties to this Agreement with respect to the subject matter of this
Agreement, is intended as a final expression of such Parties' agreement with
respect to such terms as are included in this Agreement, is intended as a
complete and exclusive statement of the terms of such agreement, and supersedes
all negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or
accompany the execution of this Agreement.
14.12 Whenever the context so requires in this Agreement, all words
used in the singular shall be construed to have been used in the plural (and
vice versa), each gender shall be construed to include any other genders.
14.13 Subject to any restriction on transferability contained in this
Agreement, this Agreement shall be binding upon and shall inure to the benefit
of the successors-in-interest and permitted assigns of each Party to this
Agreement. Nothing in this Paragraph shall create any rights enforceable by any
Third Party that is not a Party to this Agreement, except for the rights of the
successors-in-interest and permitted assigns of each Party to this Agreement,
unless such rights are expressly granted in this Agreement to other specifically
identified Third Parties.
14.14 Except as otherwise provided in this Agreement, in the event any
litigation, arbitration, mediation, or other proceeding ("Proceeding") is
initiated by any Party against any other Party to enforce, interpret or
otherwise obtain judicial or quasi-judicial relief in connection with this
Agreement, the prevailing Party in such Proceeding shall be entitled to recover
from the unsuccessful Party all costs, expenses, and reasonable attorneys' fees
relating to or arising out of (a) such Proceeding (whether or not such
Proceeding proceeds to judgment), and (b) any post-judgment or post-award
Exhibit 10.6 - 19
proceeding including without limitation one to enforce any judgment or award
resulting from any such Proceeding. Any such judgment or award shall contain a
specific provision for the recovery of all such subsequently incurred costs,
expenses, and actual attorneys' fees.
14.15 Any notice or other communication pursuant to this Agreement
shall be sufficiently made or given five days after the date sent, postage
pre-paid, by certified mail, return receipt requested, if sent to the following
addresses, or to such other address as the Party may from time to time designate
to the other Parties in writing:
In the case of Bio-Products:
Dr. Michael H. Eley, President & CEO
BIO-PRODUCTS INTERNATIONAL, INC
3317 Clifford Road, NW Huntsville,
Alabama 35810 USA
256-852-3139 (phone)
256-436-6992 (cellular)
256-824-6305 (fax)
eleym@email.uah.edu (email)
In the case of World Waste Technologies, Inc.:
Thomas L. Collins, CEO
WORLD WASTE TECHNOLOGIES, INC.
13520 Evening Creek Dr., North
Suite 130
San Diego, CA 92128
858-391-3400 (phone)
858-204-0461 (cellular)
858-486-3352 (fax)
tcollins@worldwasteintl.com (email)
Each Party shall make a reasonable, good faith effort to ensure that it will
accept or receive notices to it that are given in accordance with this
paragraph. A Party may change its address for purposes of this paragraph by
giving the other Parties written notice of a new address in the manner set forth
above.
14.16 In the event either Party hereto shall be rendered wholly or
partly unable to perform its obligations under this Agreement by reason of
causes beyond its control, including but not limited to acts of Nature, acts of
terrorism, acts, omissions, or regulation of any government or agency thereof,
judicial action, labor disputes, or transportation failure, except as specified
herein, the performance of the obligations of such Party insofar as it is
affected by such condition shall be suspended for the duration of such
condition, provided the Party affected advises the other Party of the basis of
its inability within ten (10) days of the beginning of such known inability.
After the cessation of the condition causing such inability, the Party suffering
such inability shall have a period of thirty (30) days to restore its
operation(s) and restore its obligations to the other Party.
14.17 No representations have been made to any Party regarding taxes,
it being understood by each of the Parties that each such Party accepts full
responsibility for calculation of and payment of his or its taxes, levies,
Exhibit 10.6 - 20
duties or other charges incurred or imposed as a consequence of this Agreement
and the transactions described herein.
14.18 This Agreement shall become effective when it has been executed
by all of the Parties to this Agreement.
Exhibit 10.6 - 21
IN WITNESS WHEREOF, the Parties have caused their duly authorized
representatives to duly execute and deliver this Agreement effective as of the
date written above.
BIO-PRODUCTS INTERNATIONAL, INC.
By: /s/ Dr. Michael H. Eley
-----------------------------------------
Dr. Michael H. Eley, President & CEO
WORLD WASTE TECHNOLOGIES, INC.
By: /s/ Thomas L. Collins
----------------------------------------
Thomas L. Collins, CEO
Exhibit 10.6 - 22
Exhibit 10.7
WORLD WASTE TECHNOLOGIES, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of
---------
, 2004, by and among World Waste Technologies, Inc., a
- ----------------------
California corporation (the "Company"), and the undersigned holders of common
-------
stock of the Company together with their qualifying transferees (the "Holders").
-------
RECITALS:
A. The Company has sold shares of common stock ("Common Shares") to the
-------------
Holders pursuant to one or more Subscription Agreements (each a "Subscription").
------------
B. The sale of the Common Shares is conditional upon the extension of
the rights set forth herein, and by this Agreement the Company and the Holders
desire to provide for certain rights as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, the parties, severally and not jointly,
hereby agree as follows:
AGREEMENT:
1. Registration Rights.
-------------------
1.1 Definitions. As used in this Agreement, the following terms
-----------
shall have the following respective meanings:
(a) The terms "register", "registered" and "registration" refer
-------- ---------- ------------
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
--------------
and the declaration or ordering of the effectiveness of such registration
statement.
(b) The term "Registrable Securities" means (i) any and all
----------------------
Common Shares issued and sold by the Company pursuant to the Subscriptions; or
(ii) stock issued in respect of the Common Shares referred to in (i) as a result
of a stock split, stock dividend, recapitalization or the like, which has not
been sold to the public.
Exhibit 10.7 - 1
(c) The terms "Holder" or "Holders" means any person or persons
------ -------
to whom Registrable Securities were originally issued or qualifying transferees
under subsection 1.9 hereof who hold Registrable Securities.
(d) The term "SEC" means the Securities and Exchange Commission.
---
(e) The term "Registration Expenses" shall mean all expenses
---------------------
incurred by the Company in complying with subsections 1.2, 1.3 and 1.4 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
1.2 Company Registration.
--------------------
(a) Registration. If at any time or from time to time, the
------------
Company shall determine to register any shares of its common stock, for its own
account or the account of any of its shareholders, other than a registration on
Form S-8 relating solely to employee, director or consultant stock option or
purchase plans or other equity compensation plans, or a registration on Form S-4
relating solely to a SEC Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof at
least 10 days prior to the initial filing of the registration statement
relating to such registration; and
(ii) include in such registration, and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 5 days after receipt of such written notice from the
Company, by any Holder or Holders, except as set forth in subsection 1.2(b)
below.
Notwithstanding the foregoing, if the Company shall have already registered for
resale pursuant to a registration in accordance with Section 1.3 all of the
Registrable Securities, the Company shall not be required to include such
Registrable Securities in the Company's registration or to deliver the written
notice to each Holder as provided in subsection 1.2(a)(i).
(b) Underwriting.
------------
(i) If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to subsection
1.2(a)(i). In such event the right of any Holder to registration pursuant to
subsection 1.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. Notwithstanding the foregoing, if
the Company proposes to commence an underwriting with respect to shares of its
common stock and shall not have otherwise been required to deliver a notice of
the registration to the Holders of its Registrable Securities pursuant to the
Exhibit 10.7 - 2
last sentence of subsection 1.2(a), the Company shall deliver a written notice
of such underwriting at least 10 days prior to the commencement of such
underwriting and provide the Holders an opportunity to participate in such
underwriting in accordance with this subsection 1.2(b). The Company shall,
subject to subsection 1.2(b)(ii) below, include the Registrable Securities of
any Holder in such underwriting that specifies in a written request or requests,
made within 5 days after receipt of such written notice from the Company. All
Holders proposing to distribute their Registrable Securities through any such
underwriting pursuant to this subsection 1.2(b) shall (together with the Company
and the other shareholders distributing their shares of common stock through
such underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
(ii) Notwithstanding any other provision of this subsection
1.2, if the underwriter managing such public offering determines that marketing
factors require a limitation of the number of shares of common stock to be
underwritten, and (A) if such registration is the first registered offering of
the sale of the Company's common stock to the general public, the underwriter
may limit the number of Registrable Securities to be included in the
registration and underwriting, or may exclude Registrable Securities entirely
from such registration and underwriting, or (B) if such registration is other
than the first registered offering of the sale of the Company's common stock to
the general public, the underwriter may limit the amount of Registrable
Securities to be included in the registration and underwriting by the Company's
shareholders; provided however, the number of Registrable Securities to be
included in such registration and underwriting under this subsection 1.2(b)(ii)
shall not be reduced to less than thirty percent (30%) of the aggregate shares
of common stock included in such underwriting without the prior consent of at
least a majority of the Holders who have requested their Registrable Securities
to be included in such underwriting. The Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among Holders requesting inclusion in such
underwriting in proportion, as nearly as practicable, to the respective amounts
of Registrable Securities held by each of such Holders as of the date of the
notice pursuant to subsection 1.2(a)(i) above; provided that the number of
shares of Registrable Securities requested to be included in such underwriting
shall not be reduced unless all other shares of common stock being sold by
shareholders other than the Holders are first entirely excluded from the
underwriting. If any Holder disapproves of the terms of any such underwriting,
such Holder may elect to withdraw therefrom by written notice to the Company and
the underwriter. Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
1.3 Form SB-2 or S-3. In addition to the rights and obligations set
----------------
forth in subsection 1.2 above, within ninety (90) days of a merger with a
company that has shares of common stock that are registered under Section 12 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Company
------------
will use commercially reasonable efforts to prepare and file a registration
statement on Forms SB-2 or S-3 (or any successor to Forms SB-2 or S-3) to
register the resale from time to time of the Holder's Registrable Securities. In
such a registration, the Company shall use commercially reasonable efforts to
cause such registration statement on Forms SB-2 or S-3 (or any successor form to
Exhibit 10.7 - 3
Forms SB-2 or S-3) to be declared effective by the SEC as soon as practicable;
provided, however the Company shall not be required to effect a registration
pursuant to this subsection 1.3:
(a) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Securities
Act; or
(b) during the period starting with the date of filing of, and
ending on a date 90 days following the effective date of, a registration
statement pursuant to subsection 1.2, provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective and further provided that no other person or
entity could require the Company to file a registration statement in such
period.
Any Holder that intends to dispose of Registrable Securities pursuant
to a registration under this subsection 1.3 shall not offer, sell or otherwise
dispose of any Registrable Securities unless it has provided to the Company a
written notice of its intent to offer and sell the Registrable Securities
pursuant to a registration under this subsection 1.3 at least ten (10) days
prior to the offer or sale of the Registrable Securities. Upon receipt of such
notice by the Company from a Holder, the Company may voluntarily suspend the
effectiveness of any registration statement filed pursuant to this subsection
1.3 for a limited time, which in no event shall be longer than 90 days in any
six-month period, if the Company has been advised by counsel or underwriters to
the Company that the offering for resale of any Registrable Securities pursuant
to the registration statement would materially adversely affect, or would be
improper in view of (or improper without disclosure in a prospectus), a proposed
financing, a reorganization, recapitalization, merger, consolidation or other
transaction involving the Company.
1.4 Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with any registration, qualification or compliance pursuant to this
Section 1 shall be borne by the Company except as follows:
(a) The Company shall not be required to pay fees or
disbursements of more than one firm of legal counsel to the Holders, such fees
to not exceed $10,000 in the aggregate.
(b) The Company shall not be required to pay underwriters' fees,
discounts or commissions relating to Registrable Securities.
1.5 Registration Procedures. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder participating therein advised in writing as to
the initiation of each registration, qualification and compliance and as to the
completion thereof. Except as otherwise provided in subsection 1.4, at its
expense the Company will:
Exhibit 10.7 - 4
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its commercially reasonable
efforts to cause such registration statement to become effective, and, upon the
request of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to 120 days, or if
such registration statement is on Form SB-2 or S-3 (or any successor to Form
SB-2 or S-3) and provides for sales of securities from time to time pursuant to
Rule 415 under the Securities Act, for up to one year.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement.
(c) Furnish, without charge, to the Holders such numbers of
copies of a prospectus, including each preliminary prospectus, in conformity
with the requirements of the Securities Act, and such other documents as they
may reasonably request in order to facilitate the disposition of Registrable
Securities owned by them. The Holders shall not be entitled to use any selling
materials other than a prospectus and such other materials as may be approved by
the Company, which approval shall not be unreasonably withheld.
(d) Use its commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders or any managing underwriter, provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Notwithstanding
the foregoing, the Company shall not be obligated to enter into an underwriting
agreement with any underwriter unless the Company was previously consulted with
respect to the selection of each underwriter and the Company consented to such
selection, which consent shall not be unreasonably withheld. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act or the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) The Company shall:
(i) make available for inspection by a representative of the
Holders, the managing underwriter participating in any disposition pursuant to
such registration statement and one firm of attorneys designated by the Holders
Exhibit 10.7 - 5
(upon execution of customary confidentiality agreements reasonably satisfactory
to the Company and its counsel), at reasonable times and in reasonable manner,
financial and other records, documents and properties of the Company that are
pertinent to the conduct of due diligence customary for an underwritten
offering, and cause the officers, directors and employees of the Company to
supply all information reasonably requested by any such representative,
underwriter or attorney in connection with a registration statement as shall be
necessary to enable such persons to conduct a reasonable investigation within
the meaning of Section 11 of the Securities Act.
(ii) use its commercially reasonable efforts to cause all
Registrable Securities covered by a registration statement to be listed on any
securities exchange or any automated quotation system on which the shares of
common stock of the Company are then listed;
(iii) cause to be provided to the Holders that are selling
Registrable Securities pursuant to such registration statement and to the
managing underwriter if any disposition pursuant to such registration statement
is an underwritten offering, upon the effectiveness of such registration
statement, a customary "10b-5" opinion of independent counsel (an "Opinion") and
----- -------
a customary "cold comfort" letter of independent auditors (a "Comfort Letter")
--------------
in each case addressed to such Holders and managing underwriter, if any;
(iv) notify in writing the Holders that are selling
Registrable Securities pursuant to such registration statement and any managing
underwriter if any disposition pursuant to such registration statement is an
underwritten offering, (A) when the registration statement has become effective
and when any post-effective amendment thereto has been filed and becomes
effective, (B) of any request by the SEC or any state securities authority for
amendments and supplements to the registration statement or of any material
request by the SEC or any state securities authority for additional information
after the registration statement has become effective, (C) of the issuance by
the SEC or any state securities authority of any stop order suspending the
effectiveness of the registration statement or the initiation of any proceedings
for that purpose, (D) if, between the effective date of the registration
statement and the closing of any sale of Registrable Securities covered thereby,
the representations and warranties of the Company contained in any underwriting
agreement, securities sales agreement or other similar agreement, including this
Agreement, relating to disclosure cease to be true and correct in all material
respects or if the Company receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, (E) of the
happening of any event during the period the registration statement is effective
such that such registration statement or the related prospectus contains an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make statements therein not misleading (in
the case of a prospectus, in light of circumstances under which they were made)
and (F) of any determination by the Company that a post-effective amendment to
the registration statement would be appropriate. The Holders hereby agree to
suspend, and to cause any managing underwriter to suspend, use of the prospectus
contained in a registration statement upon receipt of such notice under clause
(C), (E) or (F) above until, in the case of clause (C), such stop order is
removed or rescinded or, in the case of clauses (E) and (F), the Company has
Exhibit 10.7 - 6
amended or supplemented such prospectus to correct such misstatement or omission
or otherwise.
If the notification relates to an event described in clauses
(E) or (F), the Company shall promptly prepare and furnish to each selling
Holder and each underwriter, if any, a reasonable number of copies of a
prospectus supplemented or amended so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
(v) provide and cause to be maintained a transfer agent and
registrar for all such Registrable Securities covered by such registration
statement not later than the effective date of such registration statement;
(vi) deliver promptly upon request to each Holder
participating in the offering and each underwriter, if any, copies of all
correspondence between the SEC and the Company, its counsel or auditors and all
memoranda relating to discussions with the SEC and its staff with respect to the
registration statement, other than those portions of any such correspondence and
memoranda which contain information subject to attorney-client privilege with
respect to the Company, and, upon receipt of such confidentiality agreements as
the Company may reasonably request, make reasonably available for inspection by
any Holder of such Registrable Securities covered by such registration
statement, by any underwriter, if any, participating in any disposition to be
effected pursuant to such registration statement and by any attorney, accountant
or other agent retained by any such Holder or any such underwriter, all
pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company's officers, directors
and employees to supply all information reasonably requested by any such Holder,
underwriter, attorney, accountant or agent in connection with such registration
statement;
(vii) use commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement;
(viii) provide a CUSIP number for all Registrable Securities
not later than the effective date of any registration statement;
(ix) make reasonably available its employees and personnel
and otherwise provide reasonable assistance to the underwriters in the marketing
of Registrable Securities in any underwritten offering;
(x) promptly prior to the filing of any document which is to
be incorporated by reference into the registration statement or the prospectus
(after the initial filing of such registration statement) (other than a
registration statement or prospectus prepared pursuant to subsection 1.3)
provide copies of such document to counsel to the seller of Registrable
Securities and to the managing underwriter, if any, and make the Company's
representatives reasonably available for discussion of such document and make
such changes in such document concerning such sellers prior to the filing
thereof as counsel for such sellers or underwriters may reasonably request; and
Exhibit 10.7 - 7
(xi) cooperate with the sellers of Registrable Securities
and the managing underwriter, if any, to facilitate the timely preparation and
delivery of certificates not bearing any restrictive legends representing the
Registrable Securities to be sold, and cause such Registrable Securities to be
issued in such denominations and registered in such names in accordance with the
underwriting agreement prior to any sale of Registrable Securities to the
underwriters or, if not an underwritten offering, in accordance with the
instructions of the sellers of Registrable Securities at least three business
days prior to any sale of Registrable Securities.
1.6 Indemnification.
---------------
(a) The Company will indemnify and hold harmless to the fullest
extent permitted by law each Holder of Registrable Securities and each of its
officers, directors and partners, and each person controlling such Holder, with
respect to which such registration, qualification or compliance has been
effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter of the Registrable Securities held by or
issuable to such Holder, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereto) arising out of or based on (i) any
untrue statement (or alleged untrue statement) of a material fact contained in
any registration statement under which such securities were registered under the
Securities Act or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; (ii) any untrue statement (or alleged untrue statement) of a
material fact contained in any preliminary or final prospectus, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statement therein, in light of the
circumstances under which they were made, or not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act or any state securities law applicable to the Company or any rule
or regulation promulgated under the Securities Act, the Exchange Act or any such
state law and relating to action or inaction required of the Company in
connection with any such registration, qualification of compliance, and will
reimburse each such Holder, each of its officers, directors and partners, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, within a reasonable amount of time after incurred
for any reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action; provided, however, that the indemnity agreement contained in this
subsection 1.6(a) shall not apply to amounts paid in settlement of any such
claim, loss, damage, liability, or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld);
and provided further, that the Company will not be liable in any such case to
the extent that any such claim, loss, damage or liability arises out of or is
based on any untrue statement or omission based upon written information
furnished to the Company by such Holder or underwriter specifically for use
therein; and provided further, however, that the Company will not be liable in
any such case to the extent that any such claim, loss, damage or liability
arises directly out of or is based primarily upon an untrue statement or
omission made in any preliminary or final prospectus if (i) such Holder failed
to send or deliver a copy of the final prospectus or prospectus supplement with
or prior to the delivery of written confirmation of the sale of the Registrable
Securities and (ii) the final prospectus or prospectus supplement would have
corrected such untrue statement or omission.
Exhibit 10.7 - 8
(b) Each Holder will, if Registrable Securities held by or
issuable to such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, severally and not
jointly, indemnify and hold harmless to the fullest extent permitted by law the
Company, each of its directors and officers, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company within the meaning of the Securities Act, and each other
such Holder, each of its officers, directors and partners and each person
controlling such Holder, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement or final prospectus, or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company, such Holders, such directors, officers, partners, persons
or underwriters for any reasonable legal or any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement or prospectus in reliance upon
and in conformity with information furnished to the Company by such Holder
specifically for use therein; provided, however, that the indemnity agreement
contained in this subsection 1.6(b) shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or action if such
settlement is effected without the consent of the Holder, (which consent shall
not be unreasonably withheld); and provided further, that the total amount for
which any Holder shall be liable under this subsection 1.6(b) shall not in any
event exceed the net proceeds received by such Holder from the sale of
Registrable Securities held by such Holder in such registration; and provided
further, that a Holder will not be liable in any such case to the extent that
any such claim, loss, damage or liability arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Holder by the Company or underwriter specifically for use therein.
(c) Each party entitled to indemnification under this subsection
1.6 (the "Indemnified Party") shall give notice to the party required to provide
-----------------
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
------------------
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense; and provided further, that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, except to the extent such failure resulted in
material prejudice to the Indemnifying Party; and provided further, that an
Indemnified Party (together with all other Indemnified Parties which may be
represented without conflict by one counsel) shall have the right to retain one
separate counsel, with the fees and expenses to be paid by the Indemnifying
Party, if representation of such Indemnified Party by the counsel retained by
the Indemnifying Party would be inappropriate due to actual or potential
differing interests between such Indemnified Party and any other party
Exhibit 10.7 - 9
represented by such counsel in such proceeding. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.
(d) If for any reason the foregoing indemnity is unavailable or
is insufficient to hold harmless an indemnified party under subsection 1.6, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of any claim in such proportion as is appropriate
to reflect the relative fault of the Indemnifying Party, on the one hand, and
the Indemnified Party, on the other hand, with respect to such offering of
securities. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Indemnifying Party or the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. If, however, the allocation provided
in the second preceding sentence is not permitted by applicable law, then each
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party in such proportion as is appropriate to reflect not only such
relative faults, but also any other relevant equitable considerations. The
parties hereto agree that it would not be just and equitable if contributions
pursuant to this subsection 1.6(d) were to be determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to in the preceding sentences of this
subsection 1.6(d). The amount paid or payable in respect of any claim shall be
deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such claim.
No person guilty of fraudulent misrepresentation (within the meaning of section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Notwithstanding
anything in this subsection 1.6 to the contrary, no Indemnifying Party (other
than the Company) shall be required pursuant to this subsection 1.6(d) to
contribute any amount in excess of the net proceeds received by such
Indemnifying Party from the sale of Registrable Securities in the offering to
which the losses, claims, damages or liabilities of the Indemnified Parties
relate, less the amount of any indemnification payment made pursuant to
subsection 1.6.
(e) The indemnity agreements contained herein shall be in
addition to any other rights to indemnification or contribution which any
Indemnified Party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by, or on behalf of, any Indemnified Party and shall survive the
transfer of the Registrable Securities by any such party.
1.7 Information by Holder. Any Holder or Holders of Registrable
---------------------
Securities included in any registration shall promptly furnish to the Company
such information regarding such Holder or Holders and the distribution proposed
by such Holder or Holders as the Company may reasonably request and as shall be
required in connection with any registration, qualification or compliance
referred to herein.
Exhibit 10.7 - 10
1.8 Rule 144 Reporting. With a view to making available to Holders
------------------
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees at all times to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, after 90 days after the effective
date of the first registration filed by the Company for an offering of its
securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and
(c) so long as a Holder owns any Registrable Securities, to
furnish to such Holder forthwith upon receipt of a written request a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144 (at any time after 90 days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed by the Company as the Holder may reasonably request in
complying with any rule or regulation of the SEC allowing the Holder to sell any
such securities without registration.
1.9 Transfer of Registration Rights. Holders' rights to cause the
-------------------------------
Company to register their securities and keep information available, granted to
them by the Company under subsections 1.2, 1.3 and 1.8, may be assigned to a
transferee or assignee of (i) at least 100,000 shares (as adjusted for stock
splits, stock dividends, recapitalizations and like events), (ii) the transfer
is in connection with the transfer of all the Registrable Securities of a
Holder, or (iii) to any constituent partners or members of a Holder which is a
partnership or limited liability company, or to affiliates (as such term is
defined in SEC Rule 405) of a Holder, provided, that (a) the Company is given
written notice by such Holder at the time of or within a reasonable time after
said transfer, stating the name and address of said transferee or assignee, and
identifying the securities with respect to which such registration rights are
being assigned; (b) the assignee or transferee of such rights agrees in writing
to be bound by the terms and conditions of this Agreement, and (c) solely as to
transfers pursuant to clause (iii) above, any transferees or assignees agree to
act through a single representative. The Company may prohibit the transfer of
any Holders' rights under this subsection 1.9 to any proposed transferee or
assignee who the Company reasonably believes is a competitor of the Company, or
when such transfer may violate applicable securities laws. Notwithstanding
anything else in this subsection 1.9, any Holder may transfer rights to a
transferee of a Holder's Registrable Securities if such transferee is a partner,
member or shareholder or a retired partner, member or shareholder of such
Holder.
1.10 "Market Stand-Off" Agreement. Each Holder hereby agrees that,
----------------
during the period of duration (not to exceed 180 days) specified by the Company
Exhibit 10.7 - 11
and an underwriter of common stock or other securities of the Company following
the effective date of an IPO or reverse merger with a public company, it shall
not, to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase, pledge or otherwise transfer or
dispose of (other than to donees who agree to be similarly bound) any securities
of the Company held by it at any time during such period except common stock
included in such registration. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to the Registrable
Securities of each Holder (and the shares of securities of every other person
subject to the foregoing restriction) until the end of such period.
1.11 Delay of Registration. No Holder shall have any rights to take
---------------------
any actions to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 1.
1.12 Termination of Registration Rights. No Holder shall be entitled
----------------------------------
to exercise any right provided for in this Section 1 at any time, and the
obligations of the Company to a Holder under this Section 1 shall terminate with
respect to such Holder, when such Holder may sell all its Registrable Securities
in a three (3) month period under Rule 144 of the Act.
2. Affirmative Covenants of the Company. The Company hereby covenants
------------------------------------
and agrees as follows:
2.1 Annual Financial Information. The Company shall deliver to each
----------------------------
Holder of at least one hundred thousand (100,000) (as adjusted for stock splits
or recapitalizations) Registrable Securities (a "Qualified Holder") as soon as
----------------
practicable after the end of each fiscal year of the Company, but in any event
within 90 days thereafter, statements of operations, shareholders' equity and
cash flows of the Company for such year, and a balance sheet of the Company as
of the end of such year, such year-end financial reports to be in reasonable
detail, prepared in accordance with generally accepted accounting principles
("GAAP"), and audited by independent public accountants selected by the
----
Company's Board of Directors.
2.2 Inspection. The Company shall permit each Qualified Holder, at
----------
such Qualified Holder's expense, to visit and inspect the Company's properties,
to examine its books of account and records and to discuss the Company's
affairs, finances and accounts with its officers, all at such reasonable times
as may be requested by the Qualified Holder; provided, however, that the Company
shall not be obligated pursuant to this subsection to provide access to any
information which it reasonably considers to be a trade secret or similar
confidential information.
Exhibit 10.7 - 12
2.3 Termination of Information Covenants and Confidentiality of
-----------------------------------------------------------
Information. The covenants of the Company set forth in subsections 2.1 and 2.2
- -----------
shall terminate as to the Qualified Holder and be of no further force or effect
when the Company first becomes subject to the periodic reporting requirements of
Section 12(b), 12(g) or 15(d) of the Securities Exchange Act of 1934, as
amended. Each Qualified Holder agrees that it will keep confidential and will
not disclose or divulge any confidential, proprietary or secret information
which such Purchaser may obtain from the Company, and which the Company has
prominently marked "confidential", "proprietary" or "secret" or has otherwise
identified as being such, pursuant to financial statements, reports and other
materials submitted by the Company as required hereunder, unless such
information is or becomes known to the Qualified Holder from a source other than
the Company without violation of any rights of the Company, or is or becomes
publicly known, or unless the Company gives its written consent to the Qualified
Holder's release of such information, except that no such written consent shall
be required (and the Qualified Holder shall be free to release such information
to such recipient) if such information is to be provided to a Qualified Holder's
counsel or accountant (and the provision of such information is directly
necessary in order for such recipient provide services to Qualified Holder), or
to an officer, director or partner of a Qualified Holder, provided that the
Qualified Holder shall inform the recipient of the confidential nature of such
information, and such recipient agrees in writing in advance of disclosure to
treat the information as confidential.
3. General.
-------
3.1 Waivers and Amendments. With the written consent of the record
----------------------
holders of at least a majority of the Registrable Securities, the obligations of
the Company and the rights of the parties under this Agreement may be waived
(either generally or in a particular instance, either retroactively or
prospectively, and either for a specified period of time or indefinitely), and
with the same consent the Company, when authorized by resolution of its Board of
Directors, may enter into a supplementary agreement for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement; provided, however, that no such modification, amendment or
waiver shall reduce the aforesaid percentage of Registrable Securities without
the consent of all of the Holders of the Registrable Securities. Notwithstanding
the foregoing, subsections 2.1, 2.2, and 2.3 may be amended only with the
written consent of the Company and a majority of the shares then held by
Qualified Holders. Upon the effectuation of each such waiver, consent, agreement
of amendment or modification, the Company shall promptly give written notice
thereof to the record holders of the Registrable Securities or Qualified
Holders, as the case may be, who have not previously consented thereto in
writing. This Agreement or any provision hereof may be changed, waived,
discharged or terminated only by a statement in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, except to the extent provided in this subsection 3.1.
3.2 Governing Law. This Agreement shall be governed in all respects
-------------
by the laws of the State of Delaware without regard the principles of conflicts
of law thereof.
Exhibit 10.7 - 13
3.3 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
3.4 Entire Agreement. Except as set forth below, this Agreement and
----------------
the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and this Agreement shall supersede and cancel all prior
agreements between the parties hereto with regard to the subject matter hereof.
3.5 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be delivered by overnight
courier service or mailed by first class mail, postage prepaid, certified or
registered mail, return receipt requested, addressed (a) if to any Purchaser, at
such party's address as set forth in the Company's records, or at such other
address as such party shall have furnished to the Company in writing, or (b) if
to the Company, at such address as the Company shall have furnished to the
Purchaser in writing.
3.6 Severability. In case any provision of this Agreement shall be
------------
invalid, illegal, or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement or any provision of the other
Agreement s shall not in any way be affected or impaired thereby.
3.7 Titles and Subtitles. The titles of the sections and subsections
--------------------
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
3.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
----- SIGNATURES ON NEXT PAGE -----
Exhibit 10.7 - 14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date set forth underneath their respective signatures below.
"COMPANY"
World Waste Technologies, Inc.,
a California corporation
By: ________________________________
Thomas L. Collins, CEO
Date: _________________________, 2004
"HOLDER"
By: ________________________________
Print: _____________________________
Date: ______________________________, 2004
Exhibit 10.7 - 15
EXHIBIT 10.8
EXHIBIT 10.8-1
WORLD WASTE TECHNOLOGIES, INC.
Notice of Warrant Grant
You have been granted the following Warrant to purchase shares of the
Common Stock of World Waste Technologies, Inc. (the "Company"):
Name of Warrant Holder: Thomas L. Collins
Total Number of Shares: 100,000
Exercise Price Per Share: $1.50
Date of Grant: May 10, 2004
Date Exercisable: This Warrant may be exercised with respect to the
first 25% of the Shares subject to this Warrant
when the Holder completes eight months of
continuous Service after the Vesting Commencement
Date. This Warrant may be exercised with respect
to an additional 1/12th of the remaining Shares
subject to this warrant when the Holder completes
each three months of continuous Service
thereafter. This Warrant may become exercisable
on an accelerated basis under Section 2 of the
Warrant.
Vesting Commencement May 1, 2004
Date:
Expiration Date: May 9, 2011. This Warrant expires earlier if the
Holder's Service terminates earlier, as provided
in Section 1 of the Warrant.
Service: For purposes of this Warrant, "Service" shall be
defined as shall mean service as (i) any
individual who is a common-law employee of the
Company, a parent or a subsidiary, (ii) any
member of the Board of Directors who is not an
employee (iii) or a person who performs bona fide
services for the Company, a parent or a
subsidiary as a consultant or advisor, excluding
employees.
10.8-2
By your signature and the signature of the Company's representative below, you
and the Company agree that this warrant is granted under and governed by the
terms and conditions of the Warrant, which is attached to and made a part of
this document.
WARRANT HOLDER: WORLD WASTE TECHNOLOGIES, INC.
By: By:
--------------------------------- --------------------------------------
Date: Title:
------------------------------- -----------------------------------
Date:
------------------------------------
10.8-3
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT
TO RULE 144 OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE CORPORATION
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 11:59 PM MAY 9, 2011
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
WORLD WASTE TECHNOLOGIES, INC
THIS CERTIFIES THAT, Thomas L. Collins ("Holder") is entitled to purchase the
above number of fully paid and non-assessable shares of the Common Stock (the
"Shares") of World Waste Technologies, Inc., a California corporation (the
"Company), having an Exercise Price as set forth above.
1. Term and Expiration. This Warrant is exercisable, in whole or in
-------------------
part, prior to its expiration at the time or times set forth in the Notice of
Grant above, after which time the Warrant shall be void. This Warrant shall in
any event expire on the expiration date set forth in the Notice of Grant above,
which date is 7 years after the Date of Grant. If the Holder's Service
terminates for any reason, then this Warrant shall expire on the earliest of the
following occasions: (i) The expiration date determined pursuant to Section 1
hereof; (ii) The date three months after the termination of the Holder's Service
for any reason other than disability; or (iii) the date 12 months after the
termination of the Holder's Service by reason of disability. When the Holder's
Service terminates, this Warrant shall expire immediately with respect to the
number of Shares for which this Warrant is not yet exercisable. In the event
that the Holder dies after termination of Service but before the expiration of
this Warrant, all or part of this Warrant may be exercised (prior to expiration)
by the executors or administrators of the Holder's estate or by any person who
has acquired this Warrant directly from the Holder by beneficiary designation,
bequest or inheritance, but only to the extent that this Warrant had become
exercisable before the Holder's Service terminated. For any purpose under this
Warrant, Service shall be deemed to continue while the Holder is on a bona fide
leave of absence, if such leave was approved by the Company in writing and if
continued crediting of Service for such purpose is expressly required by the
terms of such leave or by applicable law (as determined by the Company).
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to the
----------------------------------------------------
other terms and conditions hereof, the right to purchase Shares represented by
this Warrant may be exercised by Holder prior to its expiration at the time or
times set forth in the Notice of Grant above, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Exhibit A duly executed) at the principal office of the Company and by the
payment to the Company, by check made payable to the Company drawn on a United
States bank and for United States funds, of an amount equal to the then
applicable Exercise Price per share multiplied by the number of Shares then
being purchased or by net exercise pursuant to Section 6 hereof. In the event of
any exercise of the purchase right represented by this Warrant, certificates for
the Shares so purchased shall be promptly delivered to Holder and, unless this
10.8-4
Warrant has been fully exercised or has expired, a new Warrant representing the
portion of the Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be promptly delivered to Holder. In addition, the
following rules shall apply if the Company is subject to a change in control
before the Holder's Service terminates: This Warrant shall become exercisable in
full if (A) this Warrant does not remain outstanding following the change in
control, (B) this Warrant is not assumed by the surviving corporation or its
parent, (C) the surviving corporation or its parent does not substitute a
Warrant with substantially the same terms for this Warrant or (D) the full value
of this Warrant (whether or not exercisable) is not settled in cash or cash
equivalents (including, without limitation, deferred cash payments).
3. Exercise Price. The Exercise Price at which this Warrant may be
--------------
exercised shall be the Initial Exercise Price as set forth in the Notice of
Grant above, as adjusted from time to time for stock splits, reclassifications,
combinations and the like.
4. [Reserved.]
5. Transferability and Negotiability of Warrant. This Warrant may not
--------------------------------------------
be transferred or assigned in whole or in part without compliance with
applicable federal and state securities laws by the transferor and the
transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, if reasonably requested by the Company). Subject to the provisions of
this Section 5, title to this Warrant may be transferred in the same manner as a
negotiable instrument transferable by endorsement and delivery.
6. Cash-less Exercise. In lieu of exercising this Warrant for cash, the
------------------
Holder may elect to exchange this Warrant for Shares equal to the value of this
Warrant, in whole or in part, by surrender of this Warrant, in whole or in part
as the case may be, together with notice of such election, at the principal
office of the Company.
7. No Retention Rights. Nothing in this Agreement or in the Plan shall
-------------------
confer upon the Holder any right to continue in service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the
Purchaser) or of the Holder, which rights are hereby expressly reserved by each,
to terminate his or her service at any time and for any reason, with or without
cause.
8. Successors And Assigns. Except as otherwise expressly provided to
----------------------
the contrary, the provisions of this Warrant shall inure to the benefit of, and
be binding upon, the Company and its successors and assigns and be binding upon
the Holder and the Holder's legal representatives, heirs, legatees,
distributees, assigns and transferees by operation of law, whether or not any
such person has become a party to this Agreement or has agreed in writing to
join herein and to be bound by the terms, conditions and restrictions hereof.
10.8-5
9. Tax Consequences. The grant, exercise, acquisition or disposition of
----------------
the Shares may result in adverse tax consequences. The Holder should consult
with his or her tax advisor to determine the tax consequences of the granting,
exercising, acquiring or disposing of the Purchased Shares.
10. Legends. All certificates issued pursuant to the exercise of this
-------
Warrant evidencing Shares shall bear the following legends:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER
DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A
WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN
INTEREST TO THE SHARES). THE SECRETARY OF THE COMPANY
WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
If required by the authorities of any state in connection with the
issuance of the Shares, the legend or legends required by such state authorities
shall also be endorsed on all such certificates.
11. Waivers and Amendments. Any term of this Warrant may be amended or
----------------------
waived with the written consent of the Company and the Holder. No waivers of, or
exceptions to, any term, condition or provision of this Warrant, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
12. Miscellaneous. The Company covenants that it will at all times
-------------
reserve and keep available, solely for the purpose of issue upon the exercise
hereof, a sufficient number of Shares to permit the exercise hereof in full.
Such Shares, when issued in compliance with the provisions of this Warrant and
the Company's Articles of Certificate, will be duly authorized, validly issued,
fully paid and non-assessable. No Holder of this Warrant, as such, shall, prior
to the exercise of this Warrant, be entitled to vote or receive dividends or be
deemed to be a stockholder of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon Holder, as such, any
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action, receive notice of meetings, receive dividends
or subscription rights, or otherwise. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like date and tenor. This Warrant
shall be governed by and construed under the laws of the State of California.
10.8-6
NOTICE OF EXERCISE
TO: WORLD WASTE TECHNOLOGIES, INC.
1. The undersigned hereby elects to purchase shares of the
------------
Common Stock of WORLD WASTE TECHNOLOGIES, INC. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full, together with all applicable transfer taxes, if any.
2. The undersigned hereby elects to purchase shares of the
-------------
Common Stock of WORLD WASTE TECHNOLOGIES, INC. pursuant to the terms of the
attached Warrant on a net exercise basis in accordance with Section 6.
3. In connection with the purchase of the above-listed Common Stock,
the undersigned hereby submits an executed Investment Representation Statement
as attached hereto.
4. Please issue a certificate or certificates representing said shares
of the Common Stock in the name of the undersigned or in such other name as is
specified below:
Name:
----------------------------------
Tax ID:
--------------------------------
Address:
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
Signed:
---------------------------------
Date:
---------------------------------
10.8-7
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : ____________________________________
COMPANY : WORLD WASTE TECHNOLOGIES, INC.
SECURITY : COMMON STOCK
AMOUNT : ____________________________________
DATE : ____________________________________
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933 ("Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. In addition, I understand that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel for the Purchaser
satisfactory to the Company or receipt of a no-action letter from the Securities
and Exchange Commission.
(d) I am aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: the availability of certain public information about the Company; the
resale occurring not less than one year after the party has purchased and paid
for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and
the amount of securities being sold during any three month period not exceeding
the specified limitations stated therein.
(e) I further understand that at the time I wish to sell the Securities
there may be no public market upon which to make such a sale, and that, even if
such a public market then exists, the Company may not be satisfying the current
public information requirements of Rule 144, and that, in such event, I may be
precluded from selling the Securities under Rule 144 even if the one-year
minimum holding period had been satisfied.
10.8-8
(f) I further understand that in the event all of the requirements of
Rule 144 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the
SEC has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.
Date: ________________________ _________________________________________
Purchaser
10.8-9
EXHIBIT 10.9
EXHIBIT 10.9-1
WORLD WASTE TECHNOLOGIES, INC.
Notice of Warrant Grant
You have been granted the following Warrant to purchase shares of the
Common Stock of World Waste Technologies, Inc. (the "Company"):
Name of Warrant Holder: Steve Racoosin
Total Number of Shares: 75,000
Exercise Price Per Share: $1.50
Date of Grant: May 10, 2004
Date Exercisable: This Warrant may be exercised with
respect to the first 25% of the Shares subject to
this Warrant when the Holder completes eight
months of continuous Service after the Vesting
Commencement Date. This Warrant may be exercised
with respect to an additional 1/12th of the
remaining Shares subject to this warrant when the
Holder completes each three months of continuous
Service thereafter. This Warrant may become
exercisable on an accelerated basis under Section
2 of the Warrant.
Vesting Commencement May 1, 2004
Date:
Expiration Date: May 9, 2011. This Warrant expires earlier if the
Holder's Service terminates earlier, as provided
in Section 1 of the Warrant.
Service: For purposes of this Warrant, "Service" shall be
defined as shall mean service as (i) any
individual who is a common-law employee of the
Company, a parent or a subsidiary, (ii) any
member of the Board of Directors who is not an
employee (iii) or a person who performs bona fide
services for the Company, a parent or a
subsidiary as a consultant or advisor, excluding
employees.
10.9-2
By your signature and the signature of the Company's representative below, you
and the Company agree that this warrant is granted under and governed by the
terms and conditions of the Warrant, which is attached to and made a part of
this document.
WARRANT HOLDER: WORLD WASTE TECHNOLOGIES, INC.
By: By:
------------------------------ ----------------------------------------
Date: Title:
---------------------------- -------------------------------------
Date:
--------------------------------------
10.9-3
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT
TO RULE 144 OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE CORPORATION
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 11:59 PM MAY 9, 2011
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
WORLD WASTE TECHNOLOGIES, INC
THIS CERTIFIES THAT, Steve Racoosin ("Holder") is entitled to purchase the above
number of fully paid and non-assessable shares of the Common Stock (the
"Shares") of World Waste Technologies, Inc., a California corporation (the
"Company), having an Exercise Price as set forth above.
1. Term and Expiration. This Warrant is exercisable, in whole or in
--------------------
part, prior to its expiration at the time or times set forth in the Notice of
Grant above, after which time the Warrant shall be void. This Warrant shall in
any event expire on the expiration date set forth in the Notice of Grant above,
which date is 7 years after the Date of Grant. If the Holder's Service
terminates for any reason, then this Warrant shall expire on the earliest of the
following occasions: (i) The expiration date determined pursuant to Section 1
hereof; (ii) The date three months after the termination of the Holder's Service
for any reason other than disability; or (iii) the date 12 months after the
termination of the Holder's Service by reason of disability. When the Holder's
Service terminates, this Warrant shall expire immediately with respect to the
number of Shares for which this Warrant is not yet exercisable. In the event
that the Holder dies after termination of Service but before the expiration of
this Warrant, all or part of this Warrant may be exercised (prior to expiration)
by the executors or administrators of the Holder's estate or by any person who
has acquired this Warrant directly from the Holder by beneficiary designation,
bequest or inheritance, but only to the extent that this Warrant had become
exercisable before the Holder's Service terminated. For any purpose under this
Warrant, Service shall be deemed to continue while the Holder is on a bona fide
leave of absence, if such leave was approved by the Company in writing and if
continued crediting of Service for such purpose is expressly required by the
terms of such leave or by applicable law (as determined by the Company).
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to the
----------------------------------------------------
other terms and conditions hereof, the right to purchase Shares represented by
this Warrant may be exercised by Holder prior to its expiration at the time or
times set forth in the Notice of Grant above, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Exhibit A duly executed) at the principal office of the Company and by the
payment to the Company, by check made payable to the Company drawn on a United
States bank and for United States funds, of an amount equal to the then
applicable Exercise Price per share multiplied by the number of Shares then
being purchased or by net exercise pursuant to Section 6 hereof. In the event of
any exercise of the purchase right represented by this Warrant, certificates for
10.9-4
the Shares so purchased shall be promptly delivered to Holder and, unless this
Warrant has been fully exercised or has expired, a new Warrant representing the
portion of the Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be promptly delivered to Holder. In addition, the
following rules shall apply if the Company is subject to a change in control
before the Holder's Service terminates: This Warrant shall become exercisable in
full if (A) this Warrant does not remain outstanding following the change in
control, (B) this Warrant is not assumed by the surviving corporation or its
parent, (C) the surviving corporation or its parent does not substitute a
Warrant with substantially the same terms for this Warrant or (D) the full value
of this Warrant (whether or not exercisable) is not settled in cash or cash
equivalents (including, without limitation, deferred cash payments).
3. Exercise Price. The Exercise Price at which this Warrant may be
---------------
exercised shall be the Initial Exercise Price as set forth in the Notice of
Grant above, as adjusted from time to time for stock splits, reclassifications,
combinations and the like.
4. [Reserved.]
5. Transferability and Negotiability of Warrant. This Warrant may not
--------------------------------------------
be transferred or assigned in whole or in part without compliance with
applicable federal and state securities laws by the transferor and the
transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, if reasonably requested by the Company). Subject to the provisions of
this Section 5, title to this Warrant may be transferred in the same manner as a
negotiable instrument transferable by endorsement and delivery.
6. Cash-less Exercise. In lieu of exercising this Warrant for cash, the
------------------
Holder may elect to exchange this Warrant for Shares equal to the value of this
Warrant, in whole or in part, by surrender of this Warrant, in whole or in part
as the case may be, together with notice of such election, at the principal
office of the Company.
7. No Retention Rights. Nothing in this Agreement or in the Plan shall
-------------------
confer upon the Holder any right to continue in service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the
Purchaser) or of the Holder, which rights are hereby expressly reserved by each,
to terminate his or her service at any time and for any reason, with or without
cause.
8. Successors And Assigns. Except as otherwise expressly provided to
----------------------
the contrary, the provisions of this Warrant shall inure to the benefit of, and
be binding upon, the Company and its successors and assigns and be binding upon
the Holder and the Holder's legal representatives, heirs, legatees,
distributees, assigns and transferees by operation of law, whether or not any
such person has become a party to this Agreement or has agreed in writing to
join herein and to be bound by the terms, conditions and restrictions hereof.
10.9-5
9. Tax Consequences. The grant, exercise, acquisition or disposition of
----------------
the Shares may result in adverse tax consequences. The Holder should consult
with his or her tax advisor to determine the tax consequences of the granting,
exercising, acquiring or disposing of the Purchased Shares.
10. Legends. All certificates issued pursuant to the exercise of this
-------
Warrant evidencing Shares shall bear the following legends:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER
DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A
WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE
REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN
INTEREST TO THE SHARES). THE SECRETARY OF THE COMPANY
WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
If required by the authorities of any state in connection with the
issuance of the Shares, the legend or legends required by such state authorities
shall also be endorsed on all such certificates.
11. Waivers and Amendments. Any term of this Warrant may be amended or
----------------------
waived with the written consent of the Company and the Holder. No waivers of, or
exceptions to, any term, condition or provision of this Warrant, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
12. Miscellaneous. The Company covenants that it will at all times
-------------
reserve and keep available, solely for the purpose of issue upon the exercise
hereof, a sufficient number of Shares to permit the exercise hereof in full.
Such Shares, when issued in compliance with the provisions of this Warrant and
the Company's Articles of Certificate, will be duly authorized, validly issued,
fully paid and non-assessable. No Holder of this Warrant, as such, shall, prior
to the exercise of this Warrant, be entitled to vote or receive dividends or be
deemed to be a stockholder of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon Holder, as such, any
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action, receive notice of meetings, receive dividends
or subscription rights, or otherwise. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like date and tenor. This Warrant
shall be governed by and construed under the laws of the State of California.
10.9-6
NOTICE OF EXERCISE
TO: WORLD WASTE TECHNOLOGIES, INC.
1. The undersigned hereby elects to purchase shares of the
-------------
Common Stock of WORLD WASTE TECHNOLOGIES, INC. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full, together with all applicable transfer taxes, if any.
2. The undersigned hereby elects to purchase shares of the
-------------
Common Stock of WORLD WASTE TECHNOLOGIES, INC. pursuant to the terms of the
attached Warrant on a net exercise basis in accordance with Section 6.
3. In connection with the purchase of the above-listed Common Stock,
the undersigned hereby submits an executed Investment Representation Statement
as attached hereto.
4. Please issue a certificate or certificates representing said shares
of the Common Stock in the name of the undersigned or in such other name as is
specified below:
Name:
----------------------------------
Tax ID:
--------------------------------
Address:
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
Signed:
----------------------------------
Date:
------------------------------------
10.9-7
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : ____________________________________
COMPANY : WORLD WASTE TECHNOLOGIES, INC.
SECURITY : COMMON STOCK
AMOUNT : ____________________________________
DATE : ____________________________________
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933 ("Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. In addition, I understand that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel for the Purchaser
satisfactory to the Company or receipt of a no-action letter from the Securities
and Exchange Commission.
(d) I am aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: the availability of certain public information about the Company; the
resale occurring not less than one year after the party has purchased and paid
for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and
the amount of securities being sold during any three month period not exceeding
the specified limitations stated therein.
(e) I further understand that at the time I wish to sell the Securities
there may be no public market upon which to make such a sale, and that, even if
such a public market then exists, the Company may not be satisfying the current
public information requirements of Rule 144, and that, in such event, I may be
precluded from selling the Securities under Rule 144 even if the one-year
minimum holding period had been satisfied.
10.9-8
(f) I further understand that in the event all of the requirements of
Rule 144 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the
SEC has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.
Date: ________________________ _________________________________________
Purchaser
10.9-9
EXHIBIT 10.10
10.10-1
WORLD WASTE TECHNOLOGIES, INC.
Notice of Warrant Grant
You have been granted the following Warrant to purchase shares of the
Common Stock of World Waste Technologies, Inc. (the "Company"):
Name of Warrant Holder: Fred Lundberg
Total Number of Shares: 75,000
Exercise Price Per Share: $1.50
Date of Grant: May 10, 2004
Date Exercisable: This Warrant may be exercised with
respect to the first 25% of the Shares subject to
this Warrant when the Holder completes eight
months of continuous Service after the Vesting
Commencement Date. This Warrant may be exercised
with respect to an additional 1/12th of the
remaining Shares subject to this warrant when the
Holder completes each three months of continuous
Service thereafter. This Warrant may become
exercisable on an accelerated basis under Section
2 of the Warrant.
Vesting Commencement May 1, 2004
Date:
Expiration Date: May 9, 2011. This Warrant expires earlier if the
Holder's Service terminates earlier, as provided
in Section 1 of the Warrant.
Service: For purposes of this Warrant, "Service" shall be
defined as shall mean service as (i) any
individual who is a common-law employee of the
Company, a parent or a subsidiary, (ii) any
member of the Board of Directors who is not an
employee (iii) or a person who performs bona fide
services for the Company, a parent or a
subsidiary as a consultant or advisor, excluding
employees.
10.10-2
By your signature and the signature of the Company's representative below, you
and the Company agree that this warrant is granted under and governed by the
terms and conditions of the Warrant, which is attached to and made a part of
this document.
WARRANT HOLDER: WORLD WASTE TECHNOLOGIES, INC.
By: By:
------------------------------- --------------------------------------
Date: Title:
----------------------------- -----------------------------------
Date:
------------------------------------
10.10-3
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT
TO RULE 144 OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE CORPORATION
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 11:59 PM MAY 9, 2011
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
WORLD WASTE TECHNOLOGIES, INC
THIS CERTIFIES THAT, Fred Lundberg ("Holder") is entitled to purchase the above
number of fully paid and non-assessable shares of the Common Stock (the
"Shares") of World Waste Technologies, Inc., a California corporation (the
"Company), having an Exercise Price as set forth above.
1. Term and Expiration. This Warrant is exercisable, in whole or in
--------------------
part, prior to its expiration at the time or times set forth in the Notice of
Grant above, after which time the Warrant shall be void. This Warrant shall in
any event expire on the expiration date set forth in the Notice of Grant above,
which date is 7 years after the Date of Grant. If the Holder's Service
terminates for any reason, then this Warrant shall expire on the earliest of the
following occasions: (i) The expiration date determined pursuant to Section 1
hereof; (ii) The date three months after the termination of the Holder's Service
for any reason other than disability; or (iii) the date 12 months after the
termination of the Holder's Service by reason of disability. When the Holder's
Service terminates, this Warrant shall expire immediately with respect to the
number of Shares for which this Warrant is not yet exercisable. In the event
that the Holder dies after termination of Service but before the expiration of
this Warrant, all or part of this Warrant may be exercised (prior to expiration)
by the executors or administrators of the Holder's estate or by any person who
has acquired this Warrant directly from the Holder by beneficiary designation,
bequest or inheritance, but only to the extent that this Warrant had become
exercisable before the Holder's Service terminated. For any purpose under this
Warrant, Service shall be deemed to continue while the Holder is on a bona fide
leave of absence, if such leave was approved by the Company in writing and if
continued crediting of Service for such purpose is expressly required by the
terms of such leave or by applicable law (as determined by the Company).
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to the
----------------------------------------------------
other terms and conditions hereof, the right to purchase Shares represented by
this Warrant may be exercised by Holder prior to its expiration at the time or
times set forth in the Notice of Grant above, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Exhibit A duly executed) at the principal office of the Company and by the
payment to the Company, by check made payable to the Company drawn on a United
States bank and for United States funds, of an amount equal to the then
applicable Exercise Price per share multiplied by the number of Shares then
being purchased or by net exercise pursuant to Section 6 hereof. In the event of
any exercise of the purchase right represented by this Warrant, certificates for
10.10-4
the Shares so purchased shall be promptly delivered to Holder and, unless this
Warrant has been fully exercised or has expired, a new Warrant representing the
portion of the Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be promptly delivered to Holder. In addition, the
following rules shall apply if the Company is subject to a change in control
before the Holder's Service terminates: This Warrant shall become exercisable in
full if (A) this Warrant does not remain outstanding following the change in
control, (B) this Warrant is not assumed by the surviving corporation or its
parent, (C) the surviving corporation or its parent does not substitute a
Warrant with substantially the same terms for this Warrant or (D) the full value
of this Warrant (whether or not exercisable) is not settled in cash or cash
equivalents (including, without limitation, deferred cash payments).
3. Exercise Price. The Exercise Price at which this Warrant may be
---------------
exercised shall be the Initial Exercise Price as set forth in the Notice of
Grant above, as adjusted from time to time for stock splits, reclassifications,
combinations and the like.
4. [Reserved.]
5. Transferability and Negotiability of Warrant. This Warrant may not
--------------------------------------------
be transferred or assigned in whole or in part without compliance with
applicable federal and state securities laws by the transferor and the
transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, if reasonably requested by the Company). Subject to the provisions of
this Section 5, title to this Warrant may be transferred in the same manner as a
negotiable instrument transferable by endorsement and delivery.
6. Cash-less Exercise. In lieu of exercising this Warrant for cash, the
------------------
Holder may elect to exchange this Warrant for Shares equal to the value of this
Warrant, in whole or in part, by surrender of this Warrant, in whole or in part
as the case may be, together with notice of such election, at the principal
office of the Company.
7. No Retention Rights. Nothing in this Agreement or in the Plan shall
-------------------
confer upon the Holder any right to continue in service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the
Purchaser) or of the Holder, which rights are hereby expressly reserved by each,
to terminate his or her service at any time and for any reason, with or without
cause.
8. Successors And Assigns. Except as otherwise expressly provided to
----------------------
the contrary, the provisions of this Warrant shall inure to the benefit of, and
be binding upon, the Company and its successors and assigns and be binding upon
the Holder and the Holder's legal representatives, heirs, legatees,
distributees, assigns and transferees by operation of law, whether or not any
such person has become a party to this Agreement or has agreed in writing to
join herein and to be bound by the terms, conditions and restrictions hereof.
10.10-5
9. Tax Consequences. The grant, exercise, acquisition or disposition of
----------------
the Shares may result in adverse tax consequences. The Holder should consult
with his or her tax advisor to determine the tax consequences of the granting,
exercising, acquiring or disposing of the Purchased Shares.
10. Legends. All certificates issued pursuant to the exercise of this
-------
Warrant evidencing Shares shall bear the following legends:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT
IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE
PREDECESSOR IN INTEREST TO THE SHARES). THE SECRETARY OF THE
COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED."
If required by the authorities of any state in connection with the
issuance of the Shares, the legend or legends required by such state authorities
shall also be endorsed on all such certificates.
11. Waivers and Amendments. Any term of this Warrant may be amended or
waived with the written consent of the Company and the Holder. No waivers of, or
exceptions to, any term, condition or provision of this Warrant, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
12. Miscellaneous. The Company covenants that it will at all times
reserve and keep available, solely for the purpose of issue upon the exercise
hereof, a sufficient number of Shares to permit the exercise hereof in full.
Such Shares, when issued in compliance with the provisions of this Warrant and
the Company's Articles of Certificate, will be duly authorized, validly issued,
fully paid and non-assessable. No Holder of this Warrant, as such, shall, prior
to the exercise of this Warrant, be entitled to vote or receive dividends or be
deemed to be a stockholder of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon Holder, as such, any
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action, receive notice of meetings, receive dividends
or subscription rights, or otherwise. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like date and tenor. This Warrant
shall be governed by and construed under the laws of the State of California.
10.10-6
NOTICE OF EXERCISE
TO: WORLD WASTE TECHNOLOGIES, INC.
1. The undersigned hereby elects to purchase shares of the
-------------
Common Stock of WORLD WASTE TECHNOLOGIES, INC. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full, together with all applicable transfer taxes, if any.
2. The undersigned hereby elects to purchase shares of the
-------------
Common Stock of WORLD WASTE TECHNOLOGIES, INC. pursuant to the terms of the
attached Warrant on a net exercise basis in accordance with Section 6.
3. In connection with the purchase of the above-listed Common Stock,
the undersigned hereby submits an executed Investment Representation Statement
as attached hereto.
4. Please issue a certificate or certificates representing said shares
of the Common Stock in the name of the undersigned or in such other name as is
specified below:
Name:
---------------------------------
Tax ID:
-------------------------------
Address:
-------------------------------
-------------------------------
-------------------------------
-------------------------------
-------------------------------
Signed:
---------------------------------
Date:
-----------------------------------
10.10-7
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : ____________________________________
COMPANY : WORLD WASTE TECHNOLOGIES, INC.
SECURITY : COMMON STOCK
AMOUNT : ____________________________________
DATE : ____________________________________
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933 ("Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. In addition, I understand that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel for the Purchaser
satisfactory to the Company or receipt of a no-action letter from the Securities
and Exchange Commission.
(d) I am aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: the availability of certain public information about the Company; the
resale occurring not less than one year after the party has purchased and paid
for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and
the amount of securities being sold during any three month period not exceeding
the specified limitations stated therein.
(e) I further understand that at the time I wish to sell the Securities
there may be no public market upon which to make such a sale, and that, even if
such a public market then exists, the Company may not be satisfying the current
public information requirements of Rule 144, and that, in such event, I may be
precluded from selling the Securities under Rule 144 even if the one-year
minimum holding period had been satisfied.
10.10-8
(f) I further understand that in the event all of the requirements of
Rule 144 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the
SEC has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.
Date: ________________________ _________________________________________
Purchaser
10.10-9
Exhibit 10.11
Exhibit 10.11 - 1
WORLD WASTE TECHNOLOGIES, INC.
Notice of Warrant Grant
You have been granted the following Warrant to purchase shares of the
Common Stock of World Waste Technologies, Inc. (the "Company"):
Name of Warrant Holder: Michael H. Eley
Total Number of Shares: 125,000
Exercise Price Per Share: $1.50
Date of Grant: June 21, 2004
Date Exercisable: Immediately exercisable in full and fully vested.
Consideration: The Warrant is being granted in consideration of
the Holder's agreement to amend that certain
Amended and Restated Technology License
Agreement, between the Company and Bio-Products
International, Inc., dated June 21, 2004, as
amended.
Expiration Date: June 20, 2011. This Warrant expires earlier if
the Holder's Service terminates earlier, as
provided in Section 1 of the Warrant.
Service: For purposes of this Warrant, "Service" shall be
defined as shall mean service as (i) any
individual who is a common-law employee of the
Company, a parent or a subsidiary, (ii) any
member of the Board of Directors who is not an
employee (iii) or a person who performs bona fide
services for the Company, a parent or a
subsidiary as a consultant or advisor, excluding
employees.
By your signature and the signature of the Company's representative below, you
and the Company agree that this warrant is granted under and governed by the
terms and conditions of the Warrant, which is attached to and made a part of
this document.
Warrant Holder: World Waste Technologies, Inc.
By: By:
----------------------- -------------------------------
Date: Title:
--------------------- ----------------------------
Date:
-----------------------------
Exhibit 10.11 - 2
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT
TO RULE 144 OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE CORPORATION
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 11:59 PM JUNE 20, 2011
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
WORLD WASTE TECHNOLOGIES, INC
THIS CERTIFIES THAT, Michael H. Eley ("Holder") is entitled to purchase the
above number (as adjusted pursuant to Section 4 hereof) of fully paid and
non-assessable shares of the Common Stock (the "Shares") of World Waste
Technologies, Inc., a California corporation (the "Company), having an Exercise
Price as set forth above.
1. Term and Expiration. This Warrant is exercisable, in whole or in
--------------------
part, prior to its expiration at the time or times set forth in the Notice of
Grant above, after which time the Warrant shall be void. This Warrant shall in
any event expire on the expiration date set forth in the Notice of Grant above,
which date is 7 years after the Date of Grant. If the Holder's Service
terminates for any reason, then this Warrant shall expire on the earliest of the
following occasions: (i) The expiration date determined pursuant to Section 1
hereof; (ii) The date three months after the termination of the Holder's Service
for any reason other than disability; or (iii) the date 12 months after the
termination of the Holder's Service by reason of disability. In the event that
the Holder dies after termination of Service but before the expiration of this
Warrant, all or part of this Warrant may be exercised (prior to expiration) by
the executors or administrators of the Holder's estate or by any person who has
acquired this Warrant directly from the Holder by beneficiary designation,
bequest or inheritance, but only to the extent that this Warrant had become
exercisable before the Holder's Service terminated. For any purpose under this
Warrant, Service shall be deemed to continue while the Holder is on a bona fide
leave of absence, if such leave was approved by the Company in writing and if
continued crediting of Service for such purpose is expressly required by the
terms of such leave or by applicable law (as determined by the Company).
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to the
----------------------------------------------------
other terms and conditions hereof, the right to purchase Shares represented by
this Warrant may be exercised by Holder prior to its expiration at the time or
times set forth in the Notice of Grant above, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Exhibit A duly executed) at the principal office of the Company and by the
payment to the Company, by check made payable to the Company drawn on a United
States bank and for United States funds, of an amount equal to the then
applicable Exercise Price per share multiplied by the number of Shares then
being purchased or by net exercise pursuant to Section 6 hereof. In the event of
any exercise of the purchase right represented by this Warrant, certificates for
the Shares so purchased shall be promptly delivered to Holder and, unless this
Exhibit 10.11 - 3
Warrant has been fully exercised or has expired, a new Warrant representing the
portion of the Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be promptly delivered to Holder.
3. Exercise Price. The Exercise Price at which this Warrant may be
---------------
exercised shall be the Initial Exercise Price as set forth in the Notice of
Grant above, as adjusted from time to time for stock splits, reclassifications,
combinations and the like.
4. [Reserved.]
5. Transferability and Negotiability of Warrant. This Warrant may not
--------------------------------------------
be transferred or assigned in whole or in part without compliance with
applicable federal and state securities laws by the transferor and the
transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, if reasonably requested by the Company). Subject to the provisions of
this Section 5, title to this Warrant may be transferred in the same manner as a
negotiable instrument transferable by endorsement and delivery.
6. Cash-less Exercise. In lieu of exercising this Warrant for cash, the
------------------
Holder may elect to exchange this Warrant for Shares equal to the value of this
Warrant, in whole or in part, by surrender of this Warrant, in whole or in part
as the case may be, together with notice of such election, at the principal
office of the Company.
7. No Retention Rights. Nothing in this Agreement or in the Plan shall
-------------------
confer upon the Holder any right to continue in service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the
Purchaser) or of the Holder, which rights are hereby expressly reserved by each,
to terminate his or her service at any time and for any reason, with or without
cause.
8. Successors And Assigns. Except as otherwise expressly provided to
----------------------
the contrary, the provisions of this Warrant shall inure to the benefit of, and
be binding upon, the Company and its successors and assigns and be binding upon
the Holder and the Holder's legal representatives, heirs, legatees,
distributees, assigns and transferees by operation of law, whether or not any
such person has become a party to this Agreement or has agreed in writing to
join herein and to be bound by the terms, conditions and restrictions hereof.
Notwithstanding anything contained herein to the contrary, Holder may assign
this Warrant to a trust established for the benefit of Holder's wife, children
or grandchildren.
9. Tax Consequences. The grant, exercise, acquisition or disposition of
----------------
the Shares may result in adverse tax consequences. The Holder should consult
with his or her tax advisor to determine the tax consequences of the granting,
exercising, acquiring or disposing of the Purchased Shares.
Exhibit 10.11 - 4
10. Legends. All certificates issued pursuant to the exercise of this
-------
Warrant evidencing Shares shall bear the following legends:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT
IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE
PREDECESSOR IN INTEREST TO THE SHARES). THE SECRETARY OF THE
COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED."
If required by the authorities of any state in connection with the
issuance of the Shares, the legend or legends required by such state authorities
shall also be endorsed on all such certificates.
11. Waivers and Amendments. Any term of this Warrant may be amended or
----------------------
waived with the written consent of the Company and the Holder. No waivers of, or
exceptions to, any term, condition or provision of this Warrant, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
12. Miscellaneous. The Company covenants that it will at all times
-------------
reserve and keep available, solely for the purpose of issue upon the exercise
hereof, a sufficient number of Shares to permit the exercise hereof in full.
Such Shares, when issued in compliance with the provisions of this Warrant and
the Company's Articles of Certificate, will be duly authorized, validly issued,
fully paid and non-assessable. No Holder of this Warrant, as such, shall, prior
to the exercise of this Warrant, be entitled to vote or receive dividends or be
deemed to be a stockholder of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon Holder, as such, any
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action, receive notice of meetings, receive dividends
or subscription rights, or otherwise. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like date and tenor. This Warrant
shall be governed by and construed under the laws of the State of California.
Exhibit 10.11 - 5
NOTICE OF EXERCISE
TO: WORLD WASTE TECHNOLOGIES, INC.
1. The undersigned hereby elects to purchase _________ shares of the
Common Stock of WORLD WASTE TECHNOLOGIES, INC. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full, together with all applicable transfer taxes, if any.
2. The undersigned hereby elects to purchase shares of the
-------------
Common Stock of WORLD WASTE TECHNOLOGIES, INC. pursuant to the terms of the
attached Warrant on a net exercise basis in accordance with Section 6.
3. In connection with the purchase of the above-listed Common Stock,
the undersigned hereby submits an executed Investment Representation Statement
as attached hereto.
4. Please issue a certificate or certificates representing said shares
of the Common Stock in the name of the undersigned or in such other name as is
specified below:
Name:
-----------------------------------
Tax ID:
---------------------------------
Address:
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
Signed:
---------------------------------
Date:
-----------------------------------
Exhibit 10.11 - 6
INVESTMENT REPRESENTATION STATEMENT
PURCHASER :
-------------------------------
COMPANY : WORLD WASTE TECHNOLOGIES, INC.
SECURITY : COMMON STOCK
AMOUNT :
-------------------------------
DATE :
-------------------------------
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933 ("Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. In addition, I understand that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel for the Purchaser
satisfactory to the Company or receipt of a no-action letter from the Securities
and Exchange Commission.
(d) I am aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: the availability of certain public information about the Company; the
resale occurring not less than one year after the party has purchased and paid
for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and
the amount of securities being sold during any three month period not exceeding
the specified limitations stated therein.
(e) I further understand that at the time I wish to sell the Securities
there may be no public market upon which to make such a sale, and that, even if
such a public market then exists, the Company may not be satisfying the current
public information requirements of Rule 144, and that, in such event, I may be
precluded from selling the Securities under Rule 144 even if the one-year
minimum holding period had been satisfied.
Exhibit 10.11 - 7
(f) I further understand that in the event all of the requirements of
Rule 144 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the
SEC has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.
Date:
--------------------------------- -------------------------------
Purchaser
Exhibit 10.11 - 8
Exhibit 10.12
Exhibit 10.12 - 1
WORLD WASTE TECHNOLOGIES, INC.
Notice of Warrant Grant
You have been granted the following Warrant to purchase shares of the
Common Stock of World Waste Technologies, Inc. (the "Company"):
Name of Warrant Holder: Don Malley
Total Number of Shares: 125,000
Exercise Price Per Share: $1.50
Date of Grant: June 21, 2004
Date Exercisable: Immediately exercisable in full and fully vested.
Consideration: The Warrant is being granted in consideration of
the Holder's agreement to amend that certain
Amended and Restated Technology License
Agreement, between the Company and Bio-Products
International, Inc., dated June 21, 2004, as
amended.
Expiration Date: June 20, 2011. This Warrant expires earlier if
the Holder's Service terminates earlier, as
provided in Section 1 of the Warrant.
Service: For purposes of this Warrant, "Service" shall be
defined as shall mean service as (i) any
individual who is a common-law employee of the
Company, a parent or a subsidiary, (ii) any
member of the Board of Directors who is not an
employee (iii) or a person who performs bona fide
services for the Company, a parent or a
subsidiary as a consultant or advisor, excluding
employees.
By your signature and the signature of the Company's representative below, you
and the Company agree that this warrant is granted under and governed by the
terms and conditions of the Warrant, which is attached to and made a part of
this document.
Warrant Holder: World Waste Technologies, Inc.
By: By:
------------------------- -----------------------------
Date: Title:
----------------------- --------------------------
Date:
---------------------------
Exhibit 10.12 - 2
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT
TO RULE 144 OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE CORPORATION
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 11:59 PM JUNE 20, 2011
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
WORLD WASTE TECHNOLOGIES, INC
THIS CERTIFIES THAT, Don Malley ("Holder") is entitled to purchase the above
number (as adjusted pursuant to Section 4 hereof) of fully paid and
non-assessable shares of the Common Stock (the "Shares") of World Waste
Technologies, Inc., a California corporation (the "Company), having an Exercise
Price as set forth above.
1. Term and Expiration. This Warrant is exercisable, in whole or in
--------------------
part, prior to its expiration at the time or times set forth in the Notice of
Grant above, after which time the Warrant shall be void. This Warrant shall in
any event expire on the expiration date set forth in the Notice of Grant above,
which date is 7 years after the Date of Grant. If the Holder's Service
terminates for any reason, then this Warrant shall expire on the earliest of the
following occasions: (i) The expiration date determined pursuant to Section 1
hereof; (ii) The date three months after the termination of the Holder's Service
for any reason other than disability; or (iii) the date 12 months after the
termination of the Holder's Service by reason of disability. In the event that
the Holder dies after termination of Service but before the expiration of this
Warrant, all or part of this Warrant may be exercised (prior to expiration) by
the executors or administrators of the Holder's estate or by any person who has
acquired this Warrant directly from the Holder by beneficiary designation,
bequest or inheritance, but only to the extent that this Warrant had become
exercisable before the Holder's Service terminated. For any purpose under this
Warrant, Service shall be deemed to continue while the Holder is on a bona fide
leave of absence, if such leave was approved by the Company in writing and if
continued crediting of Service for such purpose is expressly required by the
terms of such leave or by applicable law (as determined by the Company).
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to the
----------------------------------------------------
other terms and conditions hereof, the right to purchase Shares represented by
this Warrant may be exercised by Holder prior to its expiration at the time or
times set forth in the Notice of Grant above, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Exhibit A duly executed) at the principal office of the Company and by the
payment to the Company, by check made payable to the Company drawn on a United
States bank and for United States funds, of an amount equal to the then
applicable Exercise Price per share multiplied by the number of Shares then
being purchased or by net exercise pursuant to Section 6 hereof. In the event of
any exercise of the purchase right represented by this Warrant, certificates for
the Shares so purchased shall be promptly delivered to Holder and, unless this
Warrant has been fully exercised or has expired, a new Warrant representing the
portion of the Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be promptly delivered to Holder.
Exhibit 10.12 - 3
3. Exercise Price. The Exercise Price at which this Warrant may be
---------------
exercised shall be the Initial Exercise Price as set forth in the Notice of
Grant above, as adjusted from time to time for stock splits, reclassifications,
combinations and the like.
4. [Reserved.]
5. Transferability and Negotiability of Warrant. This Warrant may not
--------------------------------------------
be transferred or assigned in whole or in part without compliance with
applicable federal and state securities laws by the transferor and the
transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, if reasonably requested by the Company). Subject to the provisions of
this Section 5, title to this Warrant may be transferred in the same manner as a
negotiable instrument transferable by endorsement and delivery.
6. Cash-less Exercise. In lieu of exercising this Warrant for cash, the
------------------
Holder may elect to exchange this Warrant for Shares equal to the value of this
Warrant, in whole or in part, by surrender of this Warrant, in whole or in part
as the case may be, together with notice of such election, at the principal
office of the Company.
7. No Retention Rights. Nothing in this Agreement or in the Plan shall
-------------------
confer upon the Holder any right to continue in service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the
Purchaser) or of the Holder, which rights are hereby expressly reserved by each,
to terminate his or her service at any time and for any reason, with or without
cause.
8. Successors And Assigns. Except as otherwise expressly provided to
----------------------
the contrary, the provisions of this Warrant shall inure to the benefit of, and
be binding upon, the Company and its successors and assigns and be binding upon
the Holder and the Holder's legal representatives, heirs, legatees,
distributees, assigns and transferees by operation of law, whether or not any
such person has become a party to this Agreement or has agreed in writing to
join herein and to be bound by the terms, conditions and restrictions hereof.
Notwithstanding anything contained herein to the contrary, Holder may assign
this Warrant to M&M Consulting, Inc.
9. Tax Consequences. The grant, exercise, acquisition or disposition of
----------------
the Shares may result in adverse tax consequences. The Holder should consult
with his or her tax advisor to determine the tax consequences of the granting,
exercising, acquiring or disposing of the Purchased Shares.
10. Legends. All certificates issued pursuant to the exercise of this
-------
Warrant evidencing Shares shall bear the following legends:
Exhibit 10.12 - 4
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT
IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE
PREDECESSOR IN INTEREST TO THE SHARES). THE SECRETARY OF THE
COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED."
If required by the authorities of any state in connection with the
issuance of the Shares, the legend or legends required by such state authorities
shall also be endorsed on all such certificates.
11. Waivers and Amendments. Any term of this Warrant may be amended or
----------------------
waived with the written consent of the Company and the Holder. No waivers of, or
exceptions to, any term, condition or provision of this Warrant, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
12. Miscellaneous. The Company covenants that it will at all times
-------------
reserve and keep available, solely for the purpose of issue upon the exercise
hereof, a sufficient number of Shares to permit the exercise hereof in full.
Such Shares, when issued in compliance with the provisions of this Warrant and
the Company's Articles of Certificate, will be duly authorized, validly issued,
fully paid and non-assessable. No Holder of this Warrant, as such, shall, prior
to the exercise of this Warrant, be entitled to vote or receive dividends or be
deemed to be a stockholder of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon Holder, as such, any
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action, receive notice of meetings, receive dividends
or subscription rights, or otherwise. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like date and tenor. This Warrant
shall be governed by and construed under the laws of the State of California.
Exhibit 10.12 - 5
NOTICE OF EXERCISE
TO: WORLD WASTE TECHNOLOGIES, INC.
1. The undersigned hereby elects to purchase shares of the
-------------
Common Stock of WORLD WASTE TECHNOLOGIES, INC. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full, together with all applicable transfer taxes, if any.
2. The undersigned hereby elects to purchase shares of the
-------------
Common Stock of WORLD WASTE TECHNOLOGIES, INC. pursuant to the terms of the
attached Warrant on a net exercise basis in accordance with Section 6.
3. In connection with the purchase of the above-listed Common Stock,
the undersigned hereby submits an executed Investment Representation Statement
as attached hereto.
4. Please issue a certificate or certificates representing said shares
of the Common Stock in the name of the undersigned or in such other name as is
specified below:
Name:
-----------------------------------
Tax ID:
---------------------------------
Address:
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
Signed:
---------------------------------
Date:
-----------------------------------
Exhibit 10.12 - 6
INVESTMENT REPRESENTATION STATEMENT
PURCHASER :
----------------------------
COMPANY : WORLD WASTE TECHNOLOGIES, INC.
SECURITY : COMMON STOCK
AMOUNT :
----------------------------
DATE :
----------------------------
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933 ("Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. In addition, I understand that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel for the Purchaser
satisfactory to the Company or receipt of a no-action letter from the Securities
and Exchange Commission.
(d) I am aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: the availability of certain public information about the Company; the
resale occurring not less than one year after the party has purchased and paid
for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and
the amount of securities being sold during any three month period not exceeding
the specified limitations stated therein.
(e) I further understand that at the time I wish to sell the Securities
there may be no public market upon which to make such a sale, and that, even if
such a public market then exists, the Company may not be satisfying the current
public information requirements of Rule 144, and that, in such event, I may be
precluded from selling the Securities under Rule 144 even if the one-year
minimum holding period had been satisfied.
Exhibit 10.12 - 7
(f) I further understand that in the event all of the requirements of
Rule 144 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the
SEC has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.
Date: ________________________ _________________________________________
Purchaser
Exhibit 10.12 - 8