FORM 10-SB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the
Securities Exchange Act of 1934
ENERGY VENTURES INC.
(Name of Small Business Issuer in its charter)
Delaware
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
43 Fairmeadow Avenue, Toronto, Ontario, Canada M2P 1W8
(Address of principal executive offices) (Zip Code)
1-416-733-2736
(Issuer's Telephone Number)
1-416-733-8407
(Issuer's Fax Number)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
N/A N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.0001 per share
(Title of Class)
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TABLE OF CONTENTS
PART I...................................................3
Item 1. Description of Business.....................3
Item 2. Management's Discussion and
Analysis and Plan of Operation.............16
Item 3. Description of Property....................21
Item 4. Security Ownership of Certain
Beneficial Owners and Management...........21
Item 5. Directors, Executive Officers,
Promoters and Control Persons..............23
Item 6. Executive Compensation.....................24
Item 7. Certain Relationships and
Related Transactions.......................28
Item 8. Description of Securities..................29
PART II.................................................30
Item 1. Market Price of and Dividends
on the Company's Common Equity
and Other Shareholder Matters..............30
Item 2. Legal Proceedings..........................31
Item 3. Changes in and Disagreements
with Accountants...........................31
Item 4. Recent Sales of Unregistered
Securities.................................31
Item 5. Indemnification of Directors
and Officers...............................32
PART F/S................................................33
Index to Financial Statements...................35
PART III................................................
Index to Exhibits...............................
SIGNATURES..............................................
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PART I.
Item 1. Description of Business.
(a) Background of Issuer
Energy Ventures Inc. ( the "Company" or "we"), a Delaware corporation,
was formed to develop proprietary technologies for use in the manufacture of
batteries. The Company's executive and principal office is located at 43
Fairmeadow Avenue, Toronto, Ontario, M2P 1W8, Canada. We also lease
approximately 4093 square feet of office and laboratory space in Building M-16,
1500 Montreal Road, Ottawa, Ontario K1A 0R6. As of April 1, 2000, we had ten
employees, seven of whom work out of the Ottawa location, and we anticipate
hiring at least three more research scientists during the first half of 2000.
The Company was originally organized as O.P.D. Acquisitions, Inc. on
June 24, 1996. On September 30, 1997, the Company entered into a share-for-share
exchange with Energy Ventures Inc. (Canada) ("EVI"), a corporation organized
under the laws of Ontario, Canada on November 19, 1996. As a result of the
exchange with EVI, the Company issued 1.2 shares of its common stock (or a total
of 10,088,400 shares) for each issued and outstanding share of EVI common stock.
At the time of this exchange, the Company (i) was not conducting any business,
(ii) had 385 shareholders, and (iii) had 149,179 shares of common stock issued
and outstanding, of which D. Wayne Hartford, the President, Chief Executive
Officer and Secretary of the Company, owned 120,000 shares. As a result of the
share-for-share exchange between EVI and the Company, EVI became a wholly owned
subsidiary of the Company and the Company amended its certificate of
incorporation on October 27, 1997 to change its name to Energy Ventures Inc. The
Company also owns 100% of the equity of another subsidiary, Energy Ventures
International Inc., a Barbados corporation. Any reference to the Company, unless
the context of the reference requires otherwise, is a reference to Energy
Ventures Inc., a Delaware corporation, and to its consolidated business and
operations. The Company has not been involved with any bankruptcy, receivership
or similar proceedings. Other than the share-for- share exchange with EVI, the
Company has not had any material reclassification, merger, consolidation, or
purchase or sale of a significant amount of assets not in the ordinary course of
business.
Special Note Regarding Forward-Looking Statements
Some of the statements under "Business of Issuer", "Current Projects",
"Plan of Operations" and elsewhere in this registration statement are
forward-looking statements that involve risks and uncertainties. These
forward-looking statements include statements about our plans, objectives,
expectations, intentions and assumptions and other statements contained herein
that are not statements of historical fact. You can identify these statements by
words such as "may", "will", "should", "estimates", "plans", "expects",
"believes", "intends" and similar expressions. We cannot guarantee future
results, levels of activity, performance or achievements. Our actual results and
the timing of certain events may differ significantly from the results discussed
in the forward-looking statements. You are cautioned not to place undue reliance
on any forward-looking statements.
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(b) Business of Issuer
The Company acts as a technology integrator to develop cost effective
materials and manufacturing processes for battery and fuel cell systems. Our
goals are to improve significantly battery and fuel cell performance and to
mitigate environmental and safety hazards. Towards those ends, the Company
conducts research and development programs of various energy systems targeted to
two principal markets:
1. Automotive companies, electronic manufacturers and suppliers of
communications and electrical services and their respective suppliers. The
Company seeks to improve the efficiency, life cycle, convenience and safety of
energy cells for these battery and potential fuel cell users.
2. Consumers of batteries concerned with the cost and environmental
impact of using primary batteries.
The Company also engages in electro-chemical energy research and
related product development through a series of strategic agreements with
researchers, manufacturers and corporate consumers of batteries and fuel cells.
The Company's principal business is the development and licensing or
sale of technology to improve electro-chemical cells designed to meet the
rapidly expanding market for reliable, safe, rechargeable energy systems. This
core interest has led us into many related aspects of energy cell development
ranging from the formulation of advanced battery materials and systems, to
manufacturing processes and the distribution of battery products.
THE INDUSTRY.
Battery Characteristics.
Batteries are energy storage devices that use a transformation of
higher energy state chemical materials into lower energy materials to release
electrical energy into a circuit. Primary batteries are not rechargeable and are
only able to convert chemical energy into electrical energy. Secondary batteries
are rechargeable and can use electrical energy to drive reversible chemical
reactions from a lower energy state to a higher energy state, allowing the
battery to release electrical energy repeatedly.
Every battery is made up of one or more cells, which are the basic
building blocks in the energy conversion and storage system. When batteries are
not charging or discharging they are said to be in an open circuit, that is, no
current is flowing through the electric circuit. Each cell has the open circuit
voltage potential of its particular electro-chemical system. For example:
Type Circuit Voltage
Lead Acid 2.1 volts
Nickel-Cadmium 1.2 volts
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Nickel-Metal Hydride 1.2 volts
Alkaline 1.5 volts
Nickel-Zinc 1.6 volts
Lithium Ion 3-4 volts
Zinc-Carbon 1.5 volts
The desired electric circuit voltage is reached by connecting cells in
series. For example, most automobiles made since the early 1950's have a nominal
12-volt system. The lead-acid batteries used in these vehicles have 6 cells with
2.1 volts per cell which are connected in series to produce 12.6 volts.
When batteries are discharging, the voltage is below open circuit with
higher discharge rates producing lower voltages. The lower voltage is due to
resistive losses within the battery, as well as kinetic losses (the energy
required to make the cell reactions occur). As an example, a discharging
lead-acid battery in an automobile ranges from just below 12.6 volts with only
the radio on, to as low as 6 volts when starting the engine in extremely cold
weather.
When batteries are charging the voltage is above open circuit. The
higher voltage is necessary to drive the recharge reactions while overcoming
internal resistive losses. Typical charge voltage in a 12-volt automobile system
ranges from 13.2 to 15.5 volts. Higher voltage is also required to drive the
recharge reactions at lower temperatures.
The Commercial Battery Market
The world battery and fuel cell market is divided into "large format"
systems (principally consisting of hydro load leveling, starting and electrical
vehicle systems) and "small format" systems (including the standard "AAA", "AA",
"C" and "D" cells). Small format batteries also include a wide variety of
specially formatted batteries for use in many applications including watches,
electronic devices, computers and telecommunications equipment. Large format
systems have been, by necessity, secondary or rechargeable cells while small
format systems have been dominated by primary or single use, disposable cells.
In the past few years the demand for small format, rechargeable cells
has grown at up to 40% per year, driven primarily by technological innovation.
This growth is, in large part, the result of the growth in electronic, computer
and telecommunication devices requiring higher quality and higher capacity
rechargeable batteries. A more recent drive has come from safety and
environmental concerns as regulatory authorities have begun to restrict battery
disposal processes and primary battery production to encourage greater use of
rechargeable batteries.
There is a significant conflict of economic interest between the
producers of small format primary batteries and the producers of small format
secondary batteries. Major manufacturers have invested heavily in building
plants and distribution channels for primary batteries, but until recently
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have not invested in secondary battery technology, being content to respond to
demand for rechargeable batteries rather than promoting them. The advent of
portable electronic and telecommunication devices has introduced Original
Equipment Manufacturers ("OEMs") into the battery cell market. OEMs require
higher quality batteries to power their products, and since the industry
practice is to supply batteries customized to the device, OEMs have become major
purchasers of batteries. To improve the economics of many devices, OEMs often
specify rechargeable batteries.
As a result of OEM requirements, available technology and increasing
regulation of primary batteries, we believe that the battery industry is
entering a phase of major restructuring. This restructuring will encompass
research, product development and major conversion of manufacturing and
distribution activities, in many cases involving secondary batteries.
There is no battery industry association that collects and collates
industry data on a worldwide scale, and data that does exist is partial in
nature and must be treated with some caution. It is estimated, however, that the
worldwide market for battery cells of all types is in excess of U.S.$30 billion
annually. Large format battery cells have annual sales estimated at U.S.$16
billion and small format cells have annual sales estimated at U.S.$14 billion.
The overall market for battery cells is estimated to be growing at 7% annually,
with the large format segment growing at 5% annually and the small format
segment at approximately 9% annually. Within the small format segment, the
market for primary batteries is growing marginally while the secondary battery
market is growing at about 25% annually and is currently estimated to be U.S.$5
billion.
Product Categories.
While there are many individual battery cell product types, they may be
logically grouped into the following categories:
Lead Acid (Large Format, Secondary)
The lead acid system has a nominal voltage of 2.1 volts per cell and is
most often seen in the familiar six cell, 12-volt car battery. The standard
version of this battery gets several hundred cycles (charge and discharge) when
only a small percentage of the power is used. It is designed to be constantly
"topped up" by the charging system in an automobile. Despite the fact that there
have been complaints about the size, weight and energy density of this system,
it has been in use in the automotive market for many years with very modest
changes and it will probably remain so for the foreseeable future. The lead acid
system, however, has been modified and improved for use in niche markets such as
golf carts, trolling motors and lawn mowers and there continues to be interest
in upgrading the system despite the existence of more modern energy systems.
Fuel Cells (Large Format, Secondary)
While fuel cells are a type of rechargeable battery, they differ from
typical rechargeable systems in that the anode material is replaced (refueled)
rather than recharged, and the cathode extracts oxygen from the air. Fuel cells
operate much like an engine with no moving parts and can continue to provide
electrical energy as long as they are fueled. Hydrogen is the typical cathode
material. Fuel cells have been developed and improved for more than thirty years
but the currently
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available technology cannot provide the performance that is expected from an
automobile at a viable cost. Furthermore, without the sanction of environmental
legislation, this type of system would be reserved for specialized applications,
such as the space program. Fuel cell technology has acquired a high profile,
however, as one of the most likely future power sources for electric vehicles
and is attracting significant research and investment funding.
Other large Format Secondary Systems
Several other large format battery systems such as flat plate Nickel
Cadmium, Nickel Hydroxide, Nickel Zinc, Zinc Bromide, Zinc Air and Sodium Sulfur
are also being considered by the battery industry. Although each of these
systems has certain positive technical characteristics, when the cost per unit
of energy, cycle life, self-discharge rate, availability, safety and
environmental impacts are considered, none of these systems is currently
commercially viable. Nickel Zinc, however, is the most promising in terms of
commercial viability in the near future.
LeClanche (Small Format, Primary)
The original, commercial, small format battery was the non-rechargeable
LeClanche cell or Zinc Carbon battery that was invented in about 1863 and
distributed by the LeClanche Company, which still operates in Switzerland. This
is the least expensive of all battery systems, is 1.5 volts per cell and is
marketed today under brand names such as Eveready Heavy Duty. The market for
this battery is estimated by the Company at U.S.$3 billion annually and is
growing at approximately 1% per year.
Alkaline (Small Format, Primary)
The non-rechargeable alkaline system or Zinc Manganese battery was
invented in the 1960's by Dr. Karl Kordesch, the primary consultant for the
Company's research and development efforts, when he was employed by Eveready
Battery Company Inc. This battery is also 1.5 volts, however, depending on its
use, has three or more times the energy of a Zinc Carbon cell, Eveready chose
not to market the product and several years later licensed the technology to the
Mallory Battery Company which launched the Duracell brand ( which is now also
the name of that company) with the claim that it had three times as much energy
as the LeClanche cell at twice the price. The launch was a success and Eveready
subsequently brought out "The Energizer" with little time remaining on the
original patents. This technology is now in the public domain and annual sales
of primary alkaline batteries are estimated at U.S.$6 billion with a growth rate
of 5% to 6% per year.
Other Small Format Primary Systems
There are several small cell systems such as Silver Zinc that are used
in button cells for watches and hearing aids. There are also several small
format Lithium battery cells that are used principally in camera applications.
The voltage of the cells in this category varies from 1.5 volts to over 4 volts,
depending on the application. This market niche has annual sales estimated at
U.S. $500 million, with growth at approximately 5% per year.
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Nickel Cadmium and Nickel Metal-Hydride (Small Format, Secondary)
The Nickel Cadmium ("NiCd") system was commercialized in 1910 and for
the next 80 years its sales accounted for more than 90% of the small format
rechargeable battery market. It is a relatively low energy battery with only 1.2
volts per cell and it has a significant rate of self-discharge. The
self-discharge problems are compounded by heat, with the result that in a warm
climate or the warm environment of an appliance, the NiCd battery can discharge
its energy without use in two or three months, and in fact, at temperatures in
excess of 45 degrees Centigrade (113 degrees Fahrenheit), it can discharge in
three or four days. The NiCd system also has a "memory effect" pursuant to which
partial discharges reduce the capacity of the battery. In spite of these
concerns, it has been the only practical battery system for OEMs, and most
consumers are aware of portable devices with the small transformer (black box)
that is plugged into a household electrical system to charge the batteries (for
example, portable drills, electric toothbrushes and video cameras).
In the mid-1980's, the manufacturers of NiCd batteries became very
concerned about pending legislation restricting the use of Cadmium, an extremely
toxic material, and began to look for a safer alternative. The result was the
Nickel Metal-Hydride ("NiMH") battery that has the same voltage, can be
manufactured on the same basic equipment and has more energy than a NiCd
battery. However, it also has twice the self-discharge of NiCd and costs
considerably more to manufacture. Neither the NiCd nor the NiMH system, however,
has been able to develop much of a consumer franchise due to these shortcomings,
and there are presently very few alternatives for OEMs.
The RAM(TM) cell (Small Format, Secondary)
The RAM(TM) cell is a rechargeable version of the primary Alkaline cell
and was developed by Dr. Karl Kordesch for Battery Technologies Inc., a company
created in 1986 by Dr. Kordesch and D. Wayne Hartford, the Company's President,
Chief Executive Officer, Secretary and Director. This technology is currently
being licensed around the world and is marketed in North America as
"Renewal(TM)" and "Pure Energy(TM)". This product also has 1.5 volts and costs
very little more to manufacture than an Alkaline primary battery, but it can
replace 50 or more of these primary batteries, depending on how it is used. The
current RAM(TM) battery has the potential to replace a large portion of the
Alkaline and Zinc Carbon primary battery markets, as well as the NiCd and NiMH
secondary markets. It has the lowest cost per unit of energy of any secondary
battery and does not have any significant self-discharge or "memory effect".
Lithium Ion (Small Format, Secondary)
Lithium is a very high energy material and as such, it has been a
preferred material for battery researchers for years. The fact that it has such
high energy, however, has made it very difficult to create a rechargeable system
that is completely safe. The Lithium Ion battery is normally manufactured with
Cobalt, which creates 3.3 volts. In spite of the fact that there have been some
industrial accidents attributed to this technology, the market is so in need of
high energy systems for expanding portable computer and cell phone applications
that this battery's annual market is estimated at U.S.$1.25 billion with an
annual growth rate of more than 20%.
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Other Small Format, Secondary Systems
The more dynamic area of battery research today is in the area of
secondary batteries and it is focused largely on the growing market for
batteries for digital phones, portable computers and other portable devices. A
good deal of the attention is focused on Lithium/Cobalt combination as a
high-energy product and Lithium Manganese as a slightly lower energy product
that is safer and considerably less expensive than other Lithium systems.
Development is also underway to improve electrolytes and separators in order to
produce higher voltage and make the systems safer. Another area of worldwide
interest is the Lithium Polymer battery, which has all the active materials,
contained in a polymer carrier. The interest in this product is in the
possibility of molding batteries into virtually any shape. Several companies
have promised to produce these batteries, but to date there are none that
currently provide the necessary performance.
The Nickel Zinc battery may well compete with the NiCd, NiMH and
RAM(TM) batteries as it is only slightly more expensive than the RAM(TM) battery
and can likely provide several hundred cycles at 1.6 volts, which make it ideal
for inexpensive applications that require many cycles but cannot absorb the cost
of the production of Lithium Ion batteries. The Zinc Bromine Hybrid system
holds promise as the least expensive rechargeable system for consumer OEM use,
particularly in third world countries. There are other Zinc based systems that
are being researched and analyzed with several other electrode materials.
All of these systems, and many others, are now being considered in
different sizes and shapes. In most instances, with the exception of
flashlights, which created the original battery application, cylindrical cells
waste approximately 30% of the space reserved for batteries. The use of flat
cells, much like miniature versions of car batteries, is currently growing
rapidly in OEM applications and, as a result, a consumer replacement market is
developing, particularly in Asia.
(c) Current Projects of the Issuer
We derive and expect to derive our revenues from cooperative research,
technology licensing and from the manufacturing and sale of battery and fuel
cells to OEMs and distributors. Our policy is to focus our research and
development efforts where we have, or can acquire, significant advantage from
existing research teams or proprietary knowledge. While we have in-house
research and development capability, some of our research and development
projects are conducted under collaborative agreements with research
institutions, universities, manufacturers and major consumers and distributors.
A summary of these projects follows:
Lithium Ion Batteries.
Lithium Ion batteries are used in portable computers, cell phones, and
similar applications. The annual market for Lithium Ion batteries is estimated
at approximately U.S.$1.25 billion, with an annual growth rate of more than 20%.
Lithium is a very high energy material and as such, it has been a preferred
material for battery manufacturers for years. This is so despite the fact that
its high energy has made it very difficult to create a rechargeable system that
is completely safe. Most rechargeable Lithium batteries contain a Lithium anode
and a polymer electrolyte. If a rechargeable Lithium battery suffers a short
circuit, the internal temperature rises quickly, and runaway reactions at the
Lithium anode have sometimes been known to cause this type of battery to combust
or explode. One safety
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measure attempted by battery manufacturers has been to use a thin microporous
separator between the electrodes to act as a safety switch that will shut down
battery cells at a certain temperature. If the temperature rises beyond the
melting point of the separator, the pores are supposed to close and cut off the
current flow, thereby shutting down the battery. Polyethylene has been used by
many battery manufacturers as a separator in Lithium batteries but because that
substance is mechanically weak, it can be susceptible to damage by the electrode
surfaces and occasionally, it will fail after several recharging cycles. We
believe, however, that the Lithium Ion battery is a good portable power system
for the market it serves, and we have undertaken the necessary research and
development effort to enhance its safety and rechargeability.
The National Research Council of Canada.
On March 1, 1997, EVI entered into an agreement with the National
Research Council of Canada ("NRC") pertaining to the development of (i) a less
costly rechargeable Lithium battery using Manganese in the system and (ii) an
improved separator that could shut down the battery safely in the event of a
malfunction. NRC, established in 1916, is an agency of the Federal Government of
Canada. It has a highly skilled work force of 3,000 employees, a network of
research institutes and technology centers and is the leading research
institution in Canada. NRC's activities in the area of batteries are conducted
by its Institute for Chemical Process and Environmental Technology ("ICPET"),
which employs 88 scientists and technicians and is based in Ottawa, Ontario.
The Lithium Ion research and development program showed early signs of
progress, and both EVI and NRC sought to expand their relationship into other
areas. The agreement with NRC provided that EVI would give NRC funding in the
amount of Cdn. $50,000 through August 31, 1998 and thereafter, provide minimum
and maximum amounts per year of Cdn. $100,000 and Cdn. $500,000, respectively,
through the period ending July 31, 2008 (the "Technical Collaboration Period").
The funds are to be used for ongoing research and development in Lithium Ion and
other energy material technologies. The funds will be disbursed by EVI to NRC
during each year of the Technical Collaboration Period pursuant to an Annual
Research Plan (the "Plan") to be agreed upon by both parties. The Plan will
include the objectives and funding requirements for the work to be undertaken by
NRC for the following year. NRC shall be responsible for the research and
development work contemplated by the Plan and shall provide research personnel
and resources at a price equal to 50% of NRC's standard billing rates. EVI has
the right to terminate its funding responsibilities upon six months' prior
notice. NRC may not terminate its responsibilities under the agreement prior to
the conclusion of the Technical Collaboration Period.
As part of the agreement, NRC granted EVI a non-exclusive license to
use NRC's Lithium Ion Base Technology for the research, development,
manufacturing and marketing of batteries (with the right to sublicense such
technology) and the exclusive right to use and/or license the Enhancements.
"Base Technology" means all rights, patents, applications, inventions, and
technical information owned by NRC which existed in March 1997 and relate to
Lithium Ion technology. "Enhancements" means any inventions, ideas, formulae,
designs or modifications developed by EVI and NRC during the Technical
Collaboration Period. EVI's license terminates on the expiration date of the
last patent pertaining to the Base Technology or the Enhancements, a period that
will terminate no earlier than 2013.
Other provisions of the agreement with NRC include the following:
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(i) during the Technical Collaboration Period, NRC may not grant any
further licenses or other rights to any third parties in connection with the
Base Technology;
(ii) when the Technical Collaboration Period ends, NRC may grant any
third party a license in connection with the Base Technology, except that no
party may be granted a license for any country respecting which EVI has funded
patent registration costs pertaining to the Base Technology; and
(iii) seven years and six months after the end of the Technical
Collaboration Period, NRC may license the Enhancements to third parties for use
in any country with the exception of countries covered by sublicenses previously
granted by EVI and which are still in effect.
In a program that commenced in 1997 and ended February 1999 and was
valued at Cdn. $1.6 million, Samsung Electronics Company ("Samsung") of South
Korea and NRC developed Lithium Ion technology and manufacturing methodology. In
exchange for this sponsorship, Samsung has a non-exclusive right to license and
sublicense the resulting technology enhancements for countries other than South
Korea, but in order to use the NRC Lithium Ion Base Technology, Samsung must
first obtain a license from EVI. For countries other than South Korea, EVI
retained the non-exclusive right to license and sublicense the resulting
technology enhancements.
NRC also agreed, subject to pre-existing obligations to third parties,
to offer first to EVI any opportunities which may arise through NRC respecting
battery related technology or other energy- related technologies developed at
ICPET.
During the Technical Collaboration Period, NRC is entitled (the "NRC
Entitlement") to a royalty (40% through July 31, 2000 and rate to be negotiated
thereafter) of net licensing revenues from the use of the Lithium Ion Base
Technology and Enhancements and a royalty of 2% of the sales value of Lithium
Ion products, should EVI manufacture such products. NRC will receive the NRC
Entitlement within ninety days of the end of each contract year after offset of
EVI's actual cash development funding for such contract year. If EVI should
terminate the Technical Collaboration Period, the NRC Entitlement will be at
full rate for 18 months, 80% of full rate for the next 18 months and will
continue to decline until it reduces to zero seven years and six months after
termination. Should NRC terminate the Technical Collaboration Period effective
July 31, 2008 or later, the NRC Entitlement shall be equal to one half of such
values.
In consideration for this license, EVI paid NRC, in addition to the
royalties specified above, a license fee of Cdn. $10,000. EVI also paid as
additional research and development funding, the sum of Cdn. $90,000. In
consideration of the overall alliance between EVI and NRC, the Company also has
issued to NRC, as research incentives, 200,000 shares of common stock of the
Company, of which it may sell 20,000 shares in any single year, so long as such
sale by NRC complies with all applicable United States securities laws, and
options to purchase of 20,000 additional shares of common stock of the Company,
which options are exercisable prior to December 31, 2001 at U.S.$2.25 per share.
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Pacific Lithium Limited
In October 1999, EVI entered into an option agreement with Pacific
Lithium Limited of Auckland, New Zealand ("PLL"), an international manufacturer
of advanced battery materials and a significant supplier of high quality
battery-specific Lithium carbonate to Japanese cathode and electrolyte
suppliers. Pursuant to the option agreement, PLL could acquire an exclusive
worldwide license (i) for the manufacture and sale of Lithium Ion cathode
material developed by EVI, and (ii) for the manufacture of Lithium Ion batteries
using those materials. During the option period, which expired March 31, 2000,
PLL paid EVI U.S. $172,065 in respect of a joint development program to take
EVI's Lithium Ion technology to commercial scale. The joint development program
actually commenced on August 9, 1999, prior to the execution of the option
agreement. Through the end of 1999 and the beginning of 2000, PLL set up pilot
manufacturing facilities. On March 23, 2000, PLL notified EVI that it was
exercising its option to acquire an exclusive worldwide license in accordance
with the option agreement, such license to be effective April 1, 2000. For
purposes of contributing to EVI's ongoing research and development in Lithium
Ion Technology, PLL will pay EVI royalties on sales of cathode materials or
cells using such cathode materials, and on sublicensing fees earned by PLL. To
maintain exclusivity, PLL will pay EVI a minimum royalty amount, a portion of
which can be satisfied through continued research and development funding.
Nickel Zinc Batteries.
Consumers are dissatisfied with the performance of small rechargeable
energy systems, each one of which has its particular shortcomings. The Nickel
Cadmium ("NiCd") battery, while considerably less expensive than Lithium Ion, is
still relatively expensive, has very poor energy density, discharges its energy
by itself when not in use after a few weeks of storage, and is extremely toxic.
The Nickel Metal-Hydride ("NiMH") battery was developed under the assumption
that NiCd would be banned eventually, but while it is less toxic, it is more
expensive and has twice the self- discharge problem. The result is that the NiMH
battery has had limited success but combined with the NiCd battery, the market
is still growing at the rate of 25% to 40% per year.
The concept of making a Nickel Zinc battery that would resolve some of
these problems has been considered for several years, but gassing in the system
has made it very difficult to seal the cells and been a major deterrent to their
wide-spread use. We are currently working to develop a Nickel Zinc system which
(i) has higher voltage and energy than NiCd or NiMH batteries, (ii) is less
expensive, (iii) is much less toxic than the NiCd product, and (iv) does not
have the gassing problems typical in Nickel Zinc reactions. Recent rounds of
testing have shown an improved cycle life (i.e., the number of times the battery
can be recharged) of 100 to 120 cycles in laboratory conditions. We believe that
the cycle life can be extended even further, perhaps to several hundred recharge
cycles, with improved separator technology. In September 1999, we filed a
Canadian patent application with respect to our rechargeable Nickel Zinc
technology.
On February 21, 2000, we entered into a joint development agreement
with Young Poong Corporation of South Korea ("Young Poong"). Young Poong is an
experienced battery producer and currently manufactures high quality alkaline
batteries in both rechargeable and non-rechargeable formats for the global
market. We expect this relationship with Young Poong to accelerate the
commercial development of our rechargeable Nickel Zinc battery system which is
targeted at existing NiCd and NiMH markets. The agreement requires Young Poong
to provide us with parts to make samples of Nickel Zinc AA and AAA batteries,
which samples will then be given to Young Poong
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for testing. Young Poong has the option, exercisable until August 21, 2000, to
obtain a manufacturing license from us based on such Nickel Zinc technology. If
Young Poong exercises the option to obtain the manufacturing license, we will
reduce our customary license fee by U.S.$500,000 and receive a 3% royalty on all
sales, subject to reduction over time based upon the achievement of certain
production volume targets.
If the gassing and separator problems can be solved, we believe that a
Nickel Zinc rechargeable battery would gain a significant share of the battery
market. We intend to actively pursue such a research and development program
which we hope, but cannot guarantee, will result in the successful design of a
Nickel Zinc rechargeable cell that can be simply manufactured on the same
equipment currently being used for the manufacture of all alkaline batteries,
and that will be available for commercial testing before the end of 2000.
Zinc Carbon Batteries.
The Zinc Carbon (standard AAA, AA, C and D) battery, also known as the
LeClanche battery, is the oldest, least expensive and most widely used in the
world and has undergone little innovation in over 100 years. The Zinc Carbon
battery has a significant market share in underdeveloped countries with the
result that several billion of these batteries are manufactured and discarded
annually. We are testing recharging systems that will permit this type of
battery to be converted to a rechargeable system, thereby providing significant
cost savings as well as achieving considerable reductions in waste and
environmental damage. The non-rechargeable Zinc Carbon battery, however, has a
separator which is only designed to function for the limited life of the
battery. Current laboratory samples will cycle approximately 25 times before the
separator fails. This level of rechargeability is commercially viable but, in
order to permit a Zinc Carbon battery to be rechargeable up to 100 cycles or
more, we must develop a new separator.
We have developed a type of hybrid system that uses the basic
manufacturing facilities and most of the same components and materials as the
normal Zinc Carbon battery and have succeeded in demonstrating a very effective
rechargeable battery. A hand production line has been set up at NRC to optimize
this system. The advantage of this battery is that we believe it will be the
least expensive rechargeable battery available and that it will replace billions
of thrown away batteries around the world. The system can use existing charging
systems developed for other rechargeable batteries but it can also be charged
with small bicycle generators or solar panels. In September 1999, we filed a
Canadian patent application in connection with our rechargeable Zinc-Carbon
Hybrid technology.
Industrial Research Assistance Program.
On March 20, 2000, we entered into an agreement with NRC under which we
will receive a repayable contribution from NRC's Industrial Research Assistance
Program ("IRAP") to further the Nickel Zinc and Zinc Carbon Bromine research, as
well as research relating to other battery products, and to advance our various
technologies towards efficient commercialization in an expeditious manner.
Pursuant to such agreement, NRC shall reimburse us, on a monthly basis through
March 31, 2001, for 85% of the actual salary costs (not including benefits),
estimated to be Cdn.$495,000, incurred for our staff working on these research
projects, with a maximum contribution equal to the lesser of 33% of the total
costs incurred in the performance of the work or Cdn.$495,000. We will repay NRC
for such contributions beginning on July 1, 2003 and continuing for every
calendar quarter thereafter up to
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and including April 1, 2006, by paying to NRC 1.7% of our gross revenues for the
quarter preceding such repayment. If these repayments total less than
Cdn.$495,000 by April 1, 2006, quarterly repayments shall continue until the NRC
contribution is fully repaid. The total amount repayable cannot exceed
Cdn.$742,500.
Copper Zinc and Electro-Permeable Material Technology.
In July 1999, we concluded an agreement with T & G Corporation ("T&G")
of Connecticut regarding T&G's proprietary technology for Electro-Permeable
Material ("EPM") materials and the use of copper zinc electrodes in batteries,
as well as other portable power technologies. T&G will be credited with an
initial investment of U.S.$500,000 respecting its contribution of the technology
and we will fund the research and development costs. T&G and we will share
equally in the net revenues of the joint venture, after deduction of direct
costs, and subject to the balancing of agreed expenditures by either party in
the development of the technology and the operation of the joint venture. The
balancing of investments will be achieved by allocating 75% of net revenue
disbursements of the joint venture to the party with the larger investment until
the investments are equal. During the twelve months period ending September 30,
2000, it is our plan to spend, or cause to be spent, approximately Cdn. $50,000
on research and development pertaining to Copper Zinc and EPM technology.
Alkaline and Direct Methanol Fuel Cells.
Fuel cells are electrochemical devices that enable the chemical energy
of fuels to be converted directly into electricity, thereby avoiding the
fundamental loss of efficiency and emission of pollutants associated with
combustion processes. Fuel cells offer the advantage of lower life-cycle
operating costs for fuel and maintenance plus any economic credits for being
much cleaner than combustion engines.
The Government of Canada, through NRC and other government agencies,
has expressed an interest in supporting initiatives to ensure that Canada
remains in the forefront of Fuel Cell related research. To that end, on October
22, 1998, in consideration of a prepayment of U.S.$450,000, consisting of
200,000 shares of the Company's common stock at the value of U.S.$2.25 per
share, we obtained a ten year lease of the fuel cell laboratory equipment and
related assets of Astris Energi Inc. and Astris Inc. (collectively, "Astris") of
Mississauga, Ontario, including a prototype operational alkaline fuel cell unit.
We have an option to purchase the leased assets for nominal consideration at the
end of the lease period in 2008.
The laboratory equipment and other assets were moved to NRC's research
campus in Ottawa, Ontario, and are being used in a new EVI laboratory dedicated
to fuel cell and battery research and development. Prototype fuel cells,
together with the engineering of the subassemblies, already exist and will
undergo exhaustive testing and optimization. We have also licensed Astris's
alkaline fuel cell technology for a ten year period to complement its existing
intellectual property and, in connection with products manufactured using this
technology and any related sublicense revenue, we have committed to pay Astris a
royalty of 2.5% for four years, and 2% for an additional six years
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thereafter, subject to a minimum annual royalty of Cdn.$10,000 and a maximum
aggregate royalty of Cdn.$5,000,000.
Most fuel cells operate on Hydrogen, necessitating the use of a bulky
and costly reformer to separate Hydrogen from the fuel source used. On December
7, 1999, we announced that, working in conjunction with Dr. Karl Kordesch, Dr.
Viktor Hacker and the Technical University of Graz, Austria, we had achieved a
major technological breakthrough in fuel cell design and had filed a Canadian
patent application with respect to Direct Methanol Fuel Cells ("DMFC"). A DMFC
oxidizes Methanol directly without the necessity of a reformer and without
expensive membranes or electrodes. We believe that a DMFC that operates on a
liquid fuel will lead to a more rapid commercialization of the technology for
transportation applications because it will both simplify the on-board system
requirements and utilize the existing petroleum infrastructure.
We believe we have exceptional in-house expertise in this area of fuel
cell technology, primarily because of our long-term relationship with Dr. Karl
Kordesch. Dr. Kordesch headed up the team that, in the late 1960's, developed a
Hydrogen fuel cell that powered a full size General Motors vehicle for a period
of up to three years. NASA has used Hydrogen powered fuel cells in the U.S.
space shuttle program. Dr. Kordesch has consulted with the joint German/French
space shuttle programs, and is also the author of the principal textbooks used
to teach the subject at universities around the world. He was the leader of the
Eveready research group that invented the single use alkaline battery technology
which is currently applied in such brand name batteries as Duracell and
Energizer, holds over 80 U.S. and several foreign patents, and is the inventor
of the rechargeable alkaline Manganese battery system known as RAM(TM).
Presently, he holds the title of Professor Emeritus at the Technical University
of Graz and has been a consultant of the Company since August 1998 in the areas
of Zinc Carbon Hybrids, fuel cells and other related battery technologies. In
return for these services, we entered into a new consulting agreement with Dr.
Kordesch on March 23, 2000, under which he and his associates received options
to purchase up to 50,000 shares of the Company's common stock at an option price
of US $.50 per share, exercisable until December 31, 2000 or thirty days after
the termination of the agreement. In addition, Dr. Kordesch and his associates
will bill us for services at a rate which we shall have pre-approved. The
agreement expires on December 31, 2003, and the services of Dr. Kordesch and his
associates as consultants are exclusive to the Company and all technological
enhancements which are achieved during the term of the agreement are the sole
and exclusive property of the Company.
Our in-house research and development staff, as well as the remainder
of our research team at NRC, will collaborate with Dr. Kordesch and his
associates on a DMFC development program that we are hopeful, but cannot
guarantee, will result in a prototype unit in the latter months of 2000 and
demonstration units in the first half of 2001. During the twelve months ending
on September 30, 2000, we plan to spend, or cause to be spent, approximately
Cdn.$600,000 on research and development pertaining to fuel cell technology.
Other Projects.
In June 1998, Dr. Klaus Tomantschger assigned to us a patent
application relating to technology which can be used to prevent the buildup of
Hydrogen gas in batteries. In consideration of the assignment of this patent
application by Dr. Tomantschger, we paid him Cdn.$2,500 and agreed to pay him
75% of the first Cdn. $400,000 of gross revenues received by us from the sale,
license or other use of the technology covered by the patent application. Any
further net revenues
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derived from the exploitation of technology covered by the patent application
would be divided equally between Dr. Tomantschger and us. For purposes of the
agreement between Dr. Tomantschger and us, the term "Net Revenues" means gross
revenues less all direct costs associated with the technology, provided that
direct costs in any fiscal quarter may not be more than 50% of the gross
revenues received by us during the same quarter from the exploitation of the
technology. As of April 1, 2000, there have been no revenues with respect to
this technology.
Item 2. Management's Discussion and Analysis and Plan of Operations.
The following discussion should be read in conjunction with the financial
statements and related notes which are included elsewhere in this registration
statement. Statements made below which are not historical facts are
forward-looking statements. Forward-looking statements involve a number of risks
and uncertainties including, but not limited to, general economic conditions and
our ability to successfully complete our research and development programs and
begin to license to third parties, or market on our own, the products which are
created as a result of such programs.
Plan of Operations.
Research and Development Strategy.
In addition to the alliance agreement with NRC, we have established an
advisory committee comprised of our officers, scientists, researchers,
engineers, managers, professionals and marketers to monitor and critique
research and development projects and to consider their financial and legal
implications. Priority is given to projects that can bring significant
improvements and products to the market within three years.
The members of this advisory committee are:
o Mr. Greg K. Anderson - Senior Vice President of Janssen-Ortho
Corporation
o Mr. Geoff Becker, C.A. - member of Shimmerman Penn Burns Becker LLP,
auditors to the Company
o Mr. W. Bruce Clark - member of Cassels Brock & Blackwell, solicitors
to EVI
o Mr. D. Wayne Hartford - President, Chief Executive Officer, Secretary
and Director of the Company
o Dr. Dan Johnson - Vice President of Research and Development at
Eveready (retired)
o Mr. Terrence B. Kimmel - Vice President and General Manager of the
Company
o Dr. Karl Kordesch - chief research and development consultant to the
Company
o Mr. Austin P. Page - consultant to the Company (retired)
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o Mr. Peter F. Searle, C.A. - Vice President - Finance and Director of
the Company
o Dr. Klaus Tomantschger - Vice President, Marketing, Sales and
Intellectual Property for Integran Technologies Inc.
o Mr. David J. Trudel - Marketing Director of the Company
Licensing, Joint Venture and Manufacturing Strategy.
We are developing a number of patent applications and hold the
marketing rights to several more. We intend to bring these patented programs to
a state of readiness for field testing with an alliance partner (or partners)
and then to license the intellectual property to the partner (or partners). A
similar pattern will be followed for new patents. In programs where intellectual
property is jointly developed, licensing and revenue sharing arrangements are
pre-determined.
A significant amount of research and development in the field of energy
cell development by others has, in the past, been done, we believe, without
sufficient regard to commercial realities, manufacturing challenges, field
conditions and environmental concerns. We believe that effective product
research and development must be undertaken in a realistic context and we intend
to pursue our research and development activity on a practical and market
specific basis.
In selected activities, where there are greater commercial values and
lower investment costs, we may choose to become a principal in the commercial
activity. These cases will include those in which we can be an equal in the
joint venture and can use its technical, manufacturing and marketing strengths
to add significant value to the venture.
As a portable power technology developer and integrator, we place
significant value in forming strategic commercial and technical alliances, even
in cases where the likelihood of earning actual revenues as a result of these
relationships remains more of a goal than a certainty. As an early stage
technology developer, we believe these alliances, whether memorialized by
detailed agreements or kept on an informal basis, to be critical to focusing our
in-house research, development and commercialization activities on real market
opportunities.
Since our formation, we have formed several commercial alliances that
we believe are strategic to our business but are nonetheless informal in
comparison to the relationships described elsewhere in this Statement. These
include the following:
o Eveready Battery Company ("Eveready") - Under a
confidentiality agreement between us, we have agreed to
discuss developments and market applications of our DMFC
technology as an exploratory step towards a program focused on
developing a DMFC to meet Eveready's needs.
o W. L. Gore & Associates, Inc. ("WLG") - Under a
confidentiality agreement between us, WLG has agreed to
provide us with membrane electrode assemblies for testing in
our DMFCs. We have an obligation to report to WLG on the
performance of these materials in the test program. We may
also choose to direct membrane development at WLG in order to
serve its specific technical requirements.
o Hibar Systems Limited ("Hibar") - We have had a long
relationship with Hibar, without any formal agreement between
us, in which Hibar has agreed to work with
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us to provide quotations regarding turnkey battery production
lines, and, if successful, to construct and commission these
production lines. We currently have one bid in the final
stages and two other opportunities in the quotation stage.
o Methanex Corp. ("Methanex") - Under a confidentiality
agreement between us, we are engaged in discussions to explore
the possibility of a joint development program between us
involving DMFCs.
We believe that these relationships have been developed and nurtured
because we share a vision for the future of the portable power industry with
each of these strategic allies. At the present time, and given the current stage
of these relationships, we cannot guarantee that any of these alliances will
actually result in either technological or manufacturing innovations leading to
the marketing or licensing of any particular product. We intend, however, to
continue to seek out and develop these alliances because we believe that doing
so is in the long term best interest of the Company and its shareholders.
Acquisitions.
We have no specific plans with respect to making any acquisitions at
this time. We are, however, aware of the desirability, under certain
circumstances, in achieving growth, synergistic effect and certain economies of
scale through the acquisition of strategic technological or manufacturing
entities in the portable power industry. We are committed, therefore, to giving
careful consideration to any such acquisition opportunities with which we may be
presented.
Agreement with Northern Securities Inc.
During the twelve months ending September 30, 2000, we anticipate that
our budget requirements will be between Cdn.$1,000,000 and Cdn.$1,200,000. To
assist us in raising the necessary capital to fund our operations, on February
25, 2000, we entered into an agreement with Northern Securities Inc. of Toronto
("NSI"), under which NSI will act as exclusive agent for the Company, on a best
efforts basis, in connection with a private placement of Cdn.$750,000 in
debentures (the "Stage 1 Offering"), and a private placement of between Cdn.$6
million and $10 million of warrants convertible into common shares (the "Stage 2
Offering"). NSI's right to act as agent for the Stage 2 Offering is contingent
upon its successful completion of the Stage 1 Offering. For a period of two
years from the date of completion of the Stage 2 Offering, NSI has a right of
first refusal to act as lead or co-lead manager of any public or private
placement of securities the Company may offer in Canada, and to act as managing
underwriter for the placement with a minimum 50% participation in the Offering.
For the same two year period, NSI has also been given the right to act as our
financial advisor in connection with any merger or acquisition we might pursue.
Stage 1 Offering
NSI is already in the process of attempting to sell, on our behalf,
Cdn.$750,000 principal amount of 10% unsecured debentures (the "Debentures") to
several accredited Canadian investors. Repayment of the principal amount of the
Debentures will be due six months after issue. We will remit to NSI the interest
payable on the Debentures, or Cdn. $37,500, which NSI will hold in escrow.
Purchasers of the Debentures will also receive 1 warrant for each Cdn. $1 of
principal amount of Debentures purchased. Each warrant entitles the holder to
purchase one of the Company's shares of Common Stock for Cdn.$2 at any time up
to three years after the closing date of the sale of the Debentures (the
"Debenture Closing Date").
NSI's fees for its services as agent in connection with the Stage 1
Offering include the following: 8% of the principal amount of the Debentures
sold, a non-refundable work fee of Cdn.$20,000, Cdn.$5,000 for acting as escrow
agent with respect to the withheld interest, and a
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Cdn.$4,000 expense allowance. NSI will also receive 75,000 warrants, each
warrant entitling NSI to purchase one of the Company's common shares for Cdn.$2
at any time up to three years after the Debenture Closing Date. All amounts
pertaining to NSI's fees are payable on the Debenture Closing Date. As a
guarantee of the Company's payment of the principal amount of the Debentures six
months after the Debenture Closing Date, D. Wayne Hartford, President, Chief
Executive Officer and Secretary of the Company, has pledged 1.5 million of his
common shares, on a non-recourse basis, which pledge will be reduced to 750,000
common shares upon the filing of this Form 10-SB with the Securities and
Exchange Commission ("SEC").
Stage 2 Offering
No later than six months following the Debenture Closing Date, NSI must
have used its best efforts to place a minimum of Cdn.$6 million and a maximum of
Cdn.$10 million worth of warrants ("Special Warrants"), each of which shall be
exercisable at no additional consideration to acquire one common share. The
selling price of the Special Warrants will be established at the time of the
Stage 2 Offering, depending on the market price of the Company's common shares
at that time. If NSI does not have firm commitments from qualified investors
prepared to purchase at least $750,000 of the Special Warrants no later than
four months after the Debenture Closing Date, we have the option to seek
alternative financing through another agent.
NSI's fees for its services as agent in connection with the Stage 2
Offering include the following: 8% of the gross proceeds of the Special Warrants
sold, a non-refundable work fee of Cdn.$25,000, and an expense allowance of
Cdn.$8,000. All amounts pertaining to NSI's fees are payable on the date the
sale of the Special Warrants is closed (the "Equity Closing Date"). If the Stage
2 Offering is not closed within 120 days of the Debenture Closing Date, NSI's
non-refundable work fee is capped at Cdn.$10,000. In addition, NSI shall receive
compensation warrants entitling it to acquire the number of options
("Compensation Options") that equal 10% of the number of common shares issuable
on the exercise of the Special Warrants pursuant to the Stage 2 Offering. Each
Compensation Option entitles NSI to purchase one common share at a price equal
to the issue price of the Special Warrants at any time prior to the third
anniversary of the Equity Closing Date. In exercising the Compensation Options,
whether in whole or in part, NSI may, at its sole discretion, in lieu of paying
the exercise price in cash, elect to receive that number of our common shares
which equals the quotient of the following formula:
X(FMV- $Y)/ FMV, where:
X = the number of Compensation Options exercised,
Y = the exercise price of the Compensation Options, and
FMV = the closing price of our common shares on the principal stock exchange or
quotation system on which our common shares are then listed or quoted for
trading on the trading day immediately prior to such election by NSI.
A further requirement of our agreement with NSI is that we register the
common shares underlying the Special Warrants within 120 days after the Equity
Closing Date and apply for their listing on a Canadian Exchange.
Market Strategy.
The size of the markets in which the products we are developing through
our research and development programs and strategic alliances would compete are
difficult to quantify. Industry reports reflect numbers of between U.S.$25
billion and $35 billion per year. These values reflect the
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size of both the battery and fuel cell markets. Primary and secondary battery
markets of over 500 OEMs are already served by several companies with strong
brand awareness. The fuel cell market is developing with several companies vying
to be first to bring their innovations to market. Industry figures are not only
difficult to obtain but often conflict. From the data that is available, it
appears that the overall worldwide battery market is in the order of U.S.$33
billion, with an annual growth rate of at least 7%. The large format market is
roughly U.S. $17 billion (dominated by automobile batteries) and is growing at
5% per year. The U.S.$16 billion small format primary market is growing at 8% to
9% while the secondary segment is roughly U.S.$7 billion and growing at a rate
of up to 25% per year.
We expect that over the next few years, industrialized nations will
experience significant demand for rechargeable batteries used to power
high-drain portable electronic devices. Prospects are also favorable in the
developing world, most notably East Asia, parts of Latin America and Russia.
Although prospects vary on a country-by-country basis, rising personal and
business incomes should broaden the market base for battery-powered products
throughout the third world. Markets for rechargeable batteries have better
growth prospects than dry cell types. This reflects the presence of certain key
growth areas on the rechargeable side, in particular Nickel metal hydride,
Lithium ion and, eventually Lithium polymer batteries used to run computers and
communications equipment.
Starting this fiscal year, and continuing during the years ahead, we
plan to implement a communications plan that will support our marketing efforts
in all of these potential portable power markets, covering all of our portable
power technologies. The plan includes techniques for raising the awareness of
our efforts with both potential customers and investors. Our website already
exists at http://energyvi.com and is already responsible for regular contacts
from potential alliance partners and customers. We expect to develop product
specification sheets for each of our products and introduce our technologies to
prospective licensees in this manner. We will provide batteries for testing to
our alliance partners, and to potential licensees, under confidentiality
arrangements. We also plan to work closely with OEMs to provide test batteries
so that we may then make the necessary market linkages between end users and
manufacturers.
In the last decade, many experts forecast that the electric vehicle
would have a major impact on the large format market, but that has not yet
happened. In the past few years, several systems have been announced, usually
with great fanfare, but the majority of these systems are either not
commercially viable or in the very early stages of development.
Fuel cells are a natural response to climate change issues and the need
to reduce fossil fuel combustion and consumption. Fuel cells are seen as a
replacement of, or as part of a hybrid system with, internal combustion engines.
We believe that fuel cells could create new markets for steel, electronics,
electrical and control industries, and other equipment suppliers throughout the
world. New technology in fuel cell development could provide tens of thousands
of high-quality jobs and reduce trade deficits throughout North America. Arthur
D. Little, the renowned consulting firm, projects that fuel cell sales could
reach U.S.$3 billion this year. If just 20% of all the cars presently on the
road used fuel cells as their primary energy source, we estimate that 800,000
jobs would be created.
A DMFC, using Methanol as the fuel supply, should gain relatively easy
market access, as there would be no requirement to build a Hydrogen distribution
infrastructure. Methanol, a liquid fuel, can be distributed from existing
gasoline fueling stations. Thus, if only 10% of automobiles used in the United
States alone contained a fuel cell as their power supply, the U.S. market would
grow to potentially U.S.$50 billion annually. Early market entry will go to
technologies that are low cost, efficient and have flexible applications.
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For fuel cells, our marketing strategy will encompass several
approaches. We will attempt to interest fuel cell companies in product
development and technology transfer relationships. We will also approach
potential large-scale users of the technology to support development and
commercialization. We hope, but we cannot guarantee, that our marketing
strategies regarding fuel cells will cause us to become a major factor in the
fuel cell manufacturing business within the next several years.
The most notable fact about the battery market is that all new
technologies to date have added to the total market share without diminishing
any of the business already in existence. The only batteries that have
disappeared from the market place have been legislated out of existence because
of safety or health concerns, rather than because the market place had no
further use for the product. New systems appear to simply attract new
applications and, in only a very few cases, retard the growth of existing
technologies. The fuel cell technologies that are currently being exploited will
create an entirely new market again, and it is likely that, eventually, fuel
cells will dwarf all other segments of the battery market place.
The claims that are made so frequently for new "miracle batteries" have
caused the market generally to become skeptical and confused. We are concerned
that the average customer does not have the ability to digest and evaluate all
of the various claims being made and that he therefore bootstraps onto the due
diligence done by others -- or simply follows the leaders, without regard to
true technological innovation. For these reasons, we need to take advantage of
high profile alliances with such strategic partners as NRC and PLL, among
others, to insure our credibility with OEMs and other high profile customers. We
intend to promote our relationships with these high profile companies and
organizations to increase our visibility in the industry overall, and to
maximize our ultimate market penetration.
Item 3. Description of Property.
As of September 30,1999, the Company's primary assets were:
(a) capital assets, leased from Astris in October 1998 and installed in
our Ottawa, Canada laboratory, comprising the machinery, equipment and related
fixtures that constitute a complete operating fuel cell laboratory. Such capital
assets were acquired as discussed on page 13 of this Statement; and
(b) our license and technology rights arising from the Alliance
Agreement executed as of March 1, 1997 between EVI and NRC, as discussed on page
9 of this Statement.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth the number of and percentage of
outstanding shares of Common Stock beneficially owned by the Company's officers,
directors and those shareholders owning more than 5% of the Company's Common
Stock as at December 31, 1999, which is the most recent date for which such
information is available.
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Shares of
Name and Address Common Stock Percent of Class
- -------------------------- -------------------- ----------------
D. Wayne Hartford 11,751,100 (1) (4) 87.44%
43 Fairmeadow Avenue
Toronto, Ontario,
M2P 1W8, Canada
Peter F. Searle 112,000 (2) less than 1%
11084 Sheppard Avenue E.
Scarborough, Ontario,
M1B 1G2, Canada
Terrance B. Kimmel 100,500 (3) less than 1%
1152 St. Moritz Court
Orleans, Ontario
K1C 2B3, Canada
All Officers and Directors
as a Group (three persons) 11,963,600 (5) 89.02%
(1) Includes shares owned by Bonita A. Hartford, Mr. D. Wayne Hartford's wife
and Bonhart Holdings Corporation, a corporation controlled by
Bonita A. Hartford and also shares owned by Hartford Investment
Corporation II, and Intertec Marketing Corp. both corporations controlled
by Mr. Hartford.
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(2) 12,000 shares were issued in the name of Margaret E. Searle, Mr. Searle's
wife. Includes options for 100,000 shares, exercisable within 60 days.
(3) Includes options for 100,000 shares exercisable within 60 days, and 500
shares beneficially owned by Collette V. Kimmel, Mr. Kimmel's wife.
(4) Includes options for 551,900 shares exercisable within 60 days, owned
beneficially and of record by Mr. Hartford.
(5) Includes 11,211,700 shares of Common Stock issued and outstanding, plus
the shares underlying the aggregate 751,900 options listed here as being
exercisable within 60 days.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The following sets forth certain information concerning the present
management of the Company:
Name Age Position with Company
- ------------------ --- -----------------------------------------
D. Wayne Hartford 54 President, Chief Executive Officer and
Secretary, and a Director
Peter F. Searle 61 Vice President, Finance and a Director
Terrance B. Kimmel 54 Vice President and General Manager of EVI
D. Wayne Hartford has been an Officer and Director of the Company since
1996. In 1986, Mr. Hartford co-founded Battery Technologies Inc. (BTI), a
battery research firm that developed and licensed rechargeable alkaline battery
technology world-wide. Mr. Hartford was the President and Chief Executive
Officer of BTI until the fall of 1996.
Peter F. Searle is a Chartered Accountant in both Canada and the U.K. He
has been an Officer and Director of the Company since 1997. Since 1987, he has
been the President of Postscript Financial Services Inc., a company that
provides financial consulting and accounting services in Canada. Between 1979
and 1984, he served as Vice-President Finance and from 1984 to 1987 served as
Senior Vice-President, Vice-President Finance and Secretary of Standard
Broadcasting Corporation Limited, a major Canadian public broadcasting company
with radio, television and cable television interests in Canada, the U.S. and
Europe.
Terrance B. Kimmel has been Vice President and General Manager of EVI
since August 1999. From 1990 until August 1999, Mr. Kimmel was head of Business
Development for the National Research Council ("NRC") Institute for Chemical
Process and Environmental Technology ("ICPET").
Page 23
<PAGE>
NRC is a Canadian government Crown Corporation undertaking scientific research
and development, and since 1997 has been a research and development alliance
partner of the Company.
Item 6. Executive Compensation.
The following table sets forth in summary form the compensation
received by (i) the Chief Executive Officer of the Company and (ii) by each
other executive officer of the Company who received in excess of U.S.$100,000
during the fiscal years ended September 30, 1998 and 1999.
<TABLE>
Other Annual Restricted Options
Name and Fiscal Salary Bonus Compensation Stock Awards Granted
Principal Position Year (1) (2) (3) (4)
- ------------------ ------ --------------------- -------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
D. Wayne Hartford,
President and Chief 1998 Cdn.$214,200 Cdn.$7,200 N/A N/A
Executive Officer 1999 Cdn.$214,200 Cdn.$7,200
Peter Searle, 1998 Less than Cdn.$80,000 Cdn.$1,088
Vice President 1999 Less than Cdn.$80,000 Cdn.$1,088
Terrance B. Kimmel 1999 Cdn.$ 16,667 Cdn.$ 937
Vice President of EVI
(1) The dollar value of base salary (cash and non-cash) received. Amounts
include the compensation paid by the Company's subsidiaries.
(2) The dollar value of bonus (cash and non-cash) received.
(3) Any other annual compensation not properly categorized as salary or bonus,
including perquisites and other personal benefits, securities or property.
Amounts in the table represents automobile allowances.
(4) Amounts reflect the value of the shares of the Company's Common Stock
issued as compensation for services.
</TABLE>
The table below shows the number of shares of the Company's Common
Stock owned by the officers listed above, and the value of those shares as of
December 31, 1999.
Page 24
<PAGE>
Name Shares Value
------------------ ---------- ---------------
D. Wayne Hartford 11,751,100 U.S.$14,101,320
Peter Searle 112,000 U.S.$134,400
Terrance B. Kimmel 100,500 U.S.$120,600
The following shows the amount which the Company expects to pay to its
executive officers during the fiscal year ending September 30, 2000, and the
time which the Company's executive officers plan to devote to the Company's
business.
Proposed Time to be Devoted
Name Compensation To Company's Business
D. Wayne Hartford Cdn. $214,200 100%
Peter F. Searle Cdn.$80,000 80%
Terrance B. Kimmel Cdn. $100,000 100%
At September 30, 1998 and September 30, 1999, the Company owed D. Wayne
Hartford U.S.$75,748 and U.S.$238,982, respectively, in connection with cash
advances made by Mr. Hartford to the Company for working capital purposes during
those periods. Similarly, the Company owed D.W. Hartford & Associates Inc.
("Associates"), an affiliate of Mr. Hartford, U.S.$45,865 at September 30, 1998
and U.S.$65,600 at September 30, 1999, for cash advances made by Associates to
the Company for working capital purposes during those periods.
The Board of Directors may increase the compensation paid to the
Company's officers depending upon the results of the Company's future
operations.
Employment Contracts.
The Company does not have written employment agreements with any of its
officers, other than Terrance B. Kimmel, which employment agreement was entered
into as of August 1, 1999. The agreement requires Mr. Kimmel to devote
substantially all of his time to being Vice President and General Manager of
Energy Ventures Inc. (Canada) ("EVI"), the Company's chief operating subsidiary,
for an annual salary of Cdn.$100,000. Mr. Kimmel also received options to
acquire 300,000 shares of the Company's Common Stock, exercisable at U.S.$1.50
per share. 100,000 options were exercisable immediately upon issue with an
expiration date of August 1, 2002, another 100,000 options are exercisable no
earlier than August 1, 2000, provided Mr. Kimmel is still an employee of EVI,
and expire on August 1, 2003, and a final 100,000 options are exercisable no
Page 25
<PAGE>
earlier than August 1, 2001, provided Mr. Kimmel is still an employee of EVI,
and expire on August 1, 2004.
Contracts with Subcontractors.
Dr. Karl Kordesch is a scientist who has conducted research primarily
in the area of electro- chemistry and rechargeable energy systems. Dr. Kordesch
was the leader of the Eveready research group that invented the single use
alkaline battery technology which is currently applied in such brand name
batteries as Duracell and Energizer as well as many others world-wide. He also
invented the rechargeable alkaline Manganese RAM(TM) battery system. Since 1986,
Dr. Kordesch has been the Vice-President of Advanced Research at Battery
Technologies Inc., and holds the title of Professor Emeritus at the Technical
University of Graz, Austria. Dr. Kordesch has authored and edited several
hundred books, technical papers and publications on a wide range of topics
related to electro- chemistry and holds over 80 U.S. patents as well as several
foreign patents. Recent activities of Dr. Kordesch and the research staff at the
University of Graz include research efforts in the areas of Nickel Zinc, the
Zinc Bromine Hybrid battery and Fuel Cells generally.
On March 23, 2000, we entered into a new consulting agreement with Dr.
Kordesch. In consideration of his consulting services to the Company, he and his
associates received options to purchase up to 50,000 shares of the Company's
Common Stock at an exercise price of U.S.$.50 per share, exercisable until
December 31, 2000 or thirty days after termination of the agreement. In
addition, Dr. Kordesch and his associates will bill the Company for services at
a rate which the Company will have pre-approved. The agreement expires on
December 31, 2003, and the services of Dr. Kordesch and his associates are
exclusive to the Company, and all technological enhancements which are achieved
during the term of the agreement are the sole and exclusive property of the
Company.
Options Granted During Fiscal Year Ending September 30, l999
In his employment agreement with the Company, entered into as of August
1, 1999 and discussed at p. 25 of this Statement, Terrance B. Kimmel was granted
300,000 options, in three tranches of 100,000, exercisable at $1.50 per share.
Option Exercises in Last Fiscal Year and Fiscal Year-End Values.
None.
Long Term Incentive Plans - Awards in Last Fiscal Year.
None.
Employee Pension, Profit Sharing or Other Retirement Plans.
The Company does not have a defined benefit, pension plan, profit
sharing or other retirement plan, although the Company may adopt one or more of
such plans in the future.
Compensation of Directors.
Page 26
<PAGE>
Standard Arrangements. The Company does not pay its directors for
attending meetings of the Board of Directors, although the Company expects to
adopt a director compensation policy in the future. The Company has no standard
arrangement pursuant to which directors of the Company are compensated for any
services provided as a director or for committee participation or special
assignments.
Except as disclosed elsewhere in this report no director of the Company
received any form of compensation from the Company during the year ended
September 30, 1999.
Non-Qualified Stock Option Plan.
The Company has a Non-Qualified Stock Option Plan which authorizes the
issuance of options to purchase up to 2,000,000 shares of the Company's Common
Stock. The Company's employees, directors, officers, consultants, service
providers and advisors are eligible to be granted options pursuant to the Plan,
provided however that bona fide services must be rendered by the consultants,
service providers or advisors and the services must not be in connection with
the offer or sale of securities in a capital-raising transaction. The option
exercise price is determined by the Board of Directors.
The Plan is administered by the Board of Directors. The Board of
Directors has the authority to interpret the provisions of the Plan and
supervise the administration of the Plan. In addition, the Board of Directors is
empowered to select those persons to whom options are to be granted, to
determine the number of shares subject to each grant of an option and to
determine when, and upon what conditions, shares or options granted under the
Plan will vest or otherwise be subject to forfeiture and cancellation.
In the discretion of the Board of Directors, any option granted
pursuant to the Plan may include installment exercise terms such that the option
becomes fully exercisable in a series of cumulating portions. The Board of
Directors may also accelerate the date upon which any option (or any part of any
options) is first exercisable.
The Board of Directors may at any time, and from time to time, amend,
terminate, or suspend the Plan in any manner it deems appropriate, provided that
such amendment, termination or suspension cannot adversely affect rights or
obligations with respect to shares or options previously granted.
As of December 31, 1999, the Company had issued Non-Qualified Stock
options to the persons and upon the terms shown below. Unless otherwise
indicated, all of the options are presently exercisable.
Shares Option
Subject Exercise
Option Holder Note to Options Price Expiration Date
- --------------------- ---- ---------- ------- ---------------
Greg Anderson 50,000 $0.50 January 2, 2001
Duane Burke 5,100 $0.50 January 2, 2001
W. Bruce Clark 43,000 $0.50 January 2, 2001
Page 27
<PAGE>
D. Wayne Hartford 551,900 $0.50 January 2, 2001
Terrance B. Kimmel (2) 300,000 $1.50 August 1, 2004
Dr. Karl Kordesch 50,000 $0.50 January 2, 2001
Dr. Karl Kordesch (1) 25,000 $2.25 January 2, 2002
John Murray (1) 10,000 $2.25 January 2, 2002
Jiri Nor (1) 10,000 $2.25 January 2, 2002
Austin P. Page 50,000 $0.50 January 2, 2001
Peter F. Searle 100,000 $0.50 January 2, 2001
Dr. W. Taucher-Maunter (1) 2,500 $2.25 January 2, 2002
Dr. Klaus Tomantschger 50,000 $0.50 January 2, 2001
David J. Trudel 50,000 $0.50 January 2, 2001
(1) 65% of these Options are presently exercisable, and the remaining 35% of
the Options are exercisable after September 30, 2000.
(2) 1/3 of these Options are presently exercisable, 1/3 are exercisable after
August 1, 2000 and the remaining 1/3 of the Options are exercisable after
August 1, 2001.
Other Options.
Since inception, the Company has granted options for the purchase of
shares of its common stock to the persons, in the amounts and upon the terms
shown in the following table. These options were not granted pursuant to the
Company's Incentive or Non-Qualified stock option plans.
Shares Subject Option Expiration
Option Holder to Options Exercise Price Date
- --------------------- -------------- -------------- -----------------
The National Research
Council of Canada 20,000 $2.25 December 31, 2001
Item 7. Certain Relationships and Related Transactions.
At the time of the share for share exchange described at page 3 of this
Statement, a majority of EVI's shares were owned by the Company's officers and
directors. The following table shows the shares of EVI which were issued in this
transaction to the Company's officers and directors in exchange for their shares
in EVI, the amount which such persons paid for their shares in EVI, and the
dates they acquired their shares in EVI.
Page 28
<PAGE>
<TABLE>
Shares of the Company's
Common Stock Acquired Cost of Shares Date of Payment
In Share Exchange In EVI for Shares in EVI
- ------------------------ ----------------------- -------------- -----------------
<S> <C> <C> <C>
D. Wayne Hartford (1) 9,601,200 Cdn. $ 100 11-21-96
Peter F. Searle (2) 12,000 Cdn. $5,000 07-31-97
(1) represents Cdn.$75 paid by D. Wayne Hartford for 6,001,000 shares of EVI's
common stock, Cdn.$12.50 paid by a corporation affiliated with Mr.
Hartford for 1,000,000 shares of EVI's common stock, and Cdn.$12.50 paid
by Bonita Ann Hartford, the wife of D. Wayne Hartford, for 1,000,000
shares of EVI's common stock.
(2) shares were issued in the name of Margaret E. Searle, Mr. Searle's wife.
</TABLE>
EVI has accrued fees to be charged to that corporation by D. W. Hartford &
Associates Inc., a corporation which is owned by D. Wayne Hartford and Bonita
Ann Hartford, his wife. EVI has not been able to pay such fees due to lack of
funds. At September 30, 1998, Cdn.$142,800 of such fees were accrued and
unpaid.At September 30, 1999, Cdn.$193,150 of such fees were accrued and unpaid.
Item 8. Description of Securities.
Common Stock
The Company is authorized to issue 50,000,000 shares of Common Stock
(the "Common Stock"). As of December 31, 1999 the Company had 12,687,579 shares
of Common Stock issued and outstanding. Holders of Common Stock are each
entitled to cast one vote for each share held of record on all matters presented
to shareholders. Cumulative voting is not allowed and the holders of a majority
of the outstanding Common Stock can elect all directors.
Holders of Common Stock are entitled to receive whatever dividends
the Board of Directors declares, out of funds legally available for payment of
dividends, and, in the event of liquidation, to share pro rata in any
distribution of the Company's assets after payment of liabilities. The Board of
Directors is not obligated to declare a dividend and it is not anticipated that
dividends will be paid in the foreseeable future.
Holders of Common Stock do not have preemptive rights to subscribe
to additional shares if issued by the Company. There are no conversion,
redemption, sinking fund or similar provisions regarding the Common Stock. All
of the outstanding shares of Common Stock are fully paid and non-assessable.
Preferred Stock
Page 29
<PAGE>
The Company is authorized to issue up to 5,000,000 shares of Preferred
Stock (the "Preferred Stock"). The Company's Articles of Incorporation provide
that the Board of Directors has the authority to divide the Preferred Stock into
series and, within the limitations provided by Delaware statute, to fix by
resolution the voting power, designations, preferences, and relative
participation, special rights, and the qualifications, limitations or
restrictions of the shares of any series. As the Board of Directors has
authority to establish the terms of, and to issue, the Preferred Stock without
shareholder approval, the Preferred Stock could be issued to defend against any
attempted takeover of the Company.
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity and Other
Shareholder Matters.
As of September 30, 1999, there were approximately 385 registered
owners of the Company's Common Stock. The Company's Common Stock is traded on
the National Association of Securities Dealers OTC Bulletin Board. Set forth
below are the ranges of high and low trades for the periods indicated as
reported by the NASD. The trades reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not necessarily represent actual
transactions. The Company's Common Stock began trading in March 1998.
Quarter Ending High Low
------------------ ----- -----
March 31, 1998 $2.50 $2.50
June 30, 1998 $2.75 $2.00
September 30, 1998 $3.25 $1.25
December 31, 1998 $4.00 $2.00
March 31, 1999 [no data available for this quarter]
June 30, 1999 $5.00 $1.00
September 30, 1999 $2.875 $0.50
December 31, 1999 $2.00 $0.75
The provisions in the Company's Articles of Incorporation relating to
the Company's Preferred Stock would allow the Company's directors to issue
Preferred Stock with rights to multiple votes per share and dividend rights
which would have priority over any dividends paid
Page 30
<PAGE>
with respect to the Company's Common Stock. No dividends have been declared with
respect to the Common Stock since the formation of the Company.
Item 2. Legal Proceedings.
None
Item 3. Changes in and Disagreements with Accountants.
Not applicable
Item 4. Recent Sales of Unregistered Securities.
The issuance of the shares of the Company's Common Stock to the former
shareholders of EVI in the share exchange described at page 3 of this Statement
was exempt from registration pursuant to Rule 504 of Regulation D, promulgated
pursuant to the Securities Act of 1933, as amended (the "Act"). No underwriters
were used and the Company did not pay any commissions in connection with the
issuance of these shares.
On March 2, 1999, the Company issued 200,000 shares of its Common
Stock to Astris as payment for a ten year lease of Astris's fuel cell laboratory
equipment and related assets.
On September 22, 1998, the Company issued 200,000 shares of its Common
Stock to the National Research Council of Canada ("NRC") as partial payment for
a technology license from NRC to EVI and future considerations.
The issuance of the shares of Common Stock to Astris and NRC was exempt
from registration pursuant to Section 4(2) of the Act. All of these shares were
acquired for investment purposes only and without a view to distribution. Both
Astris and NRC were fully informed about matters concerning the Company,
including its business, financial affairs and other matters and acquired the
securities for their own accounts. The shares issued to Astris and NRC are
"restricted" securities as defined in Rule 144 of the Securities Exchange Act of
1934, as amended (the "34 Act"). No underwriters were used and no commissions
were paid in connection with the issuance of these shares.
On May 5, 1999, the Company issued, pursuant to Rule 504 of Regulation
D, promulgated pursuant to the Act, 2,000,000 shares of its Common Stock to an
investor at 10 cents per share. These shares were exempt from registration
pursuant to Section 4(2) of the Act. All of those shares were acquired for
investment purposes only and without a view to distribution. The investors were
fully informed about matters concerning the Company, including its business,
financial affairs and other matters and acquired the securities for their own
accounts. The shares issued were restricted securities as defined in Rule 144 of
the 34 Act. Intertec Marketing Corp., a Barbados corporation which is 100% owned
by 584822 Ontario Limited, which company is 100% owned by D. Wayne Hartford, is
the beneficial owner of 1,000,000 of these shares of Common Stock, and 478,000
of these shares of Common Stock are owned by Bonhart Holdings Corporation, a
Barbados corporation which is 100% owned by Hartford Investments Corporation,
which is wholly-owned
Page 31
<PAGE>
by Bonita Ann Hartford, Mr. Hartford's spouse. No underwriters were used and no
commissions were paid in connection with the issuance of these shares.
Heller, Horowitz & Feit, P.C. ("HH&F"), a law firm located in New York,
is the Company's general counsel in regard to United States legal matters. HH&F
will receive from the Company on account of its fees 100,000 shares of the
Company's Common Stock. In addition, HH&F has been granted an option to purchase
200,000 shares of the Company's Common Stock at a price of $2.00 per share.
Item 5. Indemnification of Directors and Officers.
The Delaware Business Corporation Act and the Company's Bylaws provide
that the Company may indemnify any and all of its officers, directors, employees
or agents or former officers, directors, employees or agents, against expenses
actually and necessarily incurred by them, in connection with the defense of any
legal proceeding or threatened legal proceeding, except as to matters in which
those persons are determined not to have acted in good faith and in the best
interest of the Company. Insofar as indemnification for liabilities arising
under the Act may be permitted to directors, officers, or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the SEC, such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
Page 32
<PAGE>
ENERGY VENTURES INC.
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
(Expressed in U.S. Dollars)
PAGE 34
<PAGE>
ENERGY VENTURES INC.
SEPTEMBER 30, 1999 AND 1998
INDEX
1 AUDITORS' REPORT
2 CONSOLIDATED BALANCE SHEETS
3 CONSOLIDATED STATEMENTS OF LOSS
4 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
5 CONSOLIDATED STATEMENTS OF CASH FLOWS
6-13 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
PAGE 35
<PAGE>
AUDITORS' REPORT
To the Board of Directors and Stockholders of
Energy Ventures Inc.:
We have audited the accompanying consolidated balance sheets of Energy Ventures
Inc. as at September 30, 1999 and 1998 and the consolidated statements of loss,
stockholders' equity and cash flows for the years then ended. 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 audit.
We conducted our audit in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform an 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 audit provides a reasonable basis for our
opinion.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at September 30,
1999 and 1998 and the results of its operations and its cash flows for the years
then ended in conformity with United States generally accepted accounting
principles.
Shimmerman Penn Burns Becker, LLP
Chartered Accountants
Toronto, Canada
February 21, 2000
<PAGE>
ENERGY VENTURES INC.
CONSOLIDATED BALANCE SHEETS
AS AT SEPTEMBER 30, 1999 AND 1998
(Expressed in U.S. Dollars)
<TABLE>
Note 1999 1998
---- ---- ----
<S> <C> <C> <C>
ASSETS
Current:
Cash $ - $ 2,772
Accounts receivable 27,150 4,194
Refundable investment tax credits 2 113,486 19,300
Prepaid expenses and sundry assets 14,376 4,482
---------- -----------
155,012 30,748
---------- ----------
Long term:
Capital assets 3 413,376 -
Licence and technology costs 4 353,822 393,960
---------- ----------
767,198 393,960
---------- ----------
TOTAL ASSETS $ 922,210 $ 424,708
========== ==========
LIABILITIES
Current:
Bank indebtedness $ 7,898 $ -
Accounts payable and accrued liabilities 333,141 582,552
Advances from related company 5 65,600 45,865
Advances from director 6 238,982 75,748
---------- ----------
TOTAL LIABILITIES 645,621 704,165
---------- ----------
STOCKHOLDERS' EQUITY
Capital stock 7 1,246,802 146,802
Additional paid in capital 8 165,481 165,481
Foreign exchange adjustment (11,373) 8,204
---------- -----------
1,400,910 320,487
Deficit (1,124,321) (599,944)
--------- ----------
276,589 (279,457)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 922,210 $ 424,708
========== =========
</TABLE>
<PAGE>
ENERGY VENTURES INC.
CONSOLIDATED STATEMENTS OF LOSS
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
(Expressed in U.S. Dollars)
<TABLE>
Note 1999 1998
---- ---- ----
<S> <C> <C> <C>
REVENUE $ 44,736 $ 71,587
-------- --------
EXPENSES
Technology expense 274,428 165,343
Administrative fees 86,623 88,878
Legal and audit 48,804 55,369
Amortization 44,000 -
Professional fees 41,864 36,818
Office and general 26,715 28,039
Interest 19,622 -
Occupancy costs 13,793 -
Travel and promotion 13,264 12,973
-------- --------
569,113 387,420
-------- --------
NET LOSS $(524,377) $(315,833)
======== ========
LOSS PER SHARE 10 $ (0.046) $ (0.031)
========== ==========
</TABLE>
<PAGE>
ENERGY VENTURES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
(Expressed in U.S. Dollars)
<TABLE>
Capital Stock
---------------------------- Additional Foreign
Number paid Exchange
of Shares Amount in capital Deficit Adjustment Total
--------- ------ ------------ ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE AS AT
SEPTEMBER 30, 1997 10,237,579 $ 146,802 $ 165,481 $ (284,111)$ - $ 28,172
Foreign exchange adjustment - - - - 8,204 8,204
Net loss for the year - - - (315,833) - (315,833)
-------------- --------------- --------------- ----------- --------------- -----------
BALANCE AS AT
SEPTEMBER 30, 1998 10,237,579 146,802 165,481 (599,944) 8,204 (279,457)
Shares issued 2,400,000 1,100,000 - - - 1,100,000
Foreign exchange adjustment - - - - (19,577) (19,577)
Net loss for the year - - - (524,377) - (524,377)
-------------- --------------- --------------- ----------- --------------- -----------
BALANCE AS AT
SEPTEMBER 30, 1999 12,637,579 $ 1,246,802 $ 165,481 $(1,124,321) $ (11,373) $ 276,589
========== ========== =========== ========== =========== ===========
</TABLE>
<PAGE>
ENERGY VENTURES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
(Expressed in U.S. Dollars)
1999 1998
---- ----
CASH WAS PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net loss $(524,377) $(315,833)
Items not affecting cash:
Amortization of capital assets 44,000 -
Amortization of licence and technology costs 40,138 40,159
-------- -------
(440,239) (275,674)
Changes in non-cash working capital items relating to operations:
Accounts receivable (22,956) (4,194)
Refundable investment tax credits (94,186) (19,300)
Prepaid expenses and sundry assets (9,894) 32,911
Accounts payable and accrued liabilities 200,589 113,283
-------- --------
(366,686) (152,974)
-------- --------
FINANCING ACTIVITIES
Advances from related company 19,735 72,277
Advances from director 163,234 75,748
Note payable - (45,175)
Foreign exchange adjustment (19,577) 8,204
Issue of shares 200,000 -
-------- -------
363,392 111,054
-------- --------
INVESTING ACTIVITIES
Net purchase of capital assets (7,376) -
-------- ----
DECREASE IN CASH (10,670) (41,920)
Cash at the beginning of the year 2,772 44,692
--------- -------
CASH (BANK INDEBTEDNESS) AT THE
END OF THE YEAR $ (7,898) $ 2,772
======== ======
ADDITIONAL INFORMATION
Interest paid $ 19,622 $ -
======== ============
<PAGE>
ENERGY VENTURES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
(Expressed in U.S. Dollars)
1. ACCOUNTING POLICIES
(a) Principles of consolidation
These consolidated financial statements include the accounts of
the company and its wholly-owned subsidiaries, Energy Ventures
Inc. (Canada) and Energy Ventures International Inc., a Barbados
company.
These consolidated financial statements have been prepared in
accordance with the continuity-of-interests method of accounting.
(b) Use of estimates
The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities 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.
(c) Capital assets
Capital assets are stated at cost less accumulated amortization.
Amortization has been provided at the following annual rates:
Laboratory equipment - 10% straight line
Computer - 30% on the declining balance
(d) Licence and Technology costs
Pursuant to an alliance agreement with National Research Council
of Canada ("NRC") dated March 1, 1997, the company acquired a
licence to certain Lithium Ion ("LI") technology for $10,000
Canadian.
In addition, the company issued 200,000 common shares at an agreed
fair value of $2.25 per share in March 1999, as well as 20,000
options with an exercise price of $2.25 per share expiring
December 31, 2001, as consideration for the right to access other
technologies developed by the NRC.
<PAGE>
1. ACCOUNTING POLICIES (continued)
(d) Licence and Technology costs (continued)
The licence and technology costs are amortized on a straight-line
basis over the term of the agreement.
Amortization of $40,138 (1998 - $40,159) has been included in
technology expense in the statements of loss.
(e) Foreign currency
The financial statements are expressed in U.S. dollars.
Current assets and liabilities denominated in Canadian dollars at
year end are converted into U.S. dollars at the rates of exchange
prevailing on that date. Transactions in Canadian dollars are
recorded in U.S. dollars at the average rate of exchange for the
operating period. Exchange gains and losses are reflected in the
statement of loss.
Exchange gains and losses resulting from the consolidation of
subsidiaries are reflected as an adjustment to stockholders'
deficiency.
2. REFUNDABLE INVESTMENT TAX CREDITS
Energy Ventures Inc. (Canada) has incurred research and development
expenditures for which it has estimated the amount of tax refunds
available from the Canadian federal and provincial authorities. This
estimate assumes that all claims will be duly filed within the prescribed
time limits. The actual amount receivable may vary due to a review by the
tax authorities of the technical and financial aspects of the claims.
3. CAPITAL ASSETS
Accumulated Net
Cost Amortization Book Value
Laboratory equipment $456,236 $(43,658) $412,578
Computer 1,140 (342) 798
-------- --------- ---------
$457,376 $(44,000) $413,376
======= ======= =======
<PAGE>
4. LICENCE AND TECHNOLOGY COSTS
1999 1998
------------------ ----------------------
Net Net
Cost Book Value Cost Book Value
---- ---------- ---- ----------
Licence $ 7,229 $ 5,648 $ 7,229 $ 6,369
Technology costs 450,000 348,174 450,000 387,591
------- ------- ------- -------
$457,229 $353,822 $457,229 $393,960
======= ======= ======= =======
5. ADVANCES FROM RELATED COMPANY
The advances are from a company controlled by the President and CEO of
Energy Ventures Inc. The advances bear interest at 7% per annum and have
no specific terms of repayment.
6. ADVANCES FROM DIRECTOR
The advances are from the President and CEO of the company. The advances
bear interest at 7% per annum and have no specific terms of repayment.
7. CAPITAL STOCK
(a) Authorized:
The company is authorized to issue 50,000,000 common shares and
5,000,000 preferred shares each with a par value of $0.0001 per
share.
<PAGE>
7. CAPITAL STOCK (continued)
(b) Issued:
<TABLE>
Number of
Shares Amount
<S> <C> <C>
Issued capital at the beginning of the year 10,237,579 $ 146,802
Issued for payment of laboratory equipment 200,000 450,000
Issued in satisfaction of debt related to acquisition
of licence and technology 200,000 450,000
Issued for cash 2,000,000 200,000
---------- -----------
12,637,579 $ 1,246,802
========== ==========
</TABLE>
(c) Stock options:
The Company has a stock option plan for directors, officers and
service providers. The options may be exercised between the
exercise date and the expiry date.
The following options were outstanding on September 30, 1999:
<TABLE>
Number of
Shares Exercise Price Exercise Date Expiry Date
<S> <C> <C> <C>
1,150,000 $0.50 Sep. 30/1999 Jan. 2/2001
20,000 2.25 Jan. 5/1999 Dec. 31/2001
30,875 2.25 Sep. 30/1999 Jan. 2/2002
16,625 2.25 Sep. 30/2000 Jan. 2/2002
100,000 1.50 Aug. 11/1999 Aug. 1/2002
100,000 1.50 Aug. 1/2000 Aug. 1/2003
100,000 1.50 Aug. 1/2001 Aug. 1/2004
---------
1,517,500
=========
</TABLE>
(d) Subsequent events
Subsequent to the year end, 50,000 of the $0.50 options have been
exercised and 200,000 were cancelled. In addition, 70,000 shares
were issued for $2 each in payment for research and development
services charged by one of the company's officers.
<PAGE>
8. ADDITIONAL PAID IN CAPITAL
Pursuant to an alliance agreement between Energy Ventures Inc. (Canada)
and a battery technology company such party was to advance $361,402 to
Energy Ventures Inc. (Canada) and was to receive an option to acquire
19.99% of the common shares of the company. Subsequently, the amount to
be advanced was by agreement reduced to $165,481. The option was never
exercised and has expired. The receipt of $165,481 has been added to the
capital of the company.
9. FINANCIAL INSTRUMENTS
The carrying value of the financial instruments approximates their fair
value due to the short term maturity of these instruments.
10. LOSS PER SHARE
Loss per share is calculated on the basis of the weighted average number
of common shares outstanding for the period. Fully diluted loss per share
information has not been presented as the effect of potential exercise of
stock options would be anti-dilutive.
11. LOSS CARRYFORWARDS
Energy Ventures Inc. (Canada) has non-capital losses for Canadian income
tax purposes of approximately $1,425,000 Canadian (1998 - $815,000
Canadian) available to be applied against future taxable income. These
financial statements do not reflect the potential benefit of these losses
which expire between the years 2004-2006.
Energy Ventures Inc. (Canada) has approximately $1,025,000 Canadian (1998
- $60,000 Canadian) of research and development qualified expenditures
available to be applied against future taxable income which may be
carried forward indefinitely. The tax effect of these expenditures has
not been reflected in these financial statements.
12. RELATED PARTY TRANSACTIONS
(a) During the year, the company was charged $142,900 (1998 -
$146,400) for the management services of the President and CEO by
a corporation controlled by him. Accounts payable includes
$131,700 (1998 - $93,200) payable to this corporation.
(b) During the year, the company was charged $102,300 by one of its
officers for research and development services.
<PAGE>
13. COMMITMENTS
(a) Lease
The company is committed to the following annual payments in
respect of the rental of premises:
2000 - $ 24,575
2001 - 24,575
2002 - 24,575
2003 - 24,575
2004 - 6,145
--------
$104,445
========
(b) National Research Council
Pursuant to the agreement between the company and NRC referred to
in note 1(d), NRC is entitled to receive 40% of net receipts for
licencing the LI technology as well as a royalty of 2% of net
sales of products manufactured by the company using the LI
technology.
The company has agreed to provide NRC with funding of a minimum of
$100,000 Canadian and a maximum of $500,000 Canadian each year for
purposes of on-going research and development of the LI and other
technology. The NRC will contribute by providing research and
development resources at a preferred billing rate.
(c) Licence Agreement
On October 22, 1998, Energy Ventures Inc. (Canada) entered into a
licence agreement to use certain alkaline fuel cell technology.
Energy Ventures Inc. (Canada) paid $25,000 Canadian on execution
of the agreement with respect to first year royalties. Any sales
of product manufactured using such alkaline fuel cell technology
will be subject to a royalty of 2.5% during the first four years
and 2% during the next six years. There will be a minimum annual
royalty of $10,000 Canadian beginning January 1, 2000. The
obligation to pay royalties will cease on December 31, 2008 or
when the total royalties paid reach $5,000,000 Canadian.
<PAGE>
14. SEGMENTED INFORMATION
<TABLE>
1999
--------------------------------------------------------------
Canada U.S. Barbados Total
------ ---- -------- -----
<S> <C> <C> <C> <C>
Identifiable assets:
Current $ 150,678 $ 3,391 $ 943 $ 155,012
Long term 767,198 - - 767,198
-------- ------------ ----- --------
$ 917,876 $ 3,391 $ 943 $ 922,210
======== ========== ========== ========
Revenue $ 44,736 $ - $ - $ 44,736
Expenses 533,548 32,862 2,703 569,113
-------- -------- --------- --------
Net loss $(488,812) $ (32,862) $ (2,703) $(524,377)
======== ======== ========= ========
1998
--------------------------------------------------------------
Canada U.S. Barbados Total
------ ---- -------- -----
Identifiable assets:
Current $ 25,552 $ 2,500 $ 2,696 $ 30,748
Long term 393,960 - - 393,960
-------- ------------ ----- --------
$ 419,512 $ 2,500 $ 2,696 $ 424,708
======== ========= ========= ========
Revenue $ 21,587 $ - $ 50,000 $ 71,587
Expenses 333,696 15,892 37,832 387,420
-------- -------- --------- --------
Net earnings (loss) $(312,109) $ (15,892) $ 12,168 $(315,833)
======== ======== ======== ========
</TABLE>
<PAGE>
15. COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified to conform to
the presentation adopted in the current year.
16. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. Although the change in date has
occurred, it is not possible to conclude that all aspects of the Year
2000 Issue that may affect the entity, including those related to
customers, suppliers, or other third parties, have been fully resolved.
<PAGE>
ENERGY VENTURES INC.
CONSOLIDATED BALANCE SHEET - UNAUDITED
AS AT DECEMBER 31, 1999
(Expressed in U.S. Dollars)
1999 1998
$ $
-------------- -------------
ASSETS
Current
Cash 0 4,295
Accounts receivable 79,734 7,572
Refundable investment tax credits 140,996 19,172
Prepaid expenses and sundry assets 7,501 19,907
-------------- -------------
228,231 50,946
Deferred
Capital assets 403,523 441,702
Licence and technology costs 343,911 384,064
-------------- -------------
747,434 825,766
-------------- -------------
975,665 876,712
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Bank indebtedness 39,459 0
Accounts payable and accrued liabilities 356,830 198,162
Advances from related company 70,968 50,378
Advances from director 277,227 128,680
-------------- -------------
744,484 377,220
Capital stock
12,687,579 (10,637,579) Common shares
of $0.0001 par value 1,346,802 1,046,802
Additional paid in capital 165,481 165,481
Foreign exchange adjustment (13,937) 9,601
-------------- -------------
1,498,346 1,221,884
Deficit (1,267,165) (722,392)
-------------- -------------
Stockholders' equity 231,181 499,492
-------------- -------------
975,665 876,712
============== =============
<PAGE>
ENERGY VENTURES INC.
THREE MONTHS ENDED DECEMBER 31, 1999
CONSOLIDATED STATEMENT OF LOSS - UNAUDITED
(Expressed in U.S. Dollars)
1999 1998
$ $
-------------- -------------
REVENUE
Technology revenues 66,675 1,396
-------------- -------------
EXPENSES
Technology expense 102,631 46,890
Administration fees 22,479 21,236
Legal and audit 20,641 18,539
Amortization 21,656 18,792
Professional fees 13,269 10,451
Office and general 10,720 4,801
Interest 5,316 6
Occupancy costs 7,359 977
Travel and promotion 5,448 2,152
-------------- -------------
209,519 123,844
-------------- -------------
NET LOSS FOR THE PERIOD 142,844 122,448
DEFICIT, BEGINNING OF PERIOD 1,124,321 599,944
-------------- -------------
DEFICIT, END OF PERIOD 1,267,165 722,392
============== =============
LOSS PER SHARE $0.011 $0.012
============== =============
CONSOLIDATED STATEMENT OF CASH FLOW - UNAUDITED
(Expressed in U.S. Dollars)
1999 1998
$ $
-------------- -------------
CASH WAS PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net (loss) (142,844) (122,448)
Amortization 21,656 18,792
Net change in non-cash working
capital balances related
to operations (49,530) 46,936
-------------- -------------
(170,718) (56,720)
FINANCING ACTIVITIES
Issue of common shares 100,000 0
Advances from related company 5,368 4,513
Advances from director 38,245 52,932
Foreign exchange adjustment (2,623) 1,397
-------------- -------------
140,990 58,842
INVESTING ACTIVITIES
Acquisition of capital assets (1,833) (599)
-------------- -------------
CASH (OVERDRAFT) AT BEGINNING OF PERIOD (7,898) 2,772
-------------- -------------
CASH (OVERDRAFT) AT THE END OF PERIOD (39,459) 4,295
============== =============
<PAGE>
PART III
Index to Exhibits
Page
----
Exhibit 2.1 Articles of Incorporation of the Company,
as amended, and Bylaws
Exhibit 2.2 Articles of Incorporation of EVI, and Bylaws
Exhibit 2.3 Articles of Incorporation of Energy Ventures
International Inc., and Bylaws
Exhibit 3 Instruments Defining the Rights of Security Holders None
Exhibit 4 Subscription Agreement None
Exhibit 5 Voting Trust Agreement None
Exhibit 6 Material Contracts
Exhibit 6.1 Agreement with National Research Council of Canada
Exhibit 6.2 Agreement with Pacific Lithium Limited *
(Confidentiality Requested)
Exhibit 6.3 Agreement with Young Poong
Exhibit 6.4 Agreements with Industrial Research Assistance Program
Exhibit 6.5 Agreements with Astris Energi Inc. and Astris Inc.
Exhibit 6.6. Agreement with T&G Corporation
Exhibit 6.7 Consulting Agreement with Dr. Kordesch and Kordesch
and Associates
Exhibit 6.8 Agreement with Northern Securities Inc.
Exhibit 6.9 Employment Agreement with Terrance B. Kimmel
Exhibit 7 Material Foreign Patents None
Exhibit 8 Plan of Acquisition, Reorganization, Arrangement,
Liquidation, etc. None
* Agreement not included - Confidential Status Requested
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Company caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
ENERGY VENTURES INC.
Date: March 31, 2000 By: /s/ D. Wayne Hartford
---------------------
D. Wayne Hartford
President and Chief Executive Officer
Date: March 31, 2000 By: /s/ Peter F. Searle
-------------------
Peter F. Searle
Vice President of Finance
EXHIBIT 2.1
CERTIFICATE OF INCORPORATION
OF
O.P.D. ACQUISITIONS, INC.
First: The name of this corporation is O.P.D. Acquisitions, Inc.
Second: Its registered office in the State of Delaware is to be located at 1313
N. Market Street, Wilmington DE 19801-1151, County of New Castle. The registered
agent in charge thereof is The Company Corporation, address "same as above".
THIRD: The nature of the business and the objects and purposes proposed to be
transacted, promoted and carried on, are to do any or all the things herein
mentioned as fully and to the same extent as natural persons might or could do,
and in any part of the world, viz:
The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The amount of the total authorized capital stock of this corporation is
divided into 20,000,000 shares of stock at .0010 par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Regina Cephas, 1313, N. Market St., Wilmington DE 19801-1151
SIXTH: The directors shall have power to make and to alter or amend the By-Laws;
to fix the amount to be reserved as working capital, and to authorize and cause
to be executed, mortgages and liens without limit as to the amount, upon the
property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of a majority
of the capital stock issued and outstanding, the directors shall have the
authority to dispose, in any manner, of the whole property of this corporation.
The By-Laws shall determine whether and to what extent the accounts and books of
this corporation, or any of them shall be open to the inspection of the
stockholders; and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation except as conferred by the law of the
By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings and keep
the books, documents and papers of the Corporation outside of the State of
Delaware, at such places as may be from time to time designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
SEVENTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation; (4) a transaction from which the director derived
an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the
laws of the State of Delaware, do make, file and record this Certificate and do
certify that the facts herein are true; and I have accordingly hereunto set my
hand.
DATED: June 24, 1996 /s/ Regina Cephas
Regina Cephas
EXHIBIT 2.1/A
O.P.D. ACQUISITIONS, INC.
AMENDMENT
to the
CERTIFICATE OF INCORPORATION
Pursuant to the provisions of the Delaware Corporation Law, O.P.D.
Acquisitions, Inc. adopts the following Amendments to its Certificate of
Incorporation:
FIRST: The following amendment was adopted on September 29, l997, pursuant
to Section 242 of the Delaware Corporation Law. Such amendment was adopted by
the consent of shareholders owning a majority of the Corporation's issued and
outstanding shares of common stock. Notice of this amendment has been sent to
all shareholders of record pursuant to Section 228 of the Delaware Corporation
Law.
Amendments
ARTICLE ONE OF THE CERTIFICATE OF INCORPORATION WAS AMENDED TO READ AS FOLLOWS:
The name of this Corporation shall be Energy Ventures Inc.
ARTICLE FOUR OF THE CERTIFICATE OF INCORPORATION WAS AMENDED TO READ AS FOLLOWS:
The authorized capital stock of the Corporation shall consist of
50,000,000 shares of common stock, $0.0001 par value and 5,000,000 shares of
preferred stock, $0.0001 par value.
(a) No share of the common stock shall have any preference over or
limitation in respect to any other share of such common stock. All shares of
common stock shall have equal rights and privileges.
(b) The designations, powers, rights, preferences, qualifications,
restrictions and limitations of the preferred stock shall be established from
time to time by the Corporation's Board of Directors in accordance with the Laws
of Delaware.
(c) 1. Cumulative voting shall not be allowed in elections of
directors or for any purpose.
2. No holders of shares of capital stock of the Corporation
shall be entitled, as such, to any preemptive or preferential right to subscribe
to any unissued stock or any other securities which the Corporation may now or
hereafter be authorized to issue. The Board of Directors of the Corporation,
however, in its discretion by resolution, may determine that any unissued
securities of the Corporation shall be offered for subscription solely to the
holders of common stock of the Corporation, or solely to the holders of any
class or classes of preferred stock, which the Corporation may now or hereafter
be authorized to issue, in such proportions based on stock ownership as said
board in its discretion may determine.
3. The Board of Directors may restrict the transfer of any of
the Corporation's stock issued by giving the Corporation or any stockholder
"first right of refusal to purchase" the stock, by making the stock redeemable,
or by restricting the transfer of the stock under such terms and in such manner
as the directors may deem necessary and as are not inconsistent with the laws of
the State of Delaware. Any stock so restricted must carry a conspicuous legend
noting the restriction and the place where such restriction may be found in the
records of the Corporation.
4. The judgment of the Board of Directors as to the adequacy
of any consideration received or to be received for any shares, options, or any
other securities which the Corporation at any time may be authorized to issue or
sell or otherwise dispose of shall be conclusive in the absence of fraud,
subject to the provisions of this Certificate of Incorporation and any
applicable law.
(d) Effective September 29, 1997, each issued and outstanding
share of this Corporation's Common Stock shall automatically convert into 0.10
shares of this Corporation's Common Stock. Notwithstanding the above, no
fractional shares will be issued. Any shareholder of this Corporation who on
September 29, l997 owned less than ten shares, and who would therefore otherwise
receive less than one share of this Corporation's common stock shall be entitled
to receive $0.00l for each share of this Corporation's common stock owned by
such shareholder immediately prior to the effective date of this amendment,
provided such shareholder sends a written request for payment to this
Corporation. Any fractional share, which as a result of the foregoing would
otherwise be issued to a shareholder of this Corporation (and which shareholder
on September 29, l997 owned a number of shares which is more than ten but which
number is not a whole multiple of ten) shall be rounded up to the nearest whole
share.
ARTICLE SEVEN OF THE CERTIFICATE OF INCORPORATION WAS AMENDED WITH THE ADDITION
OF THE FOLLOWING PARAGRAPH
No contract or other transaction between the Corporation and any other
corporation, whether or not a majority of the shares of the capital stock of
such other corporation is owned by the Corporation, and no act of the
Corporation shall in any way be affected or invalidated by the fact that any of
the directors of the Corporation are pecuniarily or otherwise interested in, or
are directors or officers of, such other corporation. Any director of the
corporation, individually, or any firm with which such director is affiliated
may be a party to or may be pecuniarily or otherwise interested in any contract
or transaction of the Corporation; provided, however, that the fact that he or
such firm is so interested shall be disclosed or shall have been known to the
Board of Directors of the Corporation, or a majority thereof, at or before the
entering into such contract or transaction; and any director of the Corporation
who is also a director or officer of such other corporation, or who is so
interested, may be counted in determining the existence of a quorum at any
meeting of the Board of Directors of the Corporation which shall authorize such
contract or transaction, with like force and effect as if they were not such
director or officer of such other corporation or not so interested.
<PAGE>
This Corporation shall be empowered to indemnify its officers and
directors to the fullest extent provided by law, including but not limited to
the provisions set forth in the laws of Delaware, or any successor provision.
O.P.D. ACQUISITIONS, INC.
By: /s/ Wayne Hartford
Wayne Hartford, President
EXHIBIT 2.1/BY-LAWS
- 1 -
BY-LAWS
OF
ENERGY VENTURES INC.
ARTICLE I
Meetings of Stockholders
Section 1. Annual Meeting. The annual meeting of stockholders
of the corporation for the election of directors and for the transaction of
other business shall be held at such time and such place within or without the
State of Delaware as shall be determined by the board of directors or the
President and stated in the notice of the meeting or in a duly executed waiver
of notice thereof.
Section 2. Special Meetings. A special meeting of stockholders
may be called by the board of directors or the President, and shall be called by
the President, the Secretary or an Assistant Secretary at the request in writing
of a majority of the board of directors, or at the request in writing of the
holders of record of a majority of the outstanding shares of the stock of the
corporation entitled to vote at the meeting. Each special meeting of
stockholders shall be held at such time and place within or without the State of
Delaware as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof. Business transacted at any special meeting of
stockholders shall be limited to the purpose or purposes stated in the notice of
the meeting.
Section 3. Notice and Purpose of Meetings. Written notice of
each meeting of stockholders stating the place, date and hour of the meeting
and, in the case of a special meeting, in general terms, the purpose or purposes
for which the meeting is called, shall be given not less than ten nor more than
sixty days before the meeting to each stockholder of record entitled to 1vote at
the meeting. If mailed, such notice shall be deemed to be given when deposited
in the United States mail, with first-class postage thereon prepaid, directed to
each stockholder at his address as it appears on the records of the corporation.
Section 4. Procedure. At each meeting of stockholders the
order of business and all other matters of procedure may be determined by the
person presiding at the meeting.
Section 5. List of Stockholders. The officer who has charge of
the stock ledger of the corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares of the stock of the
corporation registered in the name of each stockholder. Such list shall be open
to examination by any stockholder for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 6. Quorum. Except as otherwise required by law or the
certificate of incorporation, a quorum at all meetings of stockholders shall
consist of the holders of record of not less than a majority of the outstanding
shares of the stock of the corporation entitled to vote at the meeting, present
in person or represented by proxy, except when the stockholders are required to
vote by class, in which event the holders of record of not less than a majority
of the outstanding shares of the appropriate class shall be present in person or
represented by proxy.
Section 7. Adjournments. The stockholders entitled to vote who
are present in person or represented by proxy at any meeting of stockholders,
whether or not a quorum shall be present at the meeting, shall have power by a
majority of the votes cast to adjourn the meeting from time to time without
notice other than announcement at the meeting of the time and place to which the
meeting is adjourned. At any adjourned meeting held without notice at which a
quorum shall be present any business may be transacted that might have been
transacted on the original date of the meeting. If the adjournment is for more
than thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the adjourned meeting.
Section 8. Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder of record shall be entitled at
every meeting of stockholders to one vote for each share of the stock of the
corporation standing in his or her name on the record of stockholders on the
record date fixed for the meeting or, if no record date for the meeting was
fixed, on the date of the meeting. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may act in person or may authorize another person or
persons to act for him or her by proxy, but no proxy shall be voted or acted
upon after three years from its date unless it provides for a longer period.
Directors elected at any meeting of stockholders shall, except
as otherwise required by law, be elected by a plurality of the votes cast. All
other corporate action to be taken by vote of stockholders shall, except as
otherwise required by law or the certificate of incorporation, be authorized by
a majority of the votes cast. Unless otherwise provided in the certificate of
incorporation, the vote for directors shall be by ballot, but the vote upon any
other question before a meeting of stockholders shall not be by ballot unless
required by law or unless the person presiding at such meeting shall so direct
or unless any stockholder present in person or by proxy and entitled to vote
thereon shall so demand.
Section 9. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the certificate of incorporation, any action required to
be taken at any annual or special meeting of stockholders, or any action
(including, without limitation, adoption, amendment or repeal of by-laws) which
may be taken at any annual or special meeting of stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken and the date of each signature, shall
be signed by the holders of outstanding shares of the stock of the corporation
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted. Written consents signed by a sufficient number
of stockholders to take action shall be delivered to the corporation within
sixty days of the earliest dated consent so delivered. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Section 10. Waiver of Notice. Whenever notice is required by
law or these by-laws to be given to any stockholder, a written waiver thereof,
signed by such stockholder in person or by proxy, whether before or after the
time stated therein, shall be deemed equivalent to notice. The attendance of any
stockholder at a meeting in person or by proxy shall constitute a waiver of
notice of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any annual or special meeting
of the stockholders need be specified in any written waiver of notice.
Section 11. Inspectors of Election. The board of directors
may, in advance of any meeting of the stockholders, appoint one or more
inspectors to act at the meeting or any adjournment thereof. If inspectors are
not so appointed in advance of the meeting, the person presiding at such meeting
may, and on the request of any stockholder entitled to vote thereat shall,
appoint one or more inspectors. In case any inspector appointed fails to appear
or act, the vacancy may be filled by appointment made by the board of directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector, before entering upon the discharge of his or her duties, shall
take and sign an oath faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the best of his or her
ability. No person who is a candidate for the office of director of the
corporation shall act as an inspector at any meeting of the stockholders at
which directors are elected.
Section 12. Duties of Inspectors of Election. Whenever one or
more inspectors of election may be appointed as provided in these by-laws, he,
she or they shall determine the number of shares outstanding and entitled to
vote, the shares represented at the meeting, the existence of a quorum, and the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders.
Section 13. Fixing Record Date. The record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held, except that the
board of directors may, by resolution, fix a different record date which shall
not precede the date such resolution is adopted and shall not be more than sixty
nor less than ten days before the date of the meeting. The record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be either the first date on which a signed written
consent provided for in these By-Laws is delivered to the corporation or, if
prior action by the board of directors is required by law, at the close of
business on the day on which the board of directors adopts the resolution taking
such prior action, except that the board of directors may, by resolution, fix a
different record date which shall neither precede nor be more than ten days
after the date such resolution is adopted. The record date for determining
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or stockholders entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, shall be at the close of business on the day on which
the board of directors adopts the resolution relating thereto, except that the
board of directors may, by resolution, fix any other record date not more than
sixty days prior to such action. Only such stockholders as shall be stockholders
of record on the date so fixed shall be entitled to notice of and to vote at
such meeting of stockholders and any adjournment thereof, or to receive payment
of such dividend or such other distribution or such allotment of rights, or to
exercise such rights in respect of any such change, conversion or exchange of
shares of the stock of the corporation, or to participate in such other action,
or to give such consent, as the case may be, notwithstanding any transfer of any
shares of the stock of the corporation on the books of the corporation after any
such record date so fixed. A determination of stockholders of record entitled to
notice of or to vote at any meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of directors may
fix a new record date for the adjourned meeting.
ARTICLE II
Directors
Section 1. General Powers. The property, business and affairs
of the corporation shall be managed by or under the direction of its board of
directors.
Section 2. Number and Qualifications. The board of directors
shall consist of one or more members. The exact number of directors shall be
fixed from time to time by action of the stockholders or by vote of a majority
of the entire board of directors.
Section 3. Election and Term of Office. Except as otherwise
required by law or these by-laws, each director shall be elected at the annual
meeting of stockholders of the corporation and shall hold office until the next
annual meeting of stockholders and until his or her successor has been elected
and qualified, or until his or her earlier death, resignation or removal.
Section 4. Resignation. Any director may resign at any time by
giving written notice to the corporation. Such resignation shall take effect at
the time specified therein; unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
Section 5. Removal of Directors. Except as otherwise provided
by law, any director or the entire board of directors may be removed, with or
without cause, by the holders of a majority of the shares of the stock of the
corporation then entitled to vote at an election of directors.
Section 6. Vacancies. Newly created directorships and
vacancies in the board of directors, including vacancies resulting from the
resignation of directors effective immediately or at a future date or from the
removal of directors, with or without cause, may be filled by vote of the
stockholders, by vote of a majority of the directors then in office (including
directors whose resignations are effective at a future date), although less than
a quorum, or by the sole remaining director. Each director so chosen shall hold
office until the next annual meeting of stockholders and until his or her
successor has been elected and qualified or until his or her earlier resignation
or removal. A vote to fill a vacancy or vacancies created by the resignation or
resignations of a director or directors effective at a future date shall take
effect when the resignation or resignations become effective.
Section 7. First Meeting of Newly Elected Directors. The first
meeting of the newly elected board of directors may be held immediately after
the annual meeting of stockholders and at the same place as the annual meeting
of stockholders, provided a quorum is present, and no notice of the meeting
shall be necessary. In the event the first meeting of the newly elected board of
directors is not held at said time and place, it shall be held as provided in
Section 8 or 9 of this Article II.
Section 8. Regular Meetings of Directors. Regular meetings of
the board of directors may be held without notice at such time and such place
within or without the State of Delaware as may be fixed from time to time by
resolution of the board of directors. If any day fixed for a regular meeting
shall be a legal holiday at a place where the meeting is to be held, then the
meeting which would otherwise be held on that day shall be held at the same hour
on the next succeeding business day.
Section 9. Special Meeting of Directors. A special meeting of
the board of directors may be called by the President or, in the absence or
disability of the President, any Vice President, or by any two directors, or if
there is only one director by that one director. Each special meeting of the
board of directors may be held at such time and such place within or without the
State of Delaware as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 10. Notice of Special Meeting. Notice of each special
meeting of the board of directors, stating the time and place thereof, shall be
given by the President, any Vice President, the Secretary, any Assistant
Secretary or any member of the board of directors, to each member of the board
of directors (a) not less than three days before the meeting by depositing the
notice in the United States or Canadian mail, with first-class postage thereon
prepaid, directed to each member of the board of directors at the address
designated by him or her for such purpose (or, if none is designated, at his or
her last known address), or (b) not less than twenty-four hours before the
meeting by either (i) delivering the same to each member of the board of
directors personally, (ii) sending the same by telephone, telegraph, cable or
wireless to the address designated by him or her for such purposes (or, if none
is designated, to his or her last known address) or (iii) delivering the notice
to the address designated by him or her for such purpose (or, if none is
designated, to his or her last known address). The notice of any meeting of the
board of directors need not specify the purpose or purposes for which the
meeting is called, except as otherwise required by law or these by-laws.
Section 11. Quorum and Action by the Board. At all meetings of
the board of directors, except as otherwise required by law or these by-laws, a
quorum shall be required for the transaction of business and shall consist of
not less than a majority of the entire board of directors, and the vote of a
majority of the directors present shall decide any question that may come before
the meeting. A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting to another time or place without notice other
than announcement at the meeting of the time and place to which the meeting is
adjourned.
Section 12. Procedure. The order of business and all other
matters of procedure at every meeting of the board of directors may be
determined by the person presiding at the meeting.
Section 13. Committees of Directors. The board of directors
may, by resolution adopted by vote of a majority of the entire board of
directors, designate one or more committees, each committee to consist of one or
more of the directors of the corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of any member or alternate member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he, she or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member or alternate member. Any such committee, to the
extent provided in the resolution of the board of directors, shall have and may
exercise all the powers and authority of the board of directors in the
management of the property, business and affairs of the corporation, and may
authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority of the board
of directors in reference to amending the certificate of incorporation, adopting
any agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the corporation's
property and assets, recommending to the stockholders a dissolution of the
corporation or a revocation of a dissolution, amending the by-laws of the
corporation, declaring a dividend or authorizing the issuance of stock. Each
such committee shall keep regular minutes of its proceedings and report the same
to the board of directors when required. A majority vote of all the members of
any such committee may fix its rules or procedure, determine its actions and fix
the time and place within or without the State of Delaware for its meetings and
specify the number of members required to constitute a quorum and what notice
thereof, if any, shall be given, unless the board of directors shall otherwise
provide. The board of directors may at any time fill vacancies in, change the
membership of or discharge any such committee.
Section 14. Compensation of Directors. The board of directors
shall have the authority to fix the compensation of directors. The directors may
be paid their expenses, if any, of attendance at each meeting of the board of
directors and may be paid a fixed sum for attendance at each meeting of the
board of directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of committees of the board of directors
may be allowed like compensation for attending committee meetings.
Section 15. Action Without a Meeting. Any action required or
permitted to be taken by the board of directors or any committee thereof may be
taken without a meeting if all members of the board of directors or the
committee consent in writing to the adoption of a resolution authorizing the
action. The resolution and the written consents thereto by the members of the
board of directors or committee shall be filed with the minutes of the
proceedings of the board of directors or committee.
Section 16. Presence at Meeting by Telephone. Members of the
board of directors or any committee thereof may participate in a meeting of the
board of directors or committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting by such means shall
constitute presence in person at the meeting.
Section 17. Waiver of Notice. Whenever notice is required by
law or these by-laws to be given to any director, a written waiver thereof,
signed by such director, whether before or after the time stated therein, shall
be deemed equivalent to notice.
ARTICLE III
Officers
Section 1. Officers. The board of directors shall annually, at
the first meeting of the board of directors after the annual meeting of
stockholders, elect a Chairman of the Board, a President, one or more Vice
Presidents, a Secretary, and a Treasurer. The board of directors may from time
to time elect or appoint such additional officers as it may determine. Such
additional officers shall have such authority and perform such duties as the
board of directors may from time to time prescribe.
Section 2. Term of Office. The Chairman of the Board, The
President, each Vice President, the Secretary and the Treasurer shall each,
unless otherwise determined by the board of directors, hold office until the
first meeting of the board of directors following the next annual meeting of
stockholders and until his or her successor has been elected and qualified, or
until his or her earlier death, resignation or removal. Each additional officer
appointed or elected by the board of directors shall hold office for such term
as shall be determined from time to time by the board of directors and until his
or her successor has been elected or appointed and qualified, or until his or
her earlier death, resignation or removal.
Section 3. Removal. Any officer may be removed or have his or
her authority suspended by the board of directors at any time, with or without
cause.
Section 4. Resignation. Any officer may resign at any time by
giving written notice to the corporation. Such resignation shall take effect at
the time specified therein; unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
Section 5. Vacancies. A vacancy in any office arising for any
reason may be filled by the board of directors.
Section 6. The Chairman of the Board. The Chairman of the
Board shall preside at all meetings of stockholders and of the board of
directors and shall be entitled to vote upon all questions.
Section 7. The President. The President shall be the chief
executive officer of the corporation. In the absence or disability of the
Chairman of the Board, or at his or her request, the President shall preside at
all meetings of stockholders and of the board of directors. He or she shall have
the powers and duties of immediate supervision and management of the corporation
which usually pertain to his or her office, and shall perform all such other
duties as are properly required of him or her by the board of directors.
Section 8. The Vice Presidents. The Vice Presidents may be
designated by such title or titles as the board of directors may determine, and
each Vice President in such order of seniority as may be determined by the board
of directors shall, in the absence or disability of the President, or at his or
her request, perform the duties and exercise the powers of the President. Each
of the Vice Presidents also shall have such powers as usually pertain to his or
her office and shall perform such duties as usually pertain to his or her office
or as are properly required of him or her by the board of directors.
Section 9. The Secretary and Assistant Secretaries. The
Secretary shall issue notices of all meetings of stockholders and of the board
of directors where notices of such meetings are required by law or these
by-laws. He or she shall attend meetings of stockholders and of the board of
directors and keep the minutes thereof in a book or books to be provided for
that purpose. He or she shall affix the corporate seal to and sign such
instruments as require the seal and his or her signature and shall perform such
other duties as usually pertain to his or her office or as are properly required
of him or her by the board of directors.
The Assistant Secretaries may, in the absence or disability of
the Secretary, or at his or her request or the request of the President, perform
the duties and exercise the powers of the Secretary, and shall perform such
other duties as the board of directors shall prescribe.
Section 10. The Treasurer and Assistant Treasurers. The
Treasurer shall have the care and custody of all the moneys and securities of
the corporation. He or she shall cause to be entered in books of the corporation
to be kept for that purpose full and accurate accounts of all moneys received by
him or her and paid by him or her on account of the corporation. He or she shall
make and sign such reports, statements and instruments as may be required of him
or her by the board of directors or by the laws of the United States or of any
state, country or other jurisdiction in which the corporation transacts
business, and shall perform such other duties as usually pertain to his or her
office or as are properly required of him or her by the board of directors.
The Assistant Treasurers may, in the absence or disability of
the Treasurer, or at his or her request or the request of the President, perform
the duties and exercise the powers of the Treasurer, and shall perform such
other duties as the board of directors shall prescribe.
Section 11. Officers Holding Two or More Offices. Any two or
more offices may be held by the same person but no officer shall execute,
acknowledge or verify any instrument in more than one capacity if such
instrument is required by law or otherwise to be executed or verified by two or
more officers.
Section 12. Duties of Officers May be Delegated. In case of
the absence or disability of any officer of the corporation, or in case of a
vacancy in any office or for any other reason that the board of directors may
deem sufficient, the board of directors, except as otherwise provided by law,
may temporarily delegate the powers or duties of any officer to any other
officer or to any director.
Section 13. Compensation. The compensation of all officers
shall be determined by the board of directors. The compensation of all other
employees shall be fixed by the President within such limits as may be
prescribed by the board of directors.
Section 14. Security. The corporation may secure the fidelity
of any or all of its officers or agents by bond or otherwise, as may be required
from time to time by the board of directors.
ARTICLE IV
Indemnification of Officers and Directors
Section 1. Right of Indemnification. Each director and officer
of the corporation, whether or not then in office, shall be indemnified by the
corporation for the defense of, or in connection with, any threatened, pending
or completed actions or proceedings and appeals therein, whether civil,
criminal, administrative or investigative, in accordance with and to the fullest
extent permitted by the General Corporation Law of the State of Delaware or
other applicable law, as such law now exists or may hereafter be adopted or
amended; provided, however, that the corporation shall provide indemnification
in connection with an action or proceeding (or part thereof) initiated by such a
director or officer only if such action or proceeding (or part thereof) was
authorized by the board of directors.
Section 2. Advancement of Expenses. Expenses incurred by a
director or officer in connection with any action or proceeding as to which
indemnification may be given under Section 1 of this Article IV may be paid by
the corporation in advance of the final disposition of such action or proceeding
upon (a) the receipt of an undertaking by or on behalf of such director or
officer to repay such advancement in case such director or officer is ultimately
found not to be entitled to indemnification as authorized by this Article IV and
(b) approval by the board of directors acting by a quorum consisting of
directors who are not parties to such action or proceeding or, if such a quorum
is not obtainable, then approval by the stockholders. To the extent permitted by
law, the board of directors or, if applicable, the stockholders, shall not be
required to find that the director or officer has met the applicable standard of
conduct provided by law for indemnification in connection with such action or
proceeding before the corporation makes any advance payment of expenses
hereunder.
Section 3. Availability and Interpretation. To the extent
permitted under applicable law, the rights of indemnification and to the
advancement of expenses provided in this Article IV (a) shall be available with
respect to events occurring prior to the adoption of this Article IV, (b) shall
continue to exist after any rescission or restrictive amendment of this Article
IV with respect to events occurring prior to such rescission or amendment, (c)
shall be interpreted on the basis of applicable law in effect at the time of the
occurrence of the event or events giving rise to the action or proceeding or, at
the sole discretion of the director or officer, on the basis of applicable law
in effect at the time such rights are claimed and (d) shall be in the nature of
contract rights that may be enforced in any court of competent jurisdiction as
if the corporation and the director or officer for whom such rights are sought
were parties to a separate written agreement.
Section 4. Other Rights. The rights of indemnification and to
the advancement of expenses provided in this Article IV shall not be deemed
exclusive of any other rights to which any director or officer of the
corporation or other person may now or hereafter be otherwise entitled whether
contained in the certificate of incorporation, these by-laws, a resolution of
the board of directors or an agreement. Without limiting the generality of the
foregoing, the rights of indemnification and to the advancement of expenses
provided in this Article IV shall not be deemed exclusive of any rights,
pursuant to statute or otherwise, of any director or officer of the corporation
or other person in any action or proceeding to have assessed or allowed in his
or her favor, against the corporation or otherwise, his or her costs and
expenses incurred therein or in connection therewith or any part thereof.
Section 5. Severability. If this Article IV or any part hereof
shall be held unenforceable in any respect by a court of competent jurisdiction,
it shall be deemed modified to the minimum extent necessary to make it
enforceable, and the remainder of this Article IV shall remain fully
enforceable.
ARTICLE V
Shares and Their Transfer
Section 1. Certificates. Every stockholder of the corporation
shall be entitled to a certificate or certificates, to be in such form as the
board of directors shall prescribe, certifying the number of shares of the stock
of the corporation owned by him or her.
Section 2. Issuance of Certificates. Certificates representing
shares of stock of the corporation shall be numbered, in the order in which they
are issued and shall be signed by the President or any Vice President and the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the corporation. Any or all of the signatures on the certificate may be a
facsimile. In case any officer of the corporation who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, such certificate may
nevertheless be issued by the corporation with the same effect as if he or she
were such officer at the date of issue.
Section 3. More Than One Class of Stock. If the corporation
shall be authorized to issue more than one class of stock or more than one
series of any class, the powers, designations, preferences and relative
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate which the corporation shall issue to represent such class or
series of stock, provided that, except for restrictions on transfer of stock (as
provided in section 202 of the General Corporation Law of Delaware), in lieu of
the foregoing requirements, there may be set forth on the face or back of the
certificate which the corporation shall issue to represent such class or series
of stock, a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and relative
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
Section 4. Stock Ledger. A record shall be kept by the
Secretary, by the transfer agent, or by any other officer, employee or agent
designated by the board of directors, of the name of the individual, firm or
corporation holding the shares of the stock of the corporation represented by
each certificate, the number of shares represented by such certificate, the date
of issue thereof and, in case of cancellation, the date of cancellation thereof.
Section 5. Transfer of Shares. Upon surrender to the
corporation or the transfer agent of the corporation of a certificate
representing shares of the stock of the corporation duly endorsed or accompanied
by proper evidence of succession, assignment or authority to transfer, it shall
be the duty of the corporation to issue a new certificate to the person entitled
thereto, to cancel the old certificate and to record the transaction upon its
books. Whenever any transfer of shares shall be made for collateral security,
and not absolutely, it shall be so expressed in the entry of the transfer if,
when the certificates are presented to the corporation for transfer, both the
transferor and transferee request the corporation to do so.
Section 6. Registered Stockholders. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares of the stock of the corporation to receive dividends, and to
vote as such owner, and to hold liable for call and assessment a person
registered on its books as the owner of such shares, and shall not be bound to
recognize any equitable or other claim to or interest in such shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Delaware.
Section 7. Regulations. The board of directors may make such
rules and regulations as it may deem expedient, not inconsistent with law, the
certificate of incorporation or these by-laws, concerning the issue, transfer
and registration of certificates representing shares of the stock of the
corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer clerks or one or more transfer agents or one or more
registrars, and may require all such certificates to bear the signature or
signatures of any of them.
Section 8. Lost, Stolen and Destroyed Certificates. The board
of directors may in its discretion cause a new certificate representing shares
of the stock of the corporation to be issued in place of any certificate
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon satisfactory proof of that fact by the person claiming the
certificate to have been lost, stolen or destroyed; but the board of directors
may in its discretion refuse to issue a new certificate except upon the order of
a court having jurisdiction in such matters. When authorizing such issue of a
new certificate, the board of directors may, in its discretion, and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
ARTICLE VI
Finances
Section 1. Corporate Funds. The funds of the corporation shall
be deposited in its name with such banks, trust companies or other depositories
as the board of directors may from time to time designate. All checks, notes,
drafts and other negotiable instruments of the corporation shall be signed by
such officer or officers, employee or employees, agent or agents as the board of
directors may from time to time designate. No officers, employees or agents of
the corporation, alone or with others, shall have power to make any checks,
notes, drafts or other negotiable instruments in the name of the corporation or
to bind the corporation thereby, except as provided in this Section 1.
Section 2. Fiscal Year. The fiscal year of the corporation
shall end on September 30 of each calendar year unless otherwise provided by the
board of directors.
Section 3. Dividends; Reserves. Dividends upon the stock of
the corporation, payable out of funds legally available therefor, may be
declared by the board of directors at any regular or special meeting. Dividends
may be paid in cash, in property, or in shares of the stock of the corporation.
Before declaring any dividend, the board of directors may set aside out of any
funds of the corporation legally available for dividends such sum or sums as the
board of directors from time to time in its discretion shall deem proper as a
reserve for working capital, for contingencies, for equalizing dividends or for
such other purpose or purposes as the board of directors shall deem conducive to
the interests of the corporation, and the board of directors may modify or
abolish any such reserve in the manner in which it was created.
Section 4. Loans to Employees and Officers. The corporation
may lend money to, or guarantee any obligation of, or otherwise assist any
officer or other employee of the corporation, including any officer or employee
who is also a director of the corporation, whenever in the judgment of the board
of directors such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation.
ARTICLE VII
Corporate Seal
Section 1. Form of Seal. The corporate seal shall have
inscribed thereon the name of the corporation, the year of its incorporation and
the words "Corporate Seal" and "Delaware", and shall otherwise be in such form
as shall be prescribed from time to time by the board of directors.
Section 2. Use of Seal. The corporate seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced in
any manner.
ARTICLE VIII
Amendments
Section 1. Procedure For Amending By-Laws. By-laws of the
corporation may be adopted, amended or repealed (a) at any meeting of
stockholders, notice of which shall have referred to the proposed action, by the
holders of a majority of the shares of the corporation then entitled to vote at
an election of directors, or (b) if the power to adopt, amend or repeal by-laws
shall have been conferred upon the directors in the certificate of
incorporation, at any meeting of the board of directors, notice of which shall
have referred to the proposed action, by the vote of a majority of the entire
board of directors.
EXHIBIT 2.2
Ministere de la Consommation CERTIFICAT
et du Commerce
Ministry of Consumer and Commercial Relations CERTIFICATE
Corporation Number
Ontario Corporation Number
1209308
This is to Certify that these
articles are effective on
November 19, 1996
- -----------------------------
/S/
Director
Business corporations Act
Trons Line Stat. Comp Method
Code No. Type Incorp.
A 0 0 A 3
18 20 28 29 30
Share Notice Jurisdiction
Reqd. ONTARIO
S N
31 32 33 47
Form 1
Business
Corporations ARTICLES OF INCORPORATION
Act
1. The name of the corporation is:
ENERGY VENTURES INC.
2. The address of the registered office is:
43 Fairmeadow Avenue
North York, Ontario
M2P1W8
City of North York
In Municipality of Metropolitan Toronto
3. Number (or minimum and maximum number) of directors is:
a minimum of one (1) and a maximum of ten (10.
4. The first director(s) is/are:
<PAGE>
<TABLE>
First Names, Initials and last names Residence Address Resident Canadian State
Giving Street & No. Or R.R. No., Yes or No
Municipality and Postal Code
<S> <C> <C>
Douglas Wayne Hartford 43 Fairmeadow Avenue Yes
North York, Ontario. M2P lW8
</TABLE>
<PAGE>
5. Restrictions, if any, on business, the corporation may carry on or on
powers the corporation company. may exercise
NIL
6. The classes and any maximum number of shares
that the corporation is authorized to issue:
The Corporation is authorized to issue an unlimited number of common shares
designated as the Common Shares and an unlimited number of Preference Shares
designated as the Preference Shares issuable in series.
<PAGE>
7. Rights, privileges, restrictions and conditions (if any) attaching to each
class of shares and directors authority with respect to any class of
shares which may be issued in series:
Common Shares
(a) Subject to the prior rights of the holders of any other shares as a class:
(i) the board of directors may declare and cause to be paid dividends to the
holders of the Common Shares from any assets at the time properly
applicable to the payment of dividends, and
(ii) the holders of the Common Shares shall, in the event of the liquidation,
dissolution or winding up of the Corporation or other distribution of
assets of the Corporation among shareholders for the purpose of winding up
its affairs, be entitled to receive the remaining assets of the
Corporation; and
(b) Each Common Share is equal to every other Common Share and the holders of
the Common Shares shall be entitled to receive notice of and to attend any
meeting of the shareholders of the Corporation and shall be entitled to
one vote in respect of each Common Share held at such meeting, except at
which holders of a particular class of shares other than the Common Shams
are entitled to vote separately as a class.
Preference Shares
(a) The Preference Shares may from time to time be issued in one or more
series and, subject to the following provisions, the board of directors of
the Corporation may by resolution fix from time to time before such issue
the number of shares that is to comprise each series and the designation,
rights, privileges, restrictions and conditions attaching to each series
of Preference Shares including, without limiting the generality of the
foregoing, the rate or amount of dividends or the method of calculating
dividends, the dates of payment thereof, the redemption, purchase and/or
conversion prices and the terms and conditions of redemption, purchase
and/or conversion, and any sinking fund or other provisions, but no shares
of such series shall be issued until articles of amendment in the
prescribed form designating such series of shares have been filed;
(b) The Preference Shares of each series shall, with respect to the payment of
dividends and the distribution of assets or return of capital in the event
of liquidation, dissolution or winding up of the Corporation, whether
voluntarily or involuntarily, or any other return of capital or
distribution of the assets of the Corporation among its shareholder for
the purposes of winding up its affairs, rank equally with the Preference
Shares of every other series and be entitled to preference over the Common
Shares and over any other shares of the Corporation ranking junior to the
Preference Shares. The Preference Shares of any series may also be given
such other preferences, not inconsistent with these articles, over the
Common Shares and any other shares of the Corporation ranking junior to
the
<PAGE>
Preference Shares;
(c) If any dividends or amounts payable on the return of capital in respect of
a series of Preference Shares am not paid in full, all series of
Preference Shares shall participate rateably in aspect of such dividends
and return of capital;
<PAGE>
(d) Subject to any restrictions on the number of shares authorized, the
Preference Shares of any series may be made convertible into Common Shares
or any other class or series of shares of the Corporation;
(e) Each share of a series of Preference Shares shall carry such voting rights
n may be determined and a share of a series of Preference Shams may be
entitled to one (1) vote at all meetings of shareholders;
(f) Dividends on shares of each series of Preference Shares may be cumulative;
(g) No holder of shares of any series of Preference Shares shall be entitled,
as such, to any pre-emptive right to subscribe for the purchase or to
receive any part of any issue of shares of the Corporation, or of bonds,
debentures or other securities of the Corporation whether now or hereafter
authorized or issued;
(h) Shares of any series of Preference Shares may be made redeemable at any
time at the option of the Corporation without the consent of the holders
thereof on payment for each share to be redeemed of the amount paid up
thereon together with all unpaid cumulative dividends, if any, which have
previously been declared;
(i) The Corporation may at any time and from time to time purchase for
cancellation all or any part of the shares of any series of Preference
Shares outstanding at the lowest price at which, in the opinion of the
directors of the Corporation, such shares are obtainable, but not
exceeding the amount paid up thereon, together with all unpaid cumulative
dividends, If any, which have previously been declared;
(j) The shares of any series of Preference Shares may carry the right of the
holder thereof to call for the redemption of any shares held by the
holder,
(k) Notwithstanding any method of selecting any shares of any series of
Preference Shares to be redeemed by the Corporation which is adopted by
the board of directors of the Corporation,
<PAGE>
the Corporation shall be entitled to call, on any redemption date, for the
redemption of all of the shares represented by a certificate where the
certificate represents less Om One Hundred (100) shares of any series of
Preference Shares; and
(l) Any amendment to the articles of the Corporation to delete or vary any
preference, right, condition, restriction, limitation or prohibition
attaching to the Preference Shares as a class or to create preference
shares ranking in priority to or on a parity with the Preference Shares,
in addition to the authorization by a special resolution, must be
authorized by at least two-thirds (2/3) of the holders of each of the
series of Preference Shares at a meeting duly called for the purpose.
<PAGE>
8. The issue, transfer or ownership of shares is/is not restricted and the
restrictions (if any) are as follows:
No share in the capital of the Corporation shall be transferred, allotted
or issued without the consent of the board of directors expressed by a
resolution passed by not less am a majority of votes at a meeting of the
board of directors or by an instrument or Instruments In writing signed by
a majority of the directors.
9. Other provisions, If any, are:
(a) The number of shareholders of the Corporation, exclusive of persons who
are in
<PAGE>
10. The names and addresses of the Incorporators are
First name, initials and last name or corporate name
Douglas Wayne Hartford
Full residence address or address of registered office or of principal place of
business giving street & No. or R.R. No., municipality and postal code
43 Fairmeadow Avenue,
North York, Ontario.
M2P lW8
These articles are signed in duplicate.
Signatures of Incorporators
/S/
------------------------------
Douglas Wayne Hartford
<PAGE>
Ministry of Consumer and Commercial Relations Ontario Corporation Number
CERTIFICATE 1209308
This is to certify that these
articles are effective on
NOVEMBER 09, 1997
/s/
-------------------------
Director
Business Corporations Act
Trans
CODE
C
18
- --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT
1. The present name of the corporation is:
ENERGY VENTURES INC.
2. The name of the corporation is changed to (If applicable):
ENERGY VENTURES INC. (CANADA)
3. Date of Incorporation
19 NOVEMBER 1996
4. The articles of the corporation are amended as follows:
To change the name of the corporation from Energy Ventures Inc. to
Energy Ventures Inc. (Canada)
<PAGE>
5. The amendment has been duly authorized as required by Sections, 168 & 170
(as applicable) of the Business Corporations Act.
6. The resolution authorizing the amendment was approved by the
shareholders/directors (as applicable) of the corporation on
30th September 1997
These articles are signed in duplicate.
ENERGY VENTURES INC.
--------------------
(Name of Corporation)
By /s/
(Signature)
D. Wayne Hartford, President
<PAGE>
BY-LAW NO. 1
relating generally to the
transaction of the business and
affairs of the Corporation
BE IT ENACTED as a by-law of
ENERGY VENTURES INC.
(hereinafter referred to as the 'Corporation') as follows:
ARTICLE ONE - INTERPRETATION
Section 1.01 - Definitions
In the by-laws of the Corporation, unless the context otherwise
requires:
(a) "Act" means the Business Corporations Act (Ontario), or any statute
that may be substituted therefor, as from time to time amended;
(b) "appoint" Includes 'elect' and vice versa;
(c) "articles" means the articles on which is endorsed the certificate
of Incorporation of the Corporation as from time to time amended or
restated;
(d) "board" means the board of directors of the Corporation and
"director' means a member of the board;
(e) "by-laws" means this by-law and all other by-laws of the Corporation
from time to time in force and effect;
(f) "cheque" includes a draft;
(g) "Corporation" means the corporation Incorporated under the Act by
the said certificate endorsed on the articles and named 'Energy
Ventures Inc.';
(h) "meeting of shareholders" Includes an annual meeting of shareholders
and a special meeting of shareholders;
(1) "special meeting of shareholders" Includes a meeting of any class or
classes of shareholders and a special meeting of shareholders
entitled to vote at an annual meeting of shareholders; and
(j) "recorded address" means, In the case of:
(1) a shareholder, the address of such person as recorded In the
securities register,
(11) joint shareholders, the address appearing in the securities register
in respect of such joint holding or the first address so appearing
if there are
more than one.
(111) an officer, auditor or member of a committee of the board, his
latest address as recorded in the records of the Corporation, and
<PAGE>
ENERGY VENTURES INC.
-2-
(lv) a director, his latest address as recorded in the most recent notice
filed under the Corporations Information Act, whichever is more
current.
Section 1.02 - Interpretation
In this By-law, unless something In the subject matter or context is
Inconsistent therewith:
(a) all words and expressions defined for the purposes of the Act shall
have the same meanings when used in this By-law;
(b) the division of this By-law into articles, sections and subsections
and the Insertion of headings are for convenience of reference only
and shall not affect the construction or Interpretation hereof;
(c) words importing the singular number include the plural and vlce-
versa and words Importing the masculine gender Include the feminine
and neuter genders:
(d) all dollar amounts refereed to In this By-law are in lawful money of
Canada; and
(e) words importing a person include an individual, sole proprietorship,
partnership, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, body corporate and a natural
person In his capacity as trustee, executor, administrator, or other
legal representative.
ARTICLE TWO - BUSINESS OF THE CORPORATION
Section 2.01 - Registered Office
The registered office of the Corporation shall be at the place within
Ontario from time to time specified in the articles and at such location therein
Initially as is specified in the articles and thereafter as the board may from
time to time determine.
Section 2.02 - Corporate Seal
Until changed by resolution of the board, the corporate goal of the
Corporation shall be in the form impressed hereon.
<PAGE>
Section 2.03 - Financial Year
Until changed by the board, the financial year of the Corporation shall
end on the 31st day of January in each year.
Section 2.04 - Execution of Instruments
Deeds, transfers, assignments, contracts, obligations, certificates and
other instruments may be signed on behalf of the Corporation by any person who
is a director or who holds the office of chairman of the board, president, vice-
president, secretary, treasurer, assistant secretary or assistant treasurer or
any other office created by by-law or by the board, in addition, the board may
from time to time direct the manner in which and the person or persons by whom
any particular instrument or class of instruments may or shall be signed. Any
signing officer may affix the corporate seal to any instrument requiring same
<PAGE>
ENERGY VENTURES INC.
3 -
Section 2.05 - Banking Arrangements
The banking business of the Corporation including, without limitation,
the borrowing of money and the giving of security therefor, shall be transacted
with such banks, trust companies or other bodies corporate or organizations as
may from time to time be designated by or under the authority of the board. Such
banking business or any part thereof shall be transacted under such agreements,
instructions and delegations of powers as the board may from time to time
prescribe.
Section 2.06 - Voting Rights In Other Bodies Corporate
The signing officers of the Corporation under section 2.04 may execute
and deliver instruments of proxy and arrange for the Issuance of voting
certificates or other evidence of the right to exercise the voting rights
attaching to any securities hold by the Corporation. Such instruments shall be
in favour of such persons as may be determined by Corporation. Such Instruments
shall be in favour of such persons as may be determined by the officers
executing or arranging for the same. In addition, the board may from time to
time direct the manner In which and the persons by whom any particular voting
rights or class of voting rights may or shall be exercised.
<PAGE>
Section 2.07 - Divisions
The board may cause the business and operations of the Corporation or
any part thereof to be divided into one or more divisions upon such basis,
Including without limitation types of business or operations, geographical
territories, product lines or goods or services, as may be considered
appropriate in each case. In connection with any such division that board or,
subject to any direction by the board, the chief executive officer may authorize
from time to time, upon such basis as may be considered appropriate In each
case:
(a) Subdivision and Consolidation - the further division of the
business and operations of any such division into sub-units and the
consolidation of the business and operations of any such divisions
and sub-units;
(b) Name - the designation of any such division or sub-unit by, and the
carrying on of the business and operations of any such division or
sub- unit under, a name other than the name of the Corporation;
provided that the Corporation shall set out Its name In legible
characters In all places required by law; and
(c) Officers - the appointment of officers for any such division or
sub-unit. the determination of their powers and duties, and the
removal of any of such officers so appointed, provided that any such
officers shall not, as such, be officers of the Corporation.
<PAGE>
ARTICLE THREE - BORROWING AND SECURITY
Section 3.01 - Borrowing Power
(1) Without limiting the borrowing powers of the Corporation as set forth in
the Act, but subject to the articles and any unanimous shareholder
agreement, the board may from time to time on behalf of the Corporation,
without authorization of the shareholders:
(a) borrow money upon the credit of the Corporation;
(b) issue, reissue, sell or pledge bonds, debentures, notes or other
evidences of Indebtedness or guarantee of the Corporation,
whether secured or unsecured;
<PAGE>
ENERGY VENTURES INC.
(c) to the extent permitted by the Act, give directly or
indirectly financial assistance to any person by means of a
loan, guarantee on behalf of the Corporation to secure
performance of any present or future indebtedness, liability
or obligation of any person. or otherwise; and
(d) mortgage, hypothecate, pledge or otherwise create a security
interest in all or any currently owned or subsequently
acquired real or personal, movable or immovable property of
the Corporation including book debts, rights, powers,
franchises and undertakings, to secure any such bonds,
debentures, notes or other evidences of Indebtedness,
liability or obligation of the Corporation,
(2) Nothing In subsection (1) limits or restricts the borrowing of money by the
Corporation on bills of exchange or promissory notes made, drawn, accepted or
endorsed by or on behalf of the Corporation.
Section 3.02 - Delegation
Subject to the Act, the articles and any unanimous shareholder agreement
the board may from time to time delegate to a committee of the board, a director
or an officer of the Corporation or any other person as may be designated by the
board all or any of the powers conferred on the board by section 3.01 or by the
Act to such extent and in such manner as the board may determine at the time of
such delegation.
ARTICLE FOUR - DIRECTORS
Section 4.01 - Number of Directors
Until changed in accordance with the Act, the board shall consist of not
fewer than the minimum number and not more than the maximum number of directors
provided in the articles.
Section 4.02 - Qualification
No person shall be qualified for election as a director if such person
is less than eighteen (18) years of age; If such person Is of unsound mind and
has been so found by a court In Canada or elsewhere; If such person 13 not an
Individual; or If he has the status of a bankrupt. A director need not be a
shareholder. A majority of the directors shall be resident Canadians.
Section 4.03 - Election and Term
The election of directors shall take place at each annual meeting of
shareholders and all the directors then in office shall retire but, if
qualified, shall be eligible for re-election. Subject to the Act, the number of
directors to be elected at any such meeting shall be the number of directors
determined
<PAGE>
from time to time by special resolution or, if the special resolution empowers
the directors to determine the number, by resolution of the board. Where the
shareholders adopt an amendment to the articles to Increase the number or
minimum number of directors, the shareholders may, at the meeting at which they
adopt the amendment, elect the additional number of directors authorized by the
amendment. The election shall be by resolution. If an election of directors Is
not hold at the proper time, the Incumbent directors shall continue In office
until their successors are elected.
Section 4.04 - Removal of Directors
Subject to the Act, the shareholders may remove by ordinary resolution
passed at an annual or special meeting of shareholders any director from office
and the vacancy created by such removal may be filled at the same meeting,
failing which it may be filled by the board.
<PAGE>
ENERGY VENTURES INC.
-5-
Section 4.05 - Vacation of Office A director ceases to hold office when:
(a) the individual dies, is removed from office by the shareholders or
ceases to be qualified for election as a director: or
(b) the written resignation of the individual is received by the
Corporation, or, If a time is specified in such resignation, at the
time so specified, whichever is later.
Section 4.06 - Vacancies
Subject to the Act, a quorum of the board may fill a vacancy in the board,
except a o vacancy resulting from an Increase In the number or minimum
number of directors or from failure of the shareholders to elect the
number or minimum number of directors,
Section 4.07 - Action by the Board
Subject to any unanimous shareholder agreement, the board shall manage
or supervise the management of the business and affairs of the Corporation. The
powers of the board may be exercised at a meeting (subject to sections 4.08 and
4.09) at which a quorum Is present or by resolution in writing signed by all the
directors entitled to vote on that resolution at a meeting of the board, Where
there Is a vacancy In the board, the remaining directors may exercise all the
powers of the board so long as a quorum remains in office. Where the Corporation
has a board consisting of only one director, that director may constitute a
meeting.
Section 4.08 - Canadian Majority at Meetings
The board shall not transact business at a meeting, other than filling a
vacancy In the board, unless a majority of the directors present are resident
Canadians, except where:
(a) a resident Canadian director who is unable to be present approves In
writing or by telephone, electronic or other communications
facilities the business transacted at the meeting; and
(b) a majority of the resident Canadians would have been present had
that director been present at the meeting.
Section 4.09 - Meeting by Telephone
If all directors of the Corporation consent thereto generally or In
respect of a particular meeting, a director may participate in a meeting of the
board or of a committee of the board by means of such telephone, electronic or
other communications facilities as permit all persons participating in the
meeting to communicate with each other. simultaneously and instantaneously, and
a director
<PAGE>
participating In such a meeting by such means is deemed to be present at the
meeting. Any such consent shall be off active whether given before or after the
meeting to which It relates and may be given with respect to all meetings of the
board and of committees of the board.
Section 4.10 - Place of Meetings
Meetings of the board may be hold at any place within or outside Ontario
and In any financial year of the Corporation a majority of the meetings need not
be held in Canada.
<PAGE>
ENERGY VENTURES INC.
-6-
Section 4.11 - Calling of Meetings
Meetings of the board shall be held from time to time at such time and
at such place as may be determined by the board, the chairman of the board, the
president, the sole director where there Is only one (I) director or any two (2)
directors where there Is more then one (1) director.
Section 4.12 - Notice of Meeting
Notice of the time and place of every meeting of the board shall be
given in the manner provided in section eleven to each director not less than
forty-eight (48) hours before the time when the meeting is to be held. A notice
of a meeting of the directors need not specify the purpose of or the business to
be transacted at the meeting except where the Act requires such purpose or
business or the general nature thereof to be specified.
Section 4.13 - First Meeting of New Board
Provided a quorum of directors is present, each newly elected board may
without notice hold Its first meeting immediately following the meeting of
shareholders at which such board is elected.
Section 4.14 - Adjourned Meeting
Notice of an adjourned meeting of the board is not required if the time
and place of the adjourned meeting is announced at the original meeting.
Section 4.15 - Regular Meetings
The board may appoint a day or days in any month or months for regular
meetings of the board at a place and time to be named. A copy of any resolution
of the board fixing the place and time of such regular meetings shall be sent to
each director forthwith after being passed, but no other notice shall be
required for any such regular meeting except where the Act requires the purpose
thereof or the business to be transacted thereat to be specified.
Section 4.16 - Chairman
The chairman of any meeting of the board shall be the first mentioned of
such of the following officers as have been appointed and who is a director and
Is present at the meeting: chairman of the board or president. If no such
officer is present, the directors present shall choose one of their number to be
chairman.
Section 4.17 - Quorum
Subject to section 4.08 and any requirement of the Act, the quorum for
the transaction of business at any meeting of the board shall be a single
director where the board Is composed of one (1) or two (2) directors and two (2)
directors where the board Is composed of more than two (2) directors, or such
greater number of directors as the board may from time to time determine.
<PAGE>
Section 4,10 - Votes to Govern
At all meetings of the board every question shall be decided by a
majority of the votes cast on the question. In case of an equality of votes, the
chairman of the meeting shall be entitled to a second or casting vote.
Section 4.19 - Conflict of Interest
A director who is a party to, or who is a director or officer of or has
a material interest in any person who is a party to, a material contract or
transaction or proposed
<PAGE>
ENERGY VENTURES INC.
7
material contract or transaction with the Corporation shall disclose to the
Corporation the nature and extent of his interest at the time and in the manner
provided by the Act. Such director shall not vote on any resolution to approve
the same except as provided by the Act.
Section 4.20 - Remuneration and Expenses
Subject to any unanimous shareholder agreement, the directors shall be
paid such remuneration for their services as the board may from time to time
determine. The directors shall also be entitled to be reimbursed for traveling
and other expenses properly Incurred by them In attending meetings of the board
or any committed thereof, Nothing herein contained shall preclude any director
from serving the Corporation In any other capacity and receiving remuneration
therefor.
ARTICLE FIVE - COMMITTEES
Section 5.01 - Committees of the Board
The board may appoint from their number one or more committees of the
board, however designated. and delegate to any such committee any of the powers
of the board except those which pertain to items which, under the Act, a
committee of the board has no authority to exercise. A majority of the members
of any such committee shall be resident Canadians.
Section 5.02 - Transaction of Business
The powers of a committee of the board may be exercised by a meeting at
which a quorum is present or by resolution in writing signed by all members of
such committee who would have been entitled to vote on that resolution at a
meeting of the committee. Meetings of such committee may be held at any place in
or outside Ontario.
Section 5.03 - Advisory Bodies
The board may from time to time appoint such advisory bodies as it may
deem advisable.
Section 5.04 - Procedure
Unless otherwise determined by the board, each committee and advisory
body shall have power to fix Its quorum at not lose than a majority of its
members, to elect its chairman and to regulate its procedure.
<PAGE>
ARTICLE SIX - OFFICERS
Section 6.01 - Appointment
Subject to any unanimous shareholder agreement, the board may from time to
time appoint a president, one or more vice-presidents (to which title may be
added words indicating seniority or function), a secretary, a treasurer and such
other officers as the board may determine, including one or more assistants to
any of the officers so appointed. One person may hold more than one office. The
board may specify the duties of and, in accordance with this by-law and subject
to the Act, delegate to such officers powers to manage the business and affairs
of the Corporation. Subject to sections 6.02 and 6.03, an officer may but need
not be a director.
<PAGE>
ENERGY VENTURES INC.
Section 6.02 - Chairman of the Board
The board may from time to time also appoint a chairman of the board who shall
be a director. If appointed, the board may assign to the chairman any of the
powers and duties that are by any provisions of this by-law assigned to the
president: and the chairman shall have such other powers and duties as the board
may specify.
Section 6.03 - Vice-Chairman of the Board
If a chairman of the board has been appointed, the board may from time to time
also appoint a vice-chairman of the board who shall be a director. During the
absence or disability of the chairman of the board. the duties of the chairman
shall be performed and the powers of the chairman shall be exercised by the
vice- chairman of the board; and he shall have such other powers and duties as
the board. the chairman of the board or the president may specify.
Section 6.04 - President
The president shall be the chief executive officer and chief operating officer
and, subject to the authority of the board, shall have general supervision of
the business of the Corporation; and the president shall have such other powers
and duties as the board may specify.
Section 6.05 - Secretary
Unless otherwise determined by the board, the secretary shall be the secretary
of all meetings of the board, shareholders and committees of the board that the
secretary attends. The secretary shall enter or cause to be entered In records
kept for that purpose minutes of all proceedings at meetings of the board,
shareholders and committees of the board, whether or not the secretary attends
such meetings; the secretary shall give or cause to be given, as and when
Instructed, all notices to directors, shareholders, officers, auditors and
members of committees of the board; the secretary shall be the custodian of the
stamp or mechanical device generally used for affixing the corporate seal of the
Corporation and of all books, records and Instruments belonging to the
Corporation, except when some other officer or agent has been appointed for that
purpose; and the secretary shall have such other duties as otherwise may be
specified.
Section 6.6 - Treasurer
The treasurer shall be the chief financial officer and shall keep proper
accounting records In compliance with the Act and shall be responsible for the
deposit of money, the safekeeping of securities and the disbursement of the
funds of the Corporation; the treasurer shall render to the board whenever
required an account of all transactions and of the financial position of the
Corporation; and the treasurer shall have such other powers and duties as
otherwise may be specified.
<PAGE>
Section 6.07 - Powers and Duties of Officers
The powers and duties of all other officers shall be such as the terms of
their engagement call for or as the board or (except for those whose powers and
duties are to be specified only by the board) the chief executive officer may
specify. The board and (except as aforesaid) the chief executive officer may,
from time to time and subject to the provisions of the Act, vary, add to or
limit the powers and duties of any officer, Any of the powers and duties of an
officer to whom an assistant has been appointed may be exercised and performed
by such assistant. unless the board or the chief executive officer otherwise
directs,
<PAGE>
ENERGY VENTURES INC.
Section 6.08 - Term of Office
The board, in its discretion, may remove any officer of the Corporation.
Otherwise, each officer appointed by the board shall hold office until his
successor is appointed or until his earlier resignation,
Section 6.09 - Agents end Attorneys
The Corporation, by or under the authority of the board, shall have
power from time to time to appoint agents or attorneys for the Corporation in or
out of Canada with such powers (Including the power to sub-delegate) of
management, administration or otherwise as may be thought fit.
Section 6,10 - Conflict of Interest
An officer shall disclose his interest in any material contract or
transaction or proposed material contract or transaction with the Corporation In
accordance with section 4.19.
ARTICLE SEVEN - PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
Section 7.01 - Limitation of Liability
Every director or officer of the Corporation in exercising the powers
and discharging the duties of a director or officer shall act honestly and in
good faith with a view to the best interests of the Corporation and exercise
with care, diligence and skill that a reasonably prudent person would exercise
in comparable circumstances. Subject to the foregoing, no director or officer
shall be liable for the acts, receipts, neglects or defaults of any other
director or officer or employee, or for joining in any receipt or other act for
conformity, or for any loss, damage or expense happening to the Corporation
through the Insufficiency or deficiency of title to any property acquired for or
on behalf of the Corporation, or for the insufficiency or deficiency of any
security in or upon which any of the monies of the Corporation shall be
invested, or for any loss or damage arising from the bankruptcy, insolvency or
tortious acts of any person with whom any of the monies, securities or effects
of the Corporation shall be deposited, or for any lose occasioned by any error
of judgment or oversight on his part, or for any other loss, damage or
misfortune which shall happen In the execution of the duties of the office or in
relation thereto, provided that nothing herein shall relieve any director or
officer from the duty to act in accordance with the Act and the regulations
thereunder or from liability for any breach thereof.
Section 7.02 - Indemnity
Subject to the Act, the Corporation shall indemnify a director or
officer, a former director or officer, or a person who acts or acted at the
Corporation's request as a director or officer of a body corporate of which the
Corporation is or was a shareholder or creditor, and their heirs and legal
representatives, against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, reasonably incurred by such
person in respect of
<PAGE>
any civil, criminal or administrative action or proceeding to which such person
Is made a party by reason of being or having been a director of officer of the
Corporation or such body corporate, If (a) the person acted honestly and in good
faith with a view to the beat Interests of the Corporation; and (b) in the case
of a criminal or administrative action or proceeding that is enforced by a
monetary penalty, the person had reasonable grounds for believing that his
conduct was lawful. The Corporation shall also indemnify such person in such
other circumstances as the Act or law permits or requires. Nothing in this by-
law shall limit the right of any person entitled to indemnity to claim indemnity
apart from the provisions of this by-law.
<PAGE>
ENERGY VENTURES INC.
-10-
Section 7.03 - Insurance
Subject to the Act, the Corporation may purchase and maintain such
Insurance for the benefit of any person referred to in section 7.02 hereof as
the board may from time to time determine.
ARTICLE EIGHT - SHARES
Section 8.01 - Allotment of Shares
Subject to the Act, the articles or any unanimous shareholder agreement,
the board may from time to time allot or grant options to purchase the whole or
any part of the authorized and unissued shares of the Corporation at such times
and to such persons and for such consideration as the board shall determine,
provided that no share shall be issued until it is fully paid as provided by the
Act,
Section 8.02 - Commission
The board may from time to time authorize the Corporation to pay a
reasonable commission to any person in consideration of his purchasing or
agreeing to purchase shares of the Corporation, whether from the Corporation or
from any other person, or procuring or agreeing to procure purchasers for any
such shares.
Section 8.03 - Registration of Transfers
Subject to the Act, no transfer of a share shall be registered in a
securities register except upon presentation of the certificate representing
such shares with an endorsement which complies with the Act made thereon or
delivered therewith duly executed by an appropriate person as provided by the
Act, together with such reasonable assurance that the endorsement is genuine and
effective as the board may from time to time prescribe, upon payment of all
applicable taxes and any reasonable fees prescribed by the board, upon
compliance with such restrictions on issue, transfer or ownership as are
authorized by the articles and upon satisfaction of any lion referred to In
section 8.09.
Section 8.04 - Non Recognition of Trusts
Subject to the Act, the Corporation may treat the registered holder of
any share as the person exclusively entitled to vote, to receive notices, to
receive any dividend or other payment In respect of the share, and otherwise to
exercise all the rights and powers of an owner of the share.
Section 8.05 - Share Certificates
Every holder of one or more shares of the Corporation shall be entitled,
at the option of the holder, to a share certificate, or to a non-transferable
written certificate of acknowledgment of the holder's right to obtain a share
certificate, stating the number and class or series of shares hold by such
holder as shown on the securities register, Such certificates shall be in such
form as the board shall from time to time approve. Any such certificate shall be
signed in accordance with section 2.04 and need not be under the corporate seal.
Section 8.05 Share Certificates
The board or any officer or agent designated by the board may in its
discretion or the discretion of the officer or agent direct the Issue of a new
share or other such certificate In lieu of and upon cancellation of a
certificate that has been mutilated or in substitution for a certificate claimed
to have been lost, apparently destroyed or wrongfully
<PAGE>
ENERGY VENTURES INC.
taken on payment of such reasonable fee and on such terms as to indemnity,
reimbursement of expenses and evidence of loss and of title as the board may
from time to time prescribe, whether generally or In any particular case.
Section 8.07 - Joint Shareholders
If two (2) or more persons are registered as joint holders of any share,
the Corporation shall not be bound to Issue more than one (1) certificate In
respect thereof, and delivery of such certificate to one of such persons shall
be sufficient delivery to all of them. Any one (1) of such persons may give
effectual receipts for the certificate Issued In respect thereof or for any
dividend, bonus, return of capital or other money payable or warrant issuable In
respect of such share.
Section 8.08 - DECEASED SHAREHOLDERS
In the event of the death of a holder, or of one of the joint holders,
of any share. the Corporation shall not be required to make any entry in the
securities register In respect thereof or to make any dividend or other payments
In respect thereof except upon production of all such documents as may be
required by law and upon compliance with the reasonable requirements of the
Corporation and its transfer agents, if any.
Section 8.09 - Lien-for Indebtedness
The Corporation shall have a lion on shares registered in the name of a
shareholder Indebted to the Corporation and such lien may be enforced, subject
to the articles and to any unanimous shareholder agreement, by the sale of the
shares thereby affected or by any other action, suit, remedy or proceeding
authorized or permitted by law or by equity and, pending such enforcement, the
Corporation may refuse to register a transfer of the whole or any part of such
shares.
ARTICLE NINE - DIVIDENDS AND RIGHTS
Section 9.01 - Dividends
Subject to the Act, the board may from time to time declare dividends
payable to the shareholders according to their respective rights and Interests
In the Corporation, Dividends may be paid in money or property or by issuing
fully paid shares of the Corporation or options or rights to acquire fully paid
shares of the Corporation. Any dividend unclaimed after a period of six (0)
years from the date on which the $am$ has been declared to be payable shall be
forfeited and shall revert to the Corporation.
Section 9.02 - Dividend Cheques
A dividend payable In money shall be paid by cheque to the order of each
registered holder of shares of the class or series In respect of which It has
been declared and mailed by ordinary mail, postage prepaid, to such registered
holder at his recorded address, unless such holder otherwise directs. In the
case of joint holders the cheque shall, unless such joint holders otherwise
direct, be made payable to the order of all of such joint holders and mailed to
them at their recorded address, The mailing of such cheque as aforesaid, unless
the same is not paid on due presentation, shall s and discharge the liability
for the dividend to the extent of the sum represented thereby plus the amount of
any tax which the Company Is required to and does withhold. In the event of non-
receipt of any dividend cheque by the person to whom It Is sent as aforesaid.
the Corporation shall Issue to such person a replacement cheque for a like
amount on such terms as to indemnity,. reimbursement of expenses and evidence of
non-receipt and of title as the board may from time to time prescribe, whether
generally or in any particular case,
<PAGE>
ENERGY VENTURES INC.
- 12 -
Section 9.03 - Record Data for Dividends and Rights
The board may fix in advance a date, preceding by not more than fifty (50)
days the date for the payment of any dividend or the date for the issue of any
warrant or other evidence of the right to subscribe for securities of the
Corporation, as a record date for the determination of the persons entitled to
receive payment of such dividend or to exercise the right to subscribe for such
securities, and notice of any such record date shall be given not less than
seven (7) days before such record date In the manner provided by the Act. If no
record date is so fixed, the record date for the determination of the persons
entitled to receive payment of any dividend or to exercise the right to
subscribe for securities of the Corporation shall be at the close of business on
the day on which the resolution relating to such dividend or right to subscribe
is passed by the board.
ARTICLE TEN - MEETINGS OF SHAREHOLDERS
SECTION 10.01 ANNUAL MEETINGS
The annual meeting of shareholders shall be held at such time in each year
and, subject to section 10.03, at such place as the board, the chairman of the
board or the president may from time to time determine. for the purpose of
considering the financial statements and reports required by the Act to be
placed before the annual meeting, electing directors, appointing auditors (if
any) and for ft transaction of such other business as may properly be brought
before the meeting.
Section 10.02 - Special Meetings
The board, the chairman of the board or the president shall have power to call
a special meeting of shareholders at any time,
Section 10.03 - Place of Meetings
Meetings of shareholders of the Corporation shall be held at any place In or
outside of Ontario as the directors determine or, in the absence of such
determination. at the place where the registered office of the Corporation is
located.
Section 10.04 - Notice of Meetings
Notice of the time and place of each meeting of shareholders shall be given In
the manner provided In Article Eleven not less than ten (10) nor more than fifty
(50) days before the date of the meeting to each director, to the auditor, and
to each shareholder who at the close of business on the record date for notice
is entered In the securities register as the holder of one or more shares
carrying the right to vote at the meeting, Notice of a meeting of shareholders
called for any purpose other than consideration of the minutes of an earlier
meeting, financial statements and auditor's report, election of directors and
reappointment of the Incumbent auditor shall state the nature of such business
In sufficient detail to permit the shareholder to form a reasoned judgment
thereon and shall state the text of any special resolution or by-law to be
submitted to the meeting.
Section 10.05 - List of Shareholders Entitled to Notice
For every meeting of shareholders, the Corporation shall prepare a list of
shareholders entitled to receive notice of the meeting, arranged In alphabetical
order and showing the number of shares hold by each shareholder entitled to vote
at the meeting. If a record date for the meeting is fixed pursuant to section
10.06, the shareholders listed shall be those registered at the close of
business on such record date. If no record date is fixed, the shareholders
listed shall be those registered at the close of business on the day immediately
preceding the day on which notice of the meeting is given or, where no such
<PAGE>
ENERGY VENTURES INC.
-13-
notice is given, on the day on which the meeting is held. The list shall be
available for examination by any shareholder during the usual business hours at
the registered office of the Corporation or at the place where the central
securities register is maintained and at the meeting for which the list was
prepared. Where a separate list of shareholders has not been prepared, the names
of persons appearing in the securities register at the requisite time as the
holder of one or more shares carrying the right to vote at such meeting shall be
deemed to be a list of shareholders.
Section 10.06 - Record Date for Notice
The board may fix In advance a date, preceding the date of any meeting
of shareholders by not more than fifty (50) days and not less than ton (10)
days, as a record date for the determination of the shareholders entitled to
notice of the meeting, and notice of any such record date shall be given not
less than seven (7) days before such record date, by newspaper advertisement In
the mariner provided by the Act, if no such record date is so fixed, the record
date for the determination of the shareholders entitled to receive notice of the
meeting shall be at the close of business on the day immediately preceding the
day on which the notice is given or, if no notice is given, shall be the day on
which the meeting Is hold.
Section 10.07 - Meetings Without Notice
A meeting of shareholders may be held without notice at any time and
place permitted by the Act (a) If all the shareholders entitled to vote thereat
are present In person or duly represented or if those not present or represented
waive notice of or otherwise consent to such meeting being hold, and lb) if the
auditors and the directors are present or waive notice of or otherwise consent
to such meeting being held; so long as such shareholders, auditors or directors
present are not attending for the express purpose of objecting to the
transaction of any business on the grounds that the meeting may be transacted
which the Corporation at a meeting of shareholders may transact.
Section 10.08 - Chairman, Secretary and Scrutineers
The chairman of any meeting of shareholders shall be the first mentioned
of such of the following officers as have been appointed and who Is present at
the meeting: president, chairman of the board, or a vice-president who Is a
shareholder, if no such officer is present within fifteen (15) minutes from the
time fixed for holding the meeting, the persons present and entitled to vote
shall choose one of their number to be chairman. If the secretary of the
Corporation is absent, the chairman shall appoint some person, who need not be a
shareholder, to act as secretary of the meeting. If desired, one or more
scrutineers, who need not be shareholders, may be appointed by a resolution or
by the chairman with the consent of the meeting.
Section 10.09 - Persons Entitled to be Present
The only persons entitled to attend a meeting of shareholders shall be
those entitled to vote thereat, the directors and the auditors of the
Corporation and others who. although not entitled to vote, are entitled or
required under any provision of the Act or the articles or by-laws to be present
at the meeting. Any other person may be admitted only on the Invitation of the
chairman of the meeting or with the consent of the meeting.
Section 10.10 - Quorum
Subject to the Act In respect of a majority shareholder, a quorum for
the transaction of business at any meeting of shareholders shall be two (2)
persons present in person, each being a shareholder entitled to vote thereat or
a duly appointed proxyholder or representative for a shareholder so entitled. If
a quorum Is present at the opening of any meeting of shareholders, the
shareholders present or represented may proceed with
<PAGE>
ENERGY VENTURES INC.
-14-
the business of the meeting notwithstanding that a quorum is not present
throughout the meeting. if a quorum is not present at the time appointed for the
meeting or within a reasonable time thereafter as the shareholders may
determine, the shareholders present or represented may adjourn the meeting to a
fixed time and place but may not transact any other business.
Section 10.11 Right to Vote
Every person named In the list referred to In section 10.05 shall be
entitled to vote the shares shown thereon opposite his name at the meeting to
which such list relates, except to the extent that (a) where the Corporation has
fixed a record date in respect of such meeting. such person has transferred any
of his shares after such record date or, where the Corporation has not fixed a
record date In respect of such meeting, such person has transferred any of his
shares after the date on which such list is prepared, and (b) the transferee,
having produced properly endorsed certificates evidencing such shares, has
demanded not later than ten (10) days before the meeting that his name be
Included In such list. In any such excepted case the transferee shall be
entitled to vote the transferred shares at such meeting.
Section 10,12 - Proxyholders and Representatives
Every shareholder entitled to vote at a meeting of shareholders may
appoint a proxyholder, or one (1) or more alternate proxyholders, as the nominee
of such shareholder to attend and act at the meeting in the manner and to the
extent authorized and with the authority conferred by the proxy. A proxy shall
be In writing executed by the shareholder or the attorney of the shareholder and
shall conform with the requirements of the Act. Alternatively, every such
shareholder which is a body corporate or association may authorize by resolution
of Its directors or governing body an Individual to represent it at a meeting of
shareholders and such Individual may exercise on the shareholder'$ behalf all
the powers it could exercise if it were an Individual shareholder. The authority
of such an Individual shall be established by depositing with the Corporation a
certified copy of such resolution, or in such other manner as may be
satisfactory to the secretary of the Corporation or the chairman of the meeting.
Any such proxyholder or representative need not be a shareholder.
Section 10.13 - Time for Deposit of Proxies
The board may fix a time not exceeding forty-eight (48) hours, excluding
Saturdays and holidays, preceding any meeting or adjourned meeting of
shareholders before which time proxies to be used at the meeting must be
deposited with the Corporation or an agent thereof, any period of time so fixed
shall be specified In the notice calling the meeting. A proxy shall be acted
upon only It, prior to the time so specified, it shall have been deposited with
the Corporation or an agent thereof specified in such notice, it has been
received by the secretary of the Corporation or by the chairman of the meeting
or any adjournment thereof prior to the time of voting.
Section 10.14 - Joint Shareholders
If two (2) or more persons hold shares jointly, any one (1) of them
present in person or duly represented at a meeting of shareholders may, In the
absence of the other or others, vote the shares; but If two (2) or more of those
persons are present In person or represented and vote, they shall vote as one
the shares jointly held by them.
Section 10.15 - Votes to Govern
At any meeting of shareholders every question shall, unless otherwise
required by the articles or by-laws or by law, be determined by the majority of
the votes cast on the question. in case of an equality of votes either upon a
show of hands or upon a poll, the chairman of the meeting shall be entitled to a
second or casting vote.
<PAGE>
ENERGY VENTURES INC.
-15-
Section 10.16 - Show of Hands
Subject to the Act, any question at a meeting of shareholders shall be
decided by a show of hands unless a ballot thereon is required or demanded as
hereinafter provided, and upon a show of hands every person who is present and
entitled to vote shall have one (1) vote. Whenever, a vote by show of hands
shall have been taken upon a question, unless a ballot thereon IS so required or
demanded, a declaration by the chairman of the meeting that the vote upon the
question has been carried or carried by a particular majority or not carried and
an entry to that effect In the minutes of the meeting shall be prime facie
evidence of the fact without proof of the number or proportion of the votes
recorded In favour of or against any resolution or other proceeding in respect
of the said question and the result of the vote so taken shall be the decision
of the shareholders upon the said question.
Section 10.17 Ballots
On any question proposed for consideration at a meeting of shareholders,
and whether or not a show of hands has been taken thereon, the chairman may
require a ballot or any person who is present and entitled to vote on the
question may demand a ballot. A ballot so required or demanded shall be taken in
such manner as the chairman shall direct. A requirement or demand for a ballot
may be withdrawn at any time prior to the taking of the ballot. If a ballot is
taken, each person present shall be entitled, in respect of the shares which
such person is entitled to vote at the meeting upon the question, to that number
of votes provided by the Act or the articles, and the result of the ballot so
taken shall be the decision of the shareholders upon the said question.
Section 0.14 - Adjournment
The chairman at a meeting of shareholders may, with the consent of the
meeting and subject to such conditions as the meeting may decide, adjourn the
meeting from time to time and from place to place. It a meeting of shareholders
is adjourned for less than thirty (30) days, it shall not be necessary to give
notice of the adjourned meeting, other than by announcement at the earliest
meeting that is adjourned. Subject to the Act, if a meeting of shareholders is
adjourned by one or more adjournments for an aggregate of thirty (30) days or
more, notice of the adjourned meeting shall be given as for an original meeting.
Section 1 0.1 9 - Action In Writing by Shareholders
A resolution In writing signed by all the shareholders entitled to vote
on that resolution at a meeting of shareholders is as valid as if It had been
passed at a meeting of the shareholders unless, In accordance with the Act, (a)
In the case of resignation or removal of a director, or the appointment or
election of another person to fill the place of such director, a written
statement Is submitted to the Corporation by the director giving that person's
reasons for resignation or the reasons why that person opposes any proposed
action or resolution for the purpose of removing that person from office or the
election of another person to fill the office of such director: or (b) In the
case of the removal or resignation of an auditor, or the appointment or election
of another person to fill the office of auditor, representations In writing are
made to the Corporation by that auditor concerning the proposed removal, the
appointment or election of another person to fill the office of auditor, or the
resignation.
Section 10,20 - Only One Shareholder
Where the Corporation has only one (1) shareholder or only one (1)
holder of any class or series of shares, the shareholder present in person or
duly represented constitutes a meeting.
<PAGE>
ENERGY VENTURES INC.
- 16 -
ARTICLE ELEVEN - NOTICES
Section-11.01 Method of Giving Notice
Any notice (which term Includes any communication or document) to be
given (which term Includes sent, delivered or served) pursuant to the Act, the
regulations thereunder, the articles, the by-laws or otherwise to a shareholder,
director, officer, auditor or member of a committee of the board shall be
sufficiently given If delivered personally to the person to whom It is to be
given or If mailed to such person at the recorded address by prepaid mail. A
notice so delivered shall be deemed to have been given when it Is delivered
personally and a notice so mailed shall be deemed to have been given on the
fifth day after It Is deposited In a post office or public letter box. The
secretary may change or cause to be changed the recorded address of any
shareholder, director, officer, auditor or member of a committee of the board in
accordance with any information believed by him to be reliable.
Section 11.02 - Notice to Joint Shareholders
If two (2) or more persons are registered as joint holders of any share,
any notice may be addressed to all such joint holders, but notice addressed to
one of such persons shall be sufficient notice to all of them.
Section 11 .03 - Computation of Time
In computing the date when notice must be given under any provision
requiring a specified number of days' notice of any meeting or other event, the
day of giving the notice shall be excluded and the day of the meeting or other
event shall be excluded.
Section 11.04 - Undelivered Notices
If any notice given to a shareholder pursuant to section 11.01 is
returned on three consecutive occasions because he cannot be found, the
Corporation shall not be required to given any further notices to such
shareholder until he Informs the Corporation in writing of his now address,
Section 11.05 - Omissions and Errors
The accidental omission to give any notice to any shareholder, director,
officer, auditor or member of a committee of the board or the non-receipt of any
notice by any such person or any error In any notice not affecting the substance
thereof shall not Invalidate any action taken at any meeting held pursuant to
such notice or otherwise founded thereon.
Section 11.00 - Persons Entitled by Death or Operation of Low
Every person who, by operation of law, transfer, death of a shareholder
or any other means whatsoever, shall become entitled to any share, shall be
bound by every notice In respect of such share which shall have been duly given
to the shareholder from whom he derives his title to such share prior to his
name and address being entered on the securities register (whether such notice
was given before or after the happening of the event upon which he became so
entitled) and prior to his furnishing to the Corporation the proof of authority
or evidence of his entitlement prescribed by the Act.
$action 11.07 - Waiver of Notice
Any shareholder, proxy holder or other person entitled to attend a
meeting of shareholders, director, officer, auditor or member of a committee of
the board may at any
<PAGE>
- 17 -
time waive any notice, or waive or abridge the time for any notice, required to
be given to him under the Act. the regulations thereunder, the articles, the
by-laws, or otherwise, and such waiver or abridgement, whether given before or
after the meeting or other event of which notice is required to be given, shall
cure any default In giving or In the time of such notice, as the case may be,
Any such waiver or abridgement shall be In writing except a waiver of notice of
a meeting of shareholders or of the board or a committee of the board which may
be given In any manner.
ARTICLE TWELVE - EFFECTIVE DATE
Section 12.01 - Effective Date
This by-law shall come Into force when made by the board in accordance
with the Act.
ENACTED this 1Oth day of November, 1996, WITNESS the seal of the
Corporation.
/s/
D. Wayne Hartford,
President & Secretary
The foregoing By-Law No. 1 is hereby passed by the board of directors of
the Corporation pursuant to the Business Corporations Act by consent of the Sole
director as evidenced by his signature hereto.
DATED this 19th day of November, 1996.
/s/
D. Wayne Hartford
The foregoing By-Law No. 1 Is hereby confirmed by all of the
shareholders of the Corporation pursuant to the Business Corporations Act as
evidenced by his signature hereto.
DATED this 19th day of November, 1996.
/s/
D. Wayne Hartford
<PAGE>
BY-LAW NO. 2
By-Low to Authorize the Directors
to Borrow and Give Security
BE IT ENACTED as a by-law of
ENERGY VENTURES INC.
(hereinafter referred to as the 'Corporation') as follows:
The Directors of the Corporation may from time to time:
(a) borrow money or otherwise obtain credit upon the credit of the
Corporation In such amounts and on such terms as may be considered
advisable;
(b) Issue, reissue, sell pledge debt obligations of the Corporation,
Including without limitation, bonds, debentures, debenture stock, notes
or other securities or obligations of the Corporation, whether secured
or unsecured for such sums, upon such terms, covenants and conditions
and at such prices as may be deemed expedient;
(c) charge, mortgage, hypothecate, pledge, assign, transferee otherwise
create a security interest in all or any currently owned or subsequently
acquired real or personal, movable or immovable property of the
Corporation including without limitation, book debts and unpaid calls,
rights, powers, franchise$ and undertaking, to secure any money borrowed
or any other debt or liability of the Corporation; and
(a) delegate to such one or more the officers and directors of the
Corporation as may be designated by the directors all or any of the
powers conferred by the foregoing clause& of this By-law to such extent
and In such manner as the directors $hall determine at the time of each
delegation.
This By-law No. 2 shall remain In force and be binding upon the
Corporation as regards any party acting on the faith thereof, until a
copy, certified by the Secretary of the Corporation, under the
Corporation's seal, of a By-law repealing or replacing this By-law No. 2
shall have been received by such party and duly acknowledged in writing.
ENACTED this 19th day of November, 1996. WITNESS the seal of the
Corporation.
/s/
D. Wayne Hartford,
President and Secretary
<PAGE>
ENERGY VENTURES INC.
The foregoing By-Law No. 2 is hereby passed by the board of directors of
the Corporation pursuant to the Business Corporations Act by consent of the sole
director as evidenced by his signature hereto.
DATED this l9th day of November, 1996.
/s/
D. Wayne Hartford
The foregoing By-Law No. 2 is hereby confirmed by the sole shareholder
of the Corporation pursuant to the Business Corporations Act as evidenced by his
signature hereto.
DATED this I9th day of November, 1996.
/s/
D. Wayne Hartford
EXHIBIT 2.3
FORM 3
13064
Company No.
COMPANIES ACT OF BARBADOS
CERTIFICATE OF INCORPORATION
ENERGY VENTURES INTERNATIONAL INC.
Name of Company
I hereby certify that the above-mentioned Company, the Articles of Incorporation
of which are attached, was incorporated under the Companies Act of Barbados.
/s/
Registrar of Companies
97/01/02
Date of Incorporation
FORM I
COMPANIES ACT OF BARBADOS
(Section 5)
ARTICLES OF INCORPORATION
Name of Company Company No:
ENERGY VENTURES INTERNATIONAL INC. 13064
2. The classes and any maximum number of shares that the Company is
authorized to issue
THE ANNEXED SCHEDULE 1 IS INCORPORATED IN THIS FORM
3. Restriction if any on share transfers
THE ANNEXED SCHEDULE 2 IS INCORPORATED IN THIS FORM
4 Number (or minimum and maximum number) of Directors
There shall be a minimum of 1 and a maximum of 10 directors of the
Company.
5. Restrictions if any on business the Company may carry on
The company shall not engage in any business other than international
business as defined in the International Business Companies, Act, 1991 -
24.
6. Other provisions if any
THE ANNEXED SCHEDULE 3 IS INCORPORATED IN THIS FORM
7. Incorporators Date
January 2, 1997
Names Address Signature
Christie L. deCaires Prior Hill, Prior /s/
Park, St. James
Barbados
REGISTERED SIGNATURE
<PAGE>
COMPANIES ACT OF BARBADOS
SCHEDULE TO ARTICLES OF INCORPORATION
NAME OF COMPANY: COMPANY NO:
ENERGY VENTURES INTERNATIONAL INC. 13064
Schedule 1
The Company is authorized to issue an unlimited number of shares designated as
Common Shares. The rights, privileges, restrictions and limitations attached to
such shares are set out below:-
1. COMMON SHARES
(a) Subject to the prior rights of the holders of any other shares as
a class:
(i) the board of directors may declare and cause to be paid
dividends to the holders of the Common Shares from any
assets at the time properly applicable to the payment of
dividends, and
(ii) the holders of the Common Shares shall, in the event of the
liquidation, dissolution or winding up of the Corporation
or other distribution of assets of the Corporation among
shareholders for the purpose of winding up its affairs,
be entitled to receive the remaining assets of the
Corporation; and
(b) Each Common Share is equal to every other Common Share and the holders of
the Common Shares shall be entitled to receive notice of and to attend any
meeting of the shareholders of the Corporation and shall be entitled to one
vote in respect of each Common Share held at such meeting, except at which
holders of a particular class of shares other than the Common Shares are
entitled to vote separately as a class.
The Company is authorized to issue an unlimited number of shares designated as
Preferred Shares, issuable in series. The rights, privileges, restrictions and
limitations attached to such shares are set out below:-
PREFERENCE SHARES
(a) "The Preference Shares may from time to time be issued in one or more
series and, subject to the following provisions, the board of
directors of the Corporation
Name Address
Signature
Christie L. deCaires Prior Hill, Prior
/s/
Park, St. James
<PAGE>
COMPANIES ACT OF
BARBADOS SCHEDULE TO ARTICLES OF INCORPORATION
NAME OF COMPANY: COMPANY NO:
ENERGY VENTURES INTERNATIONAL INC. 13064
Schedule 1 cont'd
may by resolution fix from time to time before such issue the number of
shares that is to comprise each series and the designation rights,
privileges, restrictions and conditions attaching to each series of
Preference Shares including, without limiting the generality of the
foregoing, the rate or amount of dividends or the method of calculating
dividends, the dates of payment thereof, the redemption, purchase
and/or conversion prices and the terms and conditions of redemption,
purchase and/or conversion, and any sinking fund or other provisions,
but no shares of such series shall be issued until articles of
amendment in the prescribed form designating such series of shares have
been filed;
(b) The Preference Shares of each series shall, with respect to the payment of
dividends and the distribution of assets or return of capital in the event of
liquidation, dissolution or winding up of the Corporation, whether voluntarily
or involuntarily, or any other return of capital or distribution of the assets
of the Corporation among its shareholders for the purposes of winding up its
affairs, rank equally with the Preference Shares of every other series and be
entitled to preference over the Common Shares and over any other shares of the
Corporation ranking junior to the Preference Shares. The Preference Shares of
any series may also be given such other preferences, not inconsistent with these
articles, over the Common Shares and any other shares of the Corporation ranking
junior to the Preference Shares;
(c) If any dividends or amounts payable on the return of capital in
respect of a series of Preference Shares are not paid in full, all
series of Preference Shares shall participate rateably in respect of
such dividends and return of capital;
(d) Subject to any restrictions on the number of shares authorized, the
Preference Shares of any series may be made convertible into Common
Shares or any other class or series of shares of the Corporation;
Name Address
Signature
Christie L. deCaires Prior Hill, Prior
/s/
Park, St. James
<PAGE>
COMPANIES ACT OF BARBADOS
SCHEDULE TO ARTICLES OF INCORPORATION
NAME OF COMPANY: COMPANY NO:
ENERGY VENTURES INTERNATIONAL INC. 13064
Schedule 1 cont'd
(e) Each share of a series of Preference Shares shall carry such voting
rights as may be determined and a share of a series of Preference
Shares may be entitled to one (1) vote at all meetings of shareholders;
(f) Dividends on shares of each series of Preference Shares may be
cumulative;
(g) No holder of shares of any series of Preference Shares shall be
entitled, as such, to any pre-emptive right to subscribe for the
purchase or to receive any part of any issue of shares of the
Corporation, or of bonds, debentures or other securities of the
Corporation whether now or hereafter authorized or issued;
(h) Shares of arty series of Preference Shares may be made redeemable at
any time at the option of the Corporation without the consent of the
holders thereof on payment for each share to be redeemed of the amount
paid up thereon together with all unpaid cumulative dividends, if any,
which have previously been declared;
(i) The Corporation may at any time and from time to time purchase for
cancellation all or any part of the shares of any series of Preference
Shares outstanding at the lowest price at which, in the opinion of the
directors of the Corporation, such shares are obtainable, but not
exceeding the amount paid up thereon, together with all unpaid
cumulative dividends, if any, which have been previously declared;
(j) The shares of any series of Preference Shares may carry the right of
the holder thereof to call for the redemption of any shares held by the
holder;
(k) Notwithstanding any method of "electing any shares of any shares of
Preference Shares to be redeemed by the Corporation which is adopted by
the board of directors of the Corporation, the Corporation shall be
entitled to call, on any redemption date, for the redemption of all
Name Address Signature
Christie L.deCaires Prior Hill, Prior
Park, St. James
<PAGE>
COMPANIES ACT OF BARBADOS
SCHEDULE TO ARTICLES OF INCORPORATION
NAME OF COMPANY: COMPANY NO:
ENERGY VENTURES INTERNATIONAL INC. 13064
Schedule 1 cont'd
of the shares represented by a certificate where the certificate
represents less than One Hundred (100) shares of any series of
Preference Shares; and
(1) Any amendment to the articles of the Corporation to delete or vary any
preference, right, condition, restriction, limitation or prohibition attaching
to the Preference Shares as a class or to create preference shares ranking in
priority to or on a parity with the Preference Shares, in addition to the
authorization by a special resolution, must be authorized by at least two
thirds (2/3) of the holders of each of the series of Preference Shares at a
meeting duly called for the purpose.
Schedule 2
No share in the capital of the Company shall be transferred, allotted or
issued without the consent of the board of directors expressed by a resolution
passed by not less than a majority of votes at a meeting of the board of
directors or by an instrument or instruments in writing signed by a majority
of the directors.
Schedule 3
(a) No more than one-tenth of the sums which, on a liquidation of the
company would be recoverable by holders of its share or loan capital
would be recoverable directly or indirectly by or for the benefit
of persons resident in the Caricom region who are holders of its share
capital and who do not carry on International business;
(b) No more than one-tenth of the assets which, on a liquidation thereof,
would be available for distribution after the payment of creditors
would be available directly or indirectly for distribution to or for
the benefit of individuals resident in the Caricom region;
Name Address Signature
Christie L. deCaires Prior Hill, Prior /s/
Park, St. James
<PAGE>
COMPANIES ACT OF BARBADOS
SCHEDULE TO ARTICLES OF INCORPORATION
NAME OF COMPANY: COMPANY NO:
ENERGY VENTURES INTERNATIONAL INC. 13064
Schedule 3 Cont'd
(c) No more than one-tenth
(i) of the interest payable on its loans and loan capital, if any; and
(ii) of the dividends payable on its preference shares, if any; and
(iii)of the dividends payable on any ordinary share of the Company, would
be paid directly or indirectly to or for the benefit of individuals
resident in the Caricom region.
(d) The number of shareholders of the Corporation, exclusive of persons who
are in its employment and exclusive of persons,, who, having been
formerly in the employment of the Corporation, were, while in that
employment and have continued after the termination of that employment
to be shareholders of the Corporation, is limited to not more than
fifty, two or more persons who are the joint registered owners of one
or more shares being counted as one shareholder;
(e) The Corporation may purchase any of its issued Common Shares;
Any invitation to the public to subscribe for shares or debentures of the
Company is prohibited.
At no time shall the Board of Directors consist of a majority of directors who
are resident in Canada.
Meetings of the shareholders and directors of the Company may be held within
or outside of Barbados, providing that no meetings of the directors or
shareholders are hold in Canada.
Name Address
Signature
Christie L. deCaires Prior Hill, Prior
/s/
Park, St. James
<PAGE>
FORM 4
COMPANIES ACT OF BARBADOS
(Section 169(l) and (2))
NOTICE OF ADDRESS
OR
NOTICE OF CHANGE OF ADDRESS
OF REGISTERED OFFICE
1. Name of Company
ENERGY VENTURES INTERNATIONAL INC.
2. Company No. 13064
3. Address of Registered Office
c/o The Corporate Secretary Limited
"Whitepark House"
White Park Road
Bridgetown, Barbados
4. Mailing Address
Same as above
5. If change of address, give previous address of Registered Office.
N/A
6. Date Signature Title
/s/
January 2, 1997 Christie L. deCaires Incorporator
REGISTERED CORPORATE AFFAIRS
AND INTELLECTUAL PROPERTY OFFICE
<PAGE>
COMPANIES ACT OF BARBADOS
(Sections 66 & 74)
NOTICE OF DIRECTORS
OR
NOTICE OF CHANGE OF DIRECTORS
1. Name of Company ENERGY VENTURES INTERNATIONAL INC.
2. Company No. 13064
3. Notice is given that on the _____day of 19________
the following person(s) was/were appointed director(s):
Name Mailing Address
N/A
4. Notice is given that on the ____day of 19 ________
the following person(s) ceased to hold office as director(s):
Name Mailing Address
N/A
5. The directors of the company as of this date are: January 2, 1997
Name Mailing Address Occupation
JOHN D. BURKE BURKE'S BEACH, BAY ST. DIRECTOR
ST. MICHAEL
BARBADOS
<PAGE>
ENERGY VENTURES INTERNATIONAL INC.
WRITTEN CONSENT OF THE SOLE DIRECTOR
IN LIEU OF THE ORGANIZATIONAL MEETING
The undersigned, being the sole director of Energy Ventures International
Inc., (the "Company"), acting pursuant to the Companies Act, Cap. 308, hereby
records the following information and adopts the following resolutions by
written consent:
CERTIFICATE OF INCORPORATION
The Certificate of Incorporation was issued January 2, 1997.
RESOLVED: That the Secretary of the Company is hereby authorized and
directed to insert a copy of the Certificate of Incorporation in the
Company's minute book, and that all matters relating to the
incorporation of the Company are hereby approved and ratified.
BY-LAWS
Having reviewed the provisions of the proposed By-laws of the Company, the
following resolution is hereby adopted:
RESOLVED: Pursuant to Section 61 of the Companies Act, Cap. 308,
the proposed By-Laws be and hereby are adopted as the
By-laws of the Company.
REGISTERED OFFICE
It is confirmed that the Registered Office of the Company is situate at
"Whitepark House", White Park Road, Bridgetown, Barbados.
FORM OF SEAL
RESOLVED: That the form of corporate seal, an impression of
which appears on Exhibit 'A' attached hereto, be and
hereby is adopted as the common seal of the Company.
FORM OF STOCK CERTIFICATE
RESOLVED: That the form of stock certificate for the common stock
of the Company, a copy of which is annexed hereto as
Exhibit `B' is hereby approved for use by the Company.
FISCAL YEAR END
RESOLVED: That the fiscal year of the Company shall terminate
on the last day of December of each year or on such
other date as the director may, from time to time by
resolution determine.
<PAGE>
AUDITORS
The following resolution relating to the appointment of the Company's
first auditors is hereby adopted:
RESOLVED: That Robert J. Bourque & Co. are hereby appointed first
auditors of the Company, to hold such position until the
first annual general meeting of the Company.
OFFICERS
The following resolution relating to the appointment of officers is
hereby adopted:
RESOLVED: That the below-named persons be and hereby are
appointed to the offices set forth opposite their
respective names:-
John D. Burke
Janice L. Burke
The Corporate Secretary Limited represented by Mary Ellen M. Bourque and/or
Christie L. DeCaires
Managing Director
General Manager
Secretary
<PAGE>
BANK ACCOUNT
The following resolution relating to the Company's opening a bank
account with The Royal Bank of Canada be and hereby is adopted:-
RESOLVED: That the Company be and hereby is authorized to establish a
United States Dollar Account with The Royal Bank of Canada, Chelston
Park, Collymore Rock, St. Michael and that bank mandates when completed
will be annexed hereto and form part of this Written Consent.
ALLOTMENT OF SHARES
RESOLVED: That the offer received from Energy Ventures Inc. to purchase
one hundred (100) shares of the common stock of the Company (no par
value) in consideration for US$100.00, be and hereby is in all respects
' accepted and approved and that the Secretary of the Company be and
hereby is authorized and directed in the name of and on behalf of the
Company, under corporate seal, or otherwise, to issue and deliver a
certificate representing ownership of said shares of common stock to
Energy Ventures Inc.
The resolutions adopted by virtue of this Written Consent of the Sole
Director shall have the same force and effect as if adopted at a meeting of said
Director pursuant to the laws of Barbados.
<PAGE>
This Written Consent of the Director may be executed bearing a
facsimile of signature.
IN WITNESS WHEREOF, the undersigned has executed this Written Consent
of the Sole Director to be effective as of the 3rd day of January, 1997.
/s/
John D. Burke
<PAGE>
ENERGY VENTURES INTERNATIONAL INC.
WRITTEN CONSENT OF THE SOLE SHAREHOLDER
The undersigned, being the sole shareholder of Energy Ventures
International Inc., (the "Company"), acting pursuant to the Companies Act, Cap.
308, hereby records the following information and adopts the following
resolutions by written consent:
BY-LAWS
RESOLVED: That the resolution adopted by the sole director of the
Company on January 3, 1997 adopting and enacting the bylaws of the Company is
hereby ratified, approved and sanctioned.
APPOINTMENT OF AUDITORS
RESOLVED: That the appointment by the sole director of the Company on
January 3, 1997 of Robert J. Bourque & Co. as the first auditors of the Company
be and is hereby ratified, approved and sanctioned.
APPOINTMENT OF DIRECTOR
RESOLVED: That the first director of the Company in hereby confirmed as
John D. Burks;
The resolutions adopted by virtue of this Written Consent of the Sole
Shareholder shall have the same force and effect as if adopted at a meeting of
said Shareholder pursuant to the laws of Barbados.
This Written Consent of the Shareholder may be executed bearing a
facsimile of signature.
IN WITNESS WHEREOF, the undersigned has executed this Written Consent
of the Shareholder to be effective as of the 3rd day of January, 1997.
ENERGY VENTURES INC.
/s/
By: Douglas Wayne Hartford
President
<PAGE>
Incorporated under the Laws of Barbados
CERTIFICATE NO. 1 Shares
100
Common
ENERGY VENTURES INTERNATIONAL INC.,
This Certifies that ENERGY VENTURES INC. Is the registered holder of ONE HUNDRED
COMMON shares.
Transferable only on the books of the Company by the holder hereof in person or
by Attorney upon surrender of this Certificate.
Given under the common Seal of the said Company
this 3RD day of JANUARY 1997
/s/ /s/
Director The Corporate Secretary Limited
Secretary
[ENERGY VENTURES INTERNATIONAL INC. CORPORATE SEAL]
<PAGE>
BARBADOS
The Companies Act, Cap. 308
General By-Law
of
ENERGY VENTURES INTERNATIONAL INC.
Incorporated the 2nd day of January, 1997
CARTRUST CORPORATION LIMITED
'Whitepark House'
White Park Road
Bridgetown, Barbados
<PAGE>
THE COMPANIES ACT 1982
GENERAL BY-LAW
ENERGY VENTURES INTERNATIONAL INC.
TABLE OF CONTENTS
Chapter
1. INTERPRETATION
2. REGISTERED OFFICE
3. SEAL
4. DIRECTORS
5. BORROWING POWERS OF DIRECTORS
6. MEETINGS OF DIRECTORS
7. REMUNERATION OF DIRECTORS
8. SUBMISSION OF CONTRACTS TO SHAREHOLDERS
9. FOR THE PROTECTION OF DIRECTORS AND OFFICERS
10. INDEMNITIES TO DIRECTORS AND OFFICERS
ii. OFFICERS
12. SHAREHOLDERS' MEETINGS
13. SHARES
14. TRANSFER OF SHARES AND DEBENTURES
15. DIVIDENDS
16. VOTING IN OTHER COMPANIES
17. INFORMATION AVAILABLE TO SHAREHOLDERS
18. NOTICES
19. CHEQUES, DRAFTS AND NOTES
20. EXECUTION OF INSTRUMENTS
21. SIGNATURES
22. FINANCIAL YEAR
<PAGE>
THE COMPANIES ACT 1982
BY-LAW NO. 1
A by-law relating generally to the conduct of the affairs of:
ENERGY VENTURES INTERNATIONAL INC.
(hereinafter called "the Company")
BE IT ENACTED as the general by-law of the Company as follows:
1. INTERPRETATION
1.1 In this by-law and all other by-laws of the Company, unless the context
otherwise requires:
(a)"Act" means the Companies Act 1982 as from time to time amended and
every statute substituted therefore and, In the case of such substitution, any
references in the bylaws of the Company to provisions of the Act shall be read
as references to the substituted provisions therefore in the new statute or
statutes;
(b) "Regulations" means any Regulations made under the Act, and
every regulation substituted therefore and, in the case of such
substitution, any references in the by-laws of the Company to provisions of the
Regulations shall be read as references to the substituted provisions
therefore in the new regulations;
(c) "By-laws" means any by-law of the Company from time to time in
force;
(d) all terms contained in the by-laws and defined in the Act or the
Regulations shall have the meanings given to such terms in the Act or the
Regulations; and
(e) the singular includes the plural and the plural includes the
singular; the masculine gender includes the feminine and neuter genders; the
word "person" includes bodies corporate, companies, partnerships, syndicates,
trusts and any association of persons; and the word "individual" means a natural
person.
2. REGISTERED OFFICE
2.1 The registered office of the Company shall be in Barbados at such address as
the directors may fix from time to time by resolution.
3. SEAL
3.1 The common seal of the Company shall be such as the directors may by
resolution from time to time adopt. Pursuant to section 25 (2) of the
Companies Act, 1982 the common seal of the Company may be used in any country
other situated in Barbados, and such common seal must be a facsimile of the
common seal of the Company with addition on its face of the name of every
country, district or place where it is to be used
<PAGE>
4. DIRECTORS
4.1 Powers: Subject to any unanimous shareholder agreement, the business and
affairs of the Company shall be managed by the directors.
4.2 Number: There shall be a minimum of one and a maximum of ten directors of
the Company. At no time shall the Board of Directors consist of a majority of
Directors who are resident in Canada.
4.3 Election: Directors shall be elected by the shareholders on a show of hands
unless a ballot is demanded in which case such election shall be by ballot.
4.4 Tenure: Unless his tenure is sooner determined, a director shall hold office
from the date on which he is elected or appointed until the close of the annual
meeting of the shareholders next following but he shall be eligible for
re-election if qualified.
4.4.1 A director who is also an officer shall continue to be a director until he
ceases to be an officer.
4.4.2 A director shall cease to be a director:
(a) if he becomes bankrupt or compounds with his creditors or is
declared insolvent;
(b) if he is found to be of unsound mind; or
(c) if by notice in writing to the Company he resigns his office and
any such resignation shall be effective at the time it is sent to the Company or
at the time specified in the notice, whichever is later.
4.6 The shareholders of the Company may, by ordinary resolution passed at a
special meeting of the shareholders, remove any director from office and a
vacancy created by the removal of a director may be filled at the meeting of
shareholders at which the director is removed.
4.6 Committee of Directors: The directors may appoint from among their number a
committee of directors and subject to Section 80 (2) of the Act may delegate to
such committee any of the powers of the directors.
5. BORROWING POWERS OF DIRECTORS
5.1 The directors may from time to time:
(a) borrow money upon the credit of the Company;
(b) issue, reissue, sell or pledge debentures of the Company;
(c) subject to section 53 of the Act give a guarantee on behalf of the
Company to secure performance of an obligation of any person; and
(d) mortgage, charge, pledge or otherwise create a security interest in
all or any property of the Company, owned or subsequently acquired, to secure
any obligation of the Company.
5.2 The directors may from time to time by resolution delegate to any officer of
the Company all or any of the powers conferred on the directors by paragraph 5.1
hereof to the full extent thereof or such lesser extent as the directors may in
any such resolution provide.
5.3 The powers conferred by paragraph 5.1 hereof shall be in supplement of and
not in substitution for any powers to borrow money for the purposes of the
Company possessed by its directors or officers independently of a borrowing
by-law.
6. MEETING OF DIRECTORS
6.1 Place of Meeting: Meetings of the directors and of any committee of the
directors may be held within or outside Barbados, providing that no meetings of
the directors are held in Canada.
6.2 Notice: A meeting of the directors may be
convened at any time by any director or the Secretary, when
directed or authorised by any director. Subject to subsection 76(l) of the Act
the notice of any such meeting need not specify the purpose of or the business
to be transacted at the meeting. Notice of any such meeting shall be served in
the manner specified in paragraph 18.1 hereof not less than fifteen days
(exclusive of the date of the meeting) before the meeting is to take place. A
director may in any manner waive notice of a meeting of the directors and
attendance of a director at a meeting of the directors shall constitute a waiver
of notice of the meeting except where a director attends a meeting for the
express purpose of objecting to the transaction of any business on the grounds
that the meeting is not lawfully called.
6.2.1 It shall not be necessary to give notice of a meeting of the directors to
a newly elected or appointed director for a meeting held immediately following
the election of directors by the shareholders or the appointment to fill a
vacancy among the directors.
6.3 Quorum: A majority of the Directors shall form a quorum for the transaction
of business provided that the quorum does not consist of a majority of Directors
who are resident in Canada. Notwithstanding any vacancy among the Directors, a
quorum may exercise all the powers of the directors. No business shall be
transacted at a meeting of directors unless a quorum is present.
<PAGE>
6.3.1 A director may, if all the directors consent, participate in a meeting of
directors or of any committee of the directors by means of such telephone or
other communications facilities as permit all persons participating in the
meeting to hear each other and a director participating in such a meeting by
such means is deemed to be present at that meeting.
6.4 Voting: Questions arising at any meeting of the directors shall be decided
by a majority of votes.
6.5 Resolution in lieu of meeting: Notwithstanding any of the foregoing
provisions of this by-law a resolution in writing signed by all the directors
entitled to vote on that resolution at a meeting of the directors or any
committee of the directors is as valid as if it had been passed at a meeting of
the directors or any committee of the directors.
7. REMUNERATION OF DIRECTORS
7.1 The remuneration to be paid to the directors shall be such as the directors
may from time to time determine and such remuneration may be in addition to the
salary paid to any officer or employee of the Company who is also a director.
The directors may also award special remuneration to any director undertaking
any special services on the Company's behalf other than the routine work
ordinarily required of a director and the confirmation of any such resolution or
resolutions by the shareholders shall not be required. The directors shall also
be entitled to be paid their travelling and other expenses properly incurred by
them In connection with the affairs of the Company.
8. SUBMISSION OF CONTRACTS, OR TRANSACTIONS TO SHAREHOLDERS FOR APPROVAL
8.1 The directors in their discretion may submit any contract, act or
transaction for approval or ratification at any annual meeting of the
shareholders or at any special meeting of the shareholders called for the
purpose of considering the same and, subject to the provisions of section 89 of
the Act, any such contract, act or transaction that is approved or ratified or
confirmed by a resolution passed by a majority of the votes cast at any such
meeting (unless any different or additional requirement Is imposed by the Act or
by the Company's articles or any other by-law) shall be as valid and as binding
upon the Company and upon all the shareholders as though it had been approved,
ratified or confirmed by every shareholder of the Company.
9. FOR THE PROTECTION OF DIRECTORS AND OFFICERS
9.1 No director or officer of the Company shall be liable to the Company for:
(a) the acts, receipts, neglects or defaults of any other director or
officer or employee or for joining in any receipt or act for conformity;
(b) any loss, damage or expense incurred by the Company through the
insufficiency or deficiency of title to any property acquired by the Company or
for or on behalf of the Company;
<PAGE>
(c) the insufficiency or deficiency of any security in or upon which
any of the moneys of or belonging to the Company shall be placed out or
invested;
(d) any loss or damage arising from the bankruptcy, insolvency or
tortious act of any person, including any person with whom any moneys,
securities or effects shall be lodged or deposited;
(e) any loss, conversion, misapplication or misappropriation of or any
damage resulting from any dealings with any moneys, securities or other assets
belonging to the Company;
(f) any other loss, damage or misfortune whatever which may happen in
the execution of the duties of his respective office or trust or in relation
thereto;
unless the same happens by or through his failure to exercise the powers and to
discharge the duties of his office honestly and in good faith with a view to the
best interests of the Company and in connection therewith to exercise the care,
diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.
9.2 Nothing herein contained shall relieve a director or officer from the duty
to act in accordance with the Act or regulations made thereunder or relieve him
from liability for a breach thereof.
9.2.1 The directors for the time being of the Company shall not be under any
duty or responsibility in respect of any contract, act or transaction whether or
not made, done or entered into in the name or on behalf of the Company, except
such as are submitted to and authorised or approved by the directors.
9.2.2. If any director or officer of the Company is employed by or performs
services for the Company otherwise than as a director or officer or is a member
of a firm or a shareholder, director or officer of a body corporate which is
employed by or performs services for the Company, the fact of his being a
shareholder, director or officer of theCompany shall not disentitle such
director or officer or such firm or body corporate, as the case may be, from
receiving proper remuneration for such services.
10. INDEMNITIES TO DIRECTORS AND OFFICERS
10.1 Subject to section 97 of the Act, except in respect of an action by or on
behalf of the Company to obtain a judgment in its favour, the Company shall
indemnify a director or officer of the Company, a former director or officer of
the Company or a person who acts or acted at the Company's request as a director
or officer of a body corporate of which the Company is or was a shareholder or
creditor, and his personal representative, against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
reasonably incurred by him in respect of any civil, criminal or administrative
action or proceeding to which he is made a party by reason of being or having
been a director or officer of such company, if:
<PAGE>
(a) he acted honestly and in good faith with a view to the best
interests of the Company; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable grounds for believing
that his conduct was lawful.
11. OFFICERS
11.1 Appointment: The directors shall as often as may be required appoint a
Secretary and, if deemed advisable, may as often as may be required appoint any
or all of the following officers: a Chairman, a Deputy Chairman, a Managing
Director, a President, one or more Vice-Presidents, a Treasurer, one or more
Assistant Secretaries or one or more Assistant Treasurers, and Chief Operating
Officer. A director may be appointed to any office of the Company but none of
the officers except the Chairman, the Deputy Chairman, the Managing Director
need be a director. Two or more of the aforesaid offices may be held by the same
person. In case and whenever the same person holds the offices of Secretary and
Treasurer he may but need not be known as the Secretary-Treasurer. The directors
may from time to time appoint such other officers and agents as they deem
necessary who shall have such authority and shall perform such duties as may
from time totime be prescribed by the directors.
11.2 Remuneration: The remuneration of all officers appointed by the directors
shall be determined from time to time by resolution of the directors. The fact
that any officer or employee is a director or a shareholder of the Company shall
not disqualify him from receiving such remuneration as may be determined.
11.3 Powers and Duties: All officers shall sign such contracts, documents or
instruments In writing as require their respective signatures and shall
respectively have and perform all powers and duties incident to their respective
offices and such other powers and duties respectively as may from time to time
be assigned to them by the directors.
11.4 Delegation: In case of the absence or inability to act of any officer of
the Company or for any other reason that the directors may deem sufficient the
directors may delegate all or any of the powers of such officer to any other
officer or to any director.
11.5 Chairman: A Chairman shall, when present, preside at all meetings of the
directors, and any committee of the directors or the shareholders.
11.6 Deputy Chairman: If the Chairman is absent or is unable or refuses to act,
the Deputy Chairman (if any) shall, when present, preside at all meetings of the
directors, and any committee of the directors, or the shareholders.
<PAGE>
11.7 A president shall be the Chief Executive Officer and/or Managing Director
and shall exercise such powers and have such authority as may be delegated to
him by the directors in accordance with the provisions of section 80 of the Act.
He shall be vested with and may exercise all the powers and shall perform all
the duties of a Chairman and Deputy Chairman if none be appointed or if the
Chairman and the Deputy Chairman are absent or are unable or refuse to act.
11.8 Vice-President: A Vice-President or, if more than one, the Vice-Presidents,
in order of seniority, shall be vested with all the powers and shall perform all
the duties of the President in the absence or inability or refusal to act of the
President.
11.9 Secretary: The Secretary shall give or cause to be given notices for all
meetings of the directors, any committee of the directors and the shareholders
when directed to do so and shall have charge of the minute books and seal of the
Company and, subject to the provisions of paragraph 14.1 hereof, of the records
(other than accounting records) referred to in section 170 of the Act.
11.10 Treasurer: Subject to the provisions of any resolution of the directors, a
Treasurer shall have the care and custody of all the funds and securities of the
Company and shall deposit the same in the name of the Company in such bank or
banks or with such other depositary or depositories as the directors may direct.
He shall keep or cause to be kept the accounting records referred to in section
172 of the Act. He may be required to give such bond for the faithful
performance of his duties as the directors In their uncontrolled discretion may
require but no director shall be liable for failure to require any such bond or
for the insufficiency of any such bond or for any loss by reason of the failure
of the Company to receive any indemnity thereby provided.
11.11 Assistant Secretary and Assistant Treasurer: The Assistant Secretary or,
if more than one, the Assistant Secretaries in order of seniority, and the
Assistant Treasurer or, if more than one, the Assistant Treasures in order of
seniority, shall respectively perform all the duties of the Secretary and the
Treasurer, respectively, in the absence or inability or refusal to act of the
Secretary or the Treasurer, as the case may be.
11.12 General Manager or Manager: The directors may from time to time appoint
one or more General Managers or Managers and may delegate to him or them full
power to manage and direct the business and affairs of the Company (except such
matters and duties as by law must be transacted or performed by the directors or
by the shareholders) and to employ and discharge agents and employees of the
Company or may delegate to him or them any lesser authority. A General Manager
or Manager shall conform to all lawful orders given to him by the directors of
the Company and shall at all reasonable times give to the director or any of
them all information they may require regarding the affairs of the Company. Any
agent or employee appointed by the General Manager or Manager may be discharged
by the directors.
<PAGE>
11.13 Vacancies: If the office of any officer of the Company becomes vacant by
reason of death, resignation, disqualification or otherwise, the directors by
resolution shall, in the case of the Secretary, and may, in the case of any
other office, appoint a person to fill such vacancy.
12. SHAREHOLDERS' MEETINGS
12.1 Annual Meeting: Subject to the provisions of section 105 of the Act, the
annual meeting of the shareholder shall be held on such day in each year and at
such time as the directors may by resolution determine at any place within or
outside of Barbados, provided that the Annual Meeting is not held in Canada.
12.2 Special Meetings: A Special meeting of the shareholder may be convened by
order of the Chairman, the Deputy Chairman, the Managing Director, the
President, a Vice-President or by the directors at any date and time and at any
place within Barbados or if all the shareholders entitled to vote at such
meeting so agree, outside Barbados, except in Canada.
12.2.1 The directors shall, on the requisition of the holders of not less than
five percent of the issued shares of the Company that carry a right to vote at
the meeting requisitioned, forthwith convene a meeting of shareholders, and in
the case of such requisition the following provisions shall have effect:-
(1) The requisition must state the purposes of the meeting
and must be signed by the requisitionists and deposited at
the Registered office, and may consist of several documents
in like form each signed by one or more of the
requisitionists.
(2) If the directors do not, within twenty-one days
from the date of the requisition being so deposited, proceed
to convene a meeting, the requisitionists or any one of them
may themselves convene the meeting, but any meeting so
convened shall not be held after three months from the date
of such deposit.
(3) Unless subsection (3) of section 129 of the Act applies,
the directors shall be deemed notto have duly convened the
meeting if they do not give such notice as is required by
the Act within fourteen days from the deposit of the
requisition.
(4) Any meeting convened under this paragraph by the
requisitionists shall be called as nearly as possible in the
manner in which meetings are to be called pursuant to the
by-laws and Divisions E and F of Part 1 of the Act.
(5) A requisition by joint holders of shares must be signed
by all such holders.
<PAGE>
12.3 Notice: A printed, written or typewritten notice stating the day, hour and
place of meeting shall be given by serving such notice on each shareholder
entitled to vote at such meeting, on each director and on the auditor of the
Company in the manner specified in paragraph 18.1 hereof, no less than
twenty-one days or more than fifty days (in each case exclusive of the day for
which the notice is delivered or sent and of the day for which notice is given)
before the date of the meeting. Notice of a meeting at which special business is
to be transacted shall state (a) the nature of that business in sufficient
detail to permit the shareholder to form a reasoned judgment thereon, and (b)
the text of any special resolution to be submitted to the meeting.
12.4 Waiver of Notice: A shareholder and any other person entitled to attend a
meeting of shareholders may in any manner waive notice of a meeting of
shareholders and attendance of any such person at a meeting of shareholders
shall constitute a waiver of notice of the meeting except where such person
attends a meeting for the express purpose of objecting to the transaction of any
business on the grounds that the meeting is not lawfully called.
12.5 Omission of Notice: The accidental omission to give notice of any meeting
or any irregularity in the notice of any meeting or the non-receipt of any
notice y any shareholder, director or the auditor of the Company shall not
invalidate any resolution passed or any proceedings taken at any meeting of the
shareholders.
12.6 Votes: Every question submitted to any meeting of shareholders shall be
decided in the first instance by a show of hands unless a person entitled to
vote at the meeting has demanded a ballot and, if the Articles so provide, in
the case of an equality of votes the Chairman of the meeting shall on a ballot
have a casting vote in addition to any votes to which he may be otherwise
entitled.
12.6.1 At every meeting at which he is entitled to vote, every shareholder,
proxy holder or individual authorised to represent a shareholder who is present
in person shall have one vote on a show of hands. Upon a ballot at which he is
entitled to vote, every shareholder, proxy holder or individual authorised to
represent a shareholder shall, subject to the articles, have one vote for every
share held by the shareholder.
12.6.2 At any meeting unless a ballot is demanded, a declaration by the Chairman
of the meeting that a resolution has been carried or carried unanimously or by a
particular majority or lost or not carried by a particular majority shall be
conclusive evidence of the fact.
12.6.3 When the Chairman, the Deputy Chairman, the President and the
Vice-President are absent, the persons who are present and entitled to vote
shall choose another director as chairman of the meeting; but if no director is
present or all the directors present decline to take the chair, the persons who
are present and entitled to vote shall choose one of their number to be
chairman.
<PAGE>
12.6.4 A ballot, either before or after any vote by a show of hands, may be
demanded by any person entitled to vote at the meeting. If at any meeting a
ballot is demanded on the election of a Chairman or on the question of
adjournment it shall be taken forthwith without adjournment. If at any meeting a
ballot is demanded on any other question or as to the election of directors, the
vote shall be taken by ballot in such manner and either at once, later in the
meeting or after adjournment as the Chairman of the meeting directs. The result
of a ballot shall be deemed to be the resolution of the meeting at which the
ballot was demanded. A demand for a ballot may be withdrawn.
12.6.5 If two or more persons hold shares jointly, one of those holders present
at a meeting of shareholders may, in the absence of the other, vote the shares;
but if two or more of those persons who are present, in person or by proxy vote,
they must vote as one on the shares jointly held by them.
12.7 Proxies: Votes at meetings of shareholders may be given either personally
or by proxy or, in the case of a shareholder who is a body corporate or
association, by an individual authorised by a resolution of the directors or
governing body of that body corporate or association to represent it at meetings
of shareholders of the Company.
12.7.1 A proxy shall be executed by the shareholder or his attorney authorised
in writing and is valid only at the meeting in respect of which it is given or
any adjournment thereof.
12.7.2 A person appointed by proxy need not be a shareholder.
2.7.3 Subject to the provisions of Part V of the Regulations, a proxy may be in
the following form:
The undersigned shareholder
of hereby appoints of or
failing him of as the
nominee of the undersigned
to attend and act for the
undersigned and on behalf
of the undersigned at the
meeting of the shareholders
of the said Company to be
held on the day of 19 and
at any adjournment or
adjournments thereof in the
same manner, to the same
extent and with the same
powers as if the
undersigned were present at
the said meeting or such
adjournment or adjournments
thereof.
DATED this day of 19
Signature of shareholder
12.8 Adjournment: The Chairman of any meeting may with the consent of the
meeting adjourn the same from time to time to a fixed time and place and no
notice of such adjournment need be given to the shareholders unless the meeting
is adjourned by one or more adjournments for an aggregate of thirty days or more
in which case notice of the adjourned meeting shall be given as for an original
meeting. Any business that might have been brought before or dealt with at the
original meeting in accordance with the notice calling the same may be brought
before or dealt with at any adjourned meeting for which no notice is required.
<PAGE>
12.9 Quorum: Subject to the Act, and except in the case of a Company having only
one shareholder a quorum for the transaction of business at any meeting of the
shareholders shall be two persons present in person, each being either a
shareholder entitled to vote thereat, or a duly appointed proxy holder or
representative of a shareholder so entitled. If a quorum is present at the
opening of any meeting of the shareholders, the shareholders present or
represented may proceed with the business of the meeting notwithstanding a
quorum is not present throughout the meeting. If a quorum is not present within
30 minutes of the time fixed for a meeting of shareholders, the persons present
and entitled to vote may adjourn the meeting to a fixed time and place but may
not transact any other business.
12.10 Resolution in lieu of meeting: Notwithstanding any of the foregoing
provisions of this by-law a resolution in writing signed by all the shareholders
entitled to vote on that resolution at a meeting of the shareholders is, subject
to section 128 of the Act, as valid as if it had been passed at a meeting of the
shareholders.
13. SHARES
13.1 Allotment and Issuance: Subject to the Act, the articles and any unanimous
shareholder agreement, shares in the capital of the Company may be allotted and
issued by resolution of the directors at such times and on such terms and
conditions and to such persons or class of persons as the directors determine.
13.2 Certificates: Share certificates and the form of share transfer shall
(subject to section 181 of the Act) be In such form as the directors may by
resolution approve and such certificates shall be signed by a Chairman or a
Deputy Chairman or a Managing Director or a President or a Vice- President and
the Secretary or an Assistant Secretary holding office at the time of signing.
13.2.1 The directors or any agent designated by the directors may in their or
his discretion direct the issuance of a new share or other such certificate in
lieu of and upon cancellation of a certificate that has been mutilated or in
substitution for a certificate claimed to have been lost, destroyed or
wrongfully taken, on payment of such reasonable fee and on such terms as to
indemnity, reimbursement or expenses and evidence of loss and of title as the
directors may from time to time prescribe, whether generally or in any
particular case.
14. TRANSFER OF SHARES AND DEBENTURES
14.1 Transfer: The shares or debentures of a company may be transferred by a
written instrument of transfer signed by the transferor and naming the
transferee.
14.2 No share in the capital of the company shall be transferred without the
approval of the directors of the company or of a committee of such directors
evidenced by resolution and the directors may, in their absolute discretion, and
without assigning any reason therefore decline the register of any share.
Individuals resident in Barbados cannot hold a beneficial interest in more than
ten percent of the share or loan capital of the company and must otherwise
comply with the provisions as set out in the International Business Companies
(Exemption from Certain Taxes) Act 1965, (as amended by the Acts of 1977 and
1979).
14.3 Registers: Registers of shares and debentures issued by the Company shall
be kept at the registered office of the Company or at such other place in
Barbados as may from time to time be designated by resolution of the directors.
14.4 Surrender of Certificates: Subject to section 179 of the Act, no transfer
of shares or debentures shall be registered unless or until the certificate
representing the shares or debentures to be transferred has been surrendered for
cancellation.
14.5 Shareholder indebted to the Company: If so provided in the articles, the
Company has a lien on a share registered in the name of a shareholder or his
personal representative for a debt of that shareholder to the Company. By way of
enforcement of such lien the directors may refuse to permit the registration of
a transfer of such share.
15. DIVIDENDS
15.1 The directors may from time to time by resolution declare and the Company
may pay dividends on the issued and outstanding shares in the capital of the
Company subject to the provisions (if any) of the articles and sections 51 and
52 of the Act.
15.1.1 In case several persons are registered as the joint holders of any
shares, any one of such persons may give effectual receipts for all dividends
and payments on account of dividends.
16. VOTING IN OTHER COMPANIES
16.1 All shares or debentures carrying voting rights in any other body corporate
that are held from time to time by the Company may be voted at any and all
meetings of shareholders, debenture holders (as the case may be) of such other
body corporate and in such manner and by such person or persons as the directors
of the Company shall from time to time determine. The officers of the Company
may for and on behalf of the Company from time to time:-
(a) execute and deliver proxies; and
(b) arrange for the issuance of voting certificates or other evidence
of the right to vote; in such names as they may determine without the necessity
of a resolution or other action by the directors.
17. INFORMATION AVAILABLE TO SHAREHOLDERS
17.1 Except as provided by the Act, no shareholder shall be entitled to any
information respecting any details or conduct of the Company's business which in
the opinion of the directors it would be inexpedient in the interests of
the Company to communicate to the public.
17.2 The directors may from time to time, subject to rights conferred by the
Act, determine whether and to what extent and at what time and place and under
what conditions or regulations the documents, books and registers and accounting
records of the Company or any of them shall be open to the inspection of
shareholders and no shareholder shall have any right to inspect any document or
book or register or accounting record of the Company except as conferred by
statute or authorised by the directors or by a resolution of the shareholders.
18. NOTICES
18.1 Method of giving Notice: Any notice or other document required by the Act,
the Regulations, the articles or the by-laws to be sent to any shareholder,
debenture holder, director or auditor may be delivered personally or sent by
prepaid mail or cable or telex or telefax to any such person at his latest
address as shown in the records of the Company or its transfer agent and to any
such director at his latest address as shown in the records of the Company or in
the latest notice filed under section 66 to 74 of the Act, and to the auditor at
his business address.
18.2 Waiver of Notice: Notice may be waived or the time for the notice may be
waived or abridged at any time with the consent in writing of the person
entitled thereto.
18.3 Undelivered Notices: If a notice or document is sent to a shareholder or
debenture holder by prepaid mail in accordance with this paragraph and the
notice or document is returned on three consecutive occasions because the
shareholder or debenture holder cannot be found, it shall not be necessary to
send any further notices or documents to the shareholder or debenture holder
until he informs the Company in writing of his new address.
18.4 Shares and debentures registered in more than one name: All notices or
other documents with respect to any shares or debentures registered in more than
one name shall be given to whichever of such persons is named first in the
records of the Company and any notice or other document so given shall be
sufficient notice or delivery to all the holders of such shares or debentures.
18.5 Persons becoming entitled by operation of law: Subject to section 184 of
the Act, every person who by operation of law, transfer or by any other means
whatsoever becomes entitled to any share is bound by every notice or other
document in respect of such share that, previous to his name and address being
entered in the records of the Company, is duly given to the person from whom he
derives his title to such share.
18.6 Deceased Shareholders: Subject to Section 184 of the Act, any notice or
other document delivered or sent by prepaid mail, cable or telex or left at the
address of any shareholder as the same appears in the records of the Company
shall, notwithstanding that such shareholder is deceased, and whether or not the
Company has notice of his death, be deemed to have been duly served in respect
of the shares held by him (whether held solely or with any other person) until
some other person is entered in his stead in the records of the Company as the
holder or one of the holders thereof and such service shall for all purposes be
deemed a sufficient service of such notice or document on his personal
representatives and on all persons, if any, interested with him in such shares.
18.7 Signature to Notices: The signature of any director or officer of the
Company to any notice or document to be given by the Company may be written,
stamped, typewritten or printed or partly written, stamped, typewritten or
printed or telefaxed.
18.8 Computation of Time: Where a notice extending over a number of days or
other period is required under provisions of the articles or the by-laws the day
of sending the notice shall, unless it is otherwise provided, be counted in such
number of days or other period.
18.9 Proof of Service: Where a notice required under paragraph 18.1 hereof is
delivered personally to the person to the person to whom it is addressed or
delivered to his address as mentioned in paragraph 18.1 hereof, service shall be
deemed to be at the time of delivery of such notice.
18.10 Where such notice is sent by post, service of the notice shall be deemed
to be effected forty-eight hours after posting if the notice was properly
addressed and posted by prepaid mail.
18.10.1 Where the notice is sent by cable or telex or telefax service, It is
deemed to be effected on the date on which the notice is so sent.
18.10.2A certificate of an officer of the Company in office at the time of the
making of the certificate or of any transfer agent of shares of any class of the
Company as to facts in relation to the delivery or sending of any notice shall
be conclusive evidence of those facts.
19. CHEQUES, DRAFTS AND NOTES
19.1 All cheques, drafts or orders for the payment of money and all notes and
acceptances and bills ofexchange shall be signed by such officers or persons and
in such manner as the directors may from time to time designate by resolution.
20. EXECUTION OF INSTRUMENTS
20.1 Contracts, documents or instruments in writing requiring the signature of
the Company may be signed by:
(a) a Chairman, a Deputy Chairman, a President or a Vice-President
together with the Secretary or the Treasurer;
or
(b) any one director
<PAGE>
and all contracts, documents and instruments in writing so signed shall be
binding upon the Company without any further authorisation or formality. The
directors shall have power from time to time by resolution to appoint any
officers or persons on behalf of the Company either to sign certificates for
shares in the Company and contracts, documents and instruments in writing
generally or to sign specific contracts, documents or instruments in writing.
20.1.1 The common seal of the Company may be affixed to contracts, documents and
instruments in writing signed as aforesaid or by any officers or persons
specified in paragraph 20.1 hereof.
20.1.2 Subject to section 134 of the Act:
(a) a Chairman, a Deputy Chairman, a President or a Vice-President
together with the Secretary or the Treasurer;
or
(b) any one director
shall have authority to sign and execute (under seal of the Company or
otherwise) all instruments that may be necessary for the purpose of selling,
assigning, transferring, exchanging, converting or conveying any such shares,
stocks, bonds, debentures, rights, warrants or other securities.
21. SIGNATURES
21.1 The signature of a Chairman, a Deputy Chairman, a President, a Vice _
President, the Secretary, the Treasurer, an Assistant Secretary or an Assistant
Treasurer or any directors of the Company or of any officer or person, appointed
pursuant to paragraph 20 hereof by resolution of the directors, be printed,
engraved, lithographed or otherwise mechanically reproduced upon any certificate
for shares in the Company or contract, document or instrument in writing, bond,
debenture or other security of the Company executed or issued by or on behalf of
the Company. Any document or instrument in writing on which the signature of any
such officer or person is so reproduced shall be deemed to have been manually
signed by such officer or person whose signature is so reproduced and shall be
as valid to all intents and purposes as if such document or instrument in
writing had been signed manually and notwithstanding that the officer or person
whose signature is so reproduced has ceased to hold office at the date on which
such document or instrument in writing is delivered or issued.
<PAGE>
22. FINANCIAL YEAR
22.1 The directors may from time to time by resolution establish the financial
year of the Company.
DATED this 3rd day of January 1997
The Corporate Secretary Limited
/s/ /s/
Director Secretary
[ENERGY VENTURES INTERNATIONAL INC. Corporate Seal]
EXHIBIT 6.1
ALLIANCE AGREEMENT
THIS AGREEMENT made as of the 1st day of March, 1997.
BETWEEN:
NATIONAL RESEARCH COUNCIL OF CANADA
- and -
ENERGY VENTURES INC.
WHEREAS NRC and EVI wish to enter into a strategic alliance to further
develop certain lithium ion technology patented by NRC and to reflect joint
venture arrangements with respect to other technology;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1.0 DEFINITIONS
In this agreement, unless the context otherwise requires, the following
terms shall have the meanings set opposite the same:
"Base LI Technology" means collectively the EVI Base LI Technology and the NRC
Base LI Technology;
"Energy Materials Field" means Technology related to a broad variety of battery
formats, fuel cell formats, related materials (including, without limitation,
separators, electrolytes, electrodes, packaging etc.) and associated production,
processes and testing;
"Energy Ventures Inc. (Delaware)" means O.P.D. Acquisitions, Inc. a corporation
incorporated under the laws of the State of Delaware on June 24th 1996 whose
shares are to be listed on the OTC Bulletin Board which is run by The NASDAQ
Stock Market, Inc.
"Enhancement" means any invention, idea, concept, formula, design modification
or development relating to any battery Technology or the Energy Materials Field
resulting from the collaboration between the parties and from any collaboration
of either party with a third party where the rights of the parties, as
established in this agreement, are protected, including NRC's collaboration with
Samsung Electronics Company, during the Technical Collaboration Period;
"Enhancement Patents" in respect of any Enhancement means any patent
applications filed or caused to be filed anywhere in the world;
"EVI" means Energy Ventures Inc., its successors and assigns;
"EVI Base LI Technology" means all rights, as of the date hereof, to patents,
research, development and application of inventions, patents, technical
information, advice, Know-How and data owned by EVI or an EVI Group Company and
which relate to lithium ion technology or which have application in connection
with Base LI Technology;
"EVI Group Company" means EVI and each of its affiliates, subsidiaries and
associated companies as those terms are defined in the Business Corporations Act
(Ontario), as amended, and its designates, and their successors and assigns;
"Know-How" in relation to any project means all knowledge, designs, results,
data, experiences, information and advice directly related thereto;
"LI" means lithium ion;
"Licensee" means EVI or such EVI Group Company as is from time to time
designated by EVI to be the licensee under the NRC LI Technology Licence;
"Licensing Revenues" means:
(a) in the case of an arms' length transaction for a licence or a sub-
licence of any Technology:
(i) all licence fees and royalties received by any EVI Group
Company under such licence or sub-licence; and
(ii) any other monetary consideration (or the monetary value of
non-monetary consideration) that may be considered to have
been received in exchange for the granting of the licence or
sub-licence rights;
(b) in the case of a non-arms' length transaction for a licence or a
sub-licence of any Technology, an amount equal to the fees, royalties
and other consideration which would have been received by any EVI Group
Company under an arms' length equivalent commercial transaction, as
agreed to by the parties or failing agreement as determined by
Arbitration;
in each case after deducting all taxes, allowances, discounts and other
adjustments;
"Net Sales Value" means in respect of products Sold in the ordinary course of
business:
(a) to an arms' length customer and not returned the gross invoice price
for each separate Sale, net of trade, promotional, quantity or cash
discounts actually allowed, rebates granted and taken, any direct
sales tax, customs duty, insurance, special packing and freight
charges set out separately in the invoice but inclusive of all
indirect sales, manufacturers' or value-added taxes incorporated into
the price of the goods, the whole interpreted in accordance with
generally accepted accounting principles (where applicable); and
(b) in respect of products Sold or transferred to any Person not at arms'
length the value, computed in accordance with the above, which would
have been charged on an equivalent Sale to an arms' length customer;
(c) If a product is incorporated as part of an article, the price of the
product will, where reasonably possible, be identified separately on
any invoice. When a distinct price for a product is not identified on
an invoice, the Sale value shall be calculated as above, using an
average of prices billed in typical recent Sales of equivalent
products, and if there are no such Sales, then the price of the
product shall be deemed to be that portion of the Sale price of the
article as manufacturing cost of the product relates to the
manufacturing cost of the article. Licensee shall, upon request,
provide evidence satisfactory to NRC, acting reasonably, of such
manufacturing costs;
(d) If a product is bartered, the Sales price shall be that agreed to by
the parties or failing agreement shall be determined by Arbitration;
"NRC" means the National Research Council of Canada, its successors and assigns;
"NRC Base LI Technology" means the NRC LI Patents and all rights of the NRC as
of the date hereof, to all research, development and application of inventions,
patents, technical information, advice, Know-How and data relating to LI battery
technology excluding NRC's coin cell hardware Know-How;
"NRC Entitlement" means:
(a) 40% of receipts in respect of Licensing Revenues from the LI
Technology and of revenues from other LI related sales of services, in
each case for the first three years of the Term, and a percentage, to
be negotiated in good faith by the parties and failing agreement
determined by Arbitration, of such Licensing Revenues and revenues
from other LI related sales of services for the subsequent years, such
Licensing Revenues and other LI related sales of services being net of
EVl's patent costs and related expenses, reasonable sales agents'
commissions fees and expenses, scientific costs including revenue
entitlements of scientists and other Persons, direct costs related to
supplying services, costs of product development and testing, legal
and other contracting costs, Technical Assistance Costs as per
Sub-Section 4.8 and other expenses including other marketing costs
approved by both parties, subject to Sub-Section 6.1 herein; and
(b) a Royalty of 2% of the Net Sales Value of Sales of products using Base
LI Technology and any LI Enhancement, subject to Sub-Section 6.1
herein:
"NRC LI Patents" means the patents and applications set out on Schedule 1
hereto;
"NRC LI Technology Licence" means the licence and rights granted to EVI by NRC
pursuant to Sub-Section 2.1 herein;
"Other Technology" means Technology other than LI Technology and includes all
Enhancements and Know-How related thereto;
"Person" means an individual, corporation, partnership and any other legal
entity;
"Royalty" means a percentage of the Net Sales Value of products manufactured or
produced by an EVI Group Company;
"Sale" means every disposition of a product, including selling, renting,
leasing, licensing, and bartering of a product, according to generally accepted
accounting principles. It is considered to occur when a product is delivered. A
Sale exists irrespective of the collection of any debt (regardless of any
accounting principle), but not if money received is refunded. "Sell" and "Sold"
have corresponding meanings.
"Specified Uses" means rights to use in the field of research and development,
marketing, commercial production and in any other manner relating to
electrochemical power sources, cells, batteries, battery packs, electronics and
including the right to manufacture and Sell products embodying or made by the
use of Technology and to sublicence in whole or in part any of such uses to
third parties worldwide;
"Technical Collaboration Period" means the period of technical collaboration
described in Sub-Section 4.0 herein;
"Technical Representatives" means, in the case of EVI, Dr. Karl Kordesch and Dr.
John J. Murray, and in the case of NRC, Dr. Roderick S. McMillan or such other
persons as the parties may name from time to time as their respective technical
representatives for the purposes hereof;
"Technology" includes:
(a) patents, research development and Know-How;
(b) the application of inventions, patents, technical information, advice,
Know-How and data; and
(c) all Enhancements and Enhancement Patents;
"Term" means the term of the NRC LI Technology Licence described in Sub-Section
2.4 herein.
2.0 LICENCE
2.1 Grant
NRC hereby grants to the Licensee a non-exclusive worldwide licence to
use the NRC Base LI Technology for the Specified Uses with rights to sub-licence
worldwide, on the terms stated herein.
2.2 Disclosure
NRC agrees to disclose and provide information related to the NRC Base
LI Technology to the Licensee to the extent required to enable the Licensee to
use the NRC Base LI Technology for the purposes stated herein, subject to the
provisions of Sub-Sections 4.7 and 4.8 herein.
2.3 Consideration
The Licensee will pay to the NRC on May 5th 1997 the sum of $10,000
(plus applicable Goods and Services Tax) as consideration for the NRC LI
Technology Licence.
2.4 Term
The NRC LI Technology Licence will commence on August 1st 1997 and will
expire on the date upon which the last of the NRC Base LI Technology patents and
LI Enhancement Patents in use by the Licensee or any of its sublicensees
expires.
2.5 Sublicences
2.5.1 The Licensee will have unfettered rights to sublicence the NRC
Base LI Technology and to establish the commercial and other terms of any such
sublicence.
2.5.2 The Licensee agrees to advise NRC of all sublicences granted of
the NRC Base LI Technology and to provide to the NRC a copy of
same within a reasonable period of time after the grant of any
such sublicence.
3.0 OTHER TECHNOLOGY
3.1 Proposals for Other Technology
In order to provide a framework for research, development and marketing
activities respecting Other Technology, the parties have agreed to basic terms
related thereto, without creating any obligation of either party to enter into a
research & development joint venture with the other party or to enter into a
research and development joint venture on the terms hereof.
3.2 Basic Terms
For each Other Technology Project submitted by EVI in its discretion,
the terms set out in the rest of this Section 3.0 and in Sections 1.0 and
Sections 7 to 11 inclusive shall apply, except where otherwise agreed by the
parties hereto. The parties will also agree on the other terms, which may or may
not be the same as the terms of this agreement. Such other terms, in addition to
any amendments to the terms set out in this Section 3.0, shall be set out in a
separate document which will form part of Schedule 3 to be attached hereto.
3.3 Enhancements and Patents
3.3.1 Any intellectual property arising out of Other Technology
projects will be jointly owned by EVI and NRC and any patents
related thereto will be applied for jointly by EVI and NRC.
3.3.2 EVI shall have the sole right to use and the exclusive right
to licence and sublicence the Other Technology. The
determination of the countries in which any Other Technology
patents will be registered will be solely in the discretion of
EVI and all costs associated therewith will be borne by EVI,
subject to its right to deduct such costs from Other
Technology Licensing Revenues.
3.4 Patent Applications
3.4.1 Each of EVI and NRC agrees to provide to the other free of
payment, all information or explanations, data, computer
materials, software, patents and all other material related to
Other Technology which might be necessary to facilitate and
enable a patent application.
3.4.2 Each of EVI and NRC agrees to have itself and any Person
involved in the development of the Other Technology co-operate
in any way necessary to complete all papers and documents that
are reasonably necessary for the filing, processing and
issuance of intellectual property protection therefor in the
name of EVI or an EVI Group Company and the NRC and will
assign and maintain itself in a position to be able to assign
as contemplated in this agreement its intellectual property
rights free of charge as may be necessary or desirable in
order to permit intellectual property protection to be issued
as aforesaid.
3.5 NRC Research
NRC shall undertake research and development relating to Other
Technology in respect of joint ventures between EVI and NRC at 50% of its
standard billing rate.
3.6 Third Party Involvement
NRC agrees in relation to a project involving Other Technology it will
not, nor will it permit any of its affiliates (as defined in the Business
Corporations Act (Ontario)) to, enter into any agreement or otherwise deal with
a Person introduced to it by EVI in relation to the Other Technology where such
agreement or dealing or could reasonably be considered to be prejudicial to the
business arrangements between EVI and such Person.
3.7 Specific Terms
For each Other Technology project, the terms of the separate document
referred to in Sub-Section 3.2 herein will include the following terms:
3.7.1 The rights, if any, of NRC to any payment other than
Development Funding;
3.7.2 The definition of the Other Technology and the research and
development plan related thereto;
3.7.3 The arrangements if any between NRC and any party other than
EVI relating to the such Other Technology; and
3.7.4 The term of the arrangements if different from the Term of
this agreement.
4.0 TECHNICAL COLLABORATION
4.1 Technical Collaboration Period
A technical collaboration period (the "Technical Collaboration Period")
between the Licensee and NRC will commence on August 1st 1997 and continue for
each year thereafter during the Term ("Agreement Year") subject to the
provisions of Sections 5.0 and 6.0.
4.2 Development Funding
During the Technical Collaboration Period:
4.2.1 The Licensee will provide to NRC funding of a minimum of
$100,000 and a maximum of $500,000 each Agreement Year
("Development Funding") for purposes of ongoing collaborative
research and development in LI technology, Other Technology
and the Energy Materials Field. For the Agreement Year which
will commence on August 1st 1997 the minimum funding shall,
however, be limited to $50,000.
4.2.2 The Development Funding will be invoiced by NRC and payable in
quarterly instalments or alternatively in accordance with the
Research Plan (as defined below).
4.2.3 For each Agreement Year during the Technical Collaboration
Period, the parties will develop and establish the parameters
for the ongoing research and development program to be
undertaken during such year, such parameters and the ongoing
research and development program, however, to be reviewed and
revised by both parties no less frequently than quarterly
based on progress reports (the "Research Plan").
4.2.4 The Research Plan will identify the specific Technology
project, set out the statement of work, objectives,
milestones, deliverables, costs and payment requirements for
the work to be undertaken under the Research Plan. Where the
specific Technology project involves Other Technology, the
parties will agree upon the specific terms of such project in
accordance with Sub-Section 3.7 herein and execute an addendum
to this agreement to be attached to and form part of Schedule
3 hereto.
4.2.5 NRC agrees that it will be responsible for undertaking the
research and development work contemplated by each Research
Plan and that it will contribute annually scientific research
and development resources at 50% of the standard billing rate
it normally charges to execute the Annual Research Plan, being
a minimum of $200,000 and a maximum of $1,000,000 of work
annually (at standard billing rates). NRC further agrees to
provide such detailed statements to EVI as EVI may reasonably
require evidencing the research and development work NRC
undertakes pursuant to this Sub-Section 4.2.
4.2.6 Both parties agree that their respective responsibilities
under this Sub-Section 4.2 may, with the approval of the other
party, be provided in kind rather than in cash. They further
agree that the maximum EVI Development Funding referred to in
Section 4.2 and the related NRC responsibilities under
Sub-Section 4.2.5 may, with the approval of both parties, be
increased.
4.3 Additional Development Funding and NRC Entitlement
4.3.1 EVI will pay to the NRC, as additional research and
development funding the sum of $90,000, payable $40,000 on May
5th 1997 and $50,000 on December 31st 1998 after invoicing by
NRC ("Additional Development Funding"). NRC shall invoice and
EVI shall pay, in addition to the above, all applicable taxes
including Goods and Services Tax.
4.3.2 EVI will pay to the NRC, the NRC Entitlement for each
Agreement Year provided that in any year the Licensee will be
entitled to reduce the amount owing to the NRC under this
provision by an amount equal to the Development Funding
actually paid in cash or kind by EVI to NRC for the Agreement
Year as set out in Sub- Section 4.2 herein. Any amount owing
to the NRC hereunder in respect of any Agreement Year will be
paid to the NRC within 90 days following the end of such
Agreement Year and will be accompanied by a report setting out
the manner in which the amount owing was calculated. EVI will
add to such payments all applicable taxes including Goods and
Services Tax.
4.3.3 In consideration of the rights granted to EVI hereunder, EVI
agrees to cause Energy Ventures Inc. (Delaware) to allot and
issue to NRC, as fully paid and non-assessable, 200,000 shares
of common stock of Energy Ventures Inc. (Delaware) (the
"Shares"), which the parties agree are valued at an aggregate
of U.S. $450,000. EVI further agrees to cause Energy Ventures
Inc. (Delaware) to issue to NRC, options respecting the issue
of 20,000 shares of common stock of Energy Ventures Inc.
(Delaware), such options to be exercisable prior to December
31st 2001 at U.S. $2.25 per share (the "Options"). NRC
acknowledges that the issue to it of Shares and Options will
be subject to applicable securities laws, including (without
limitation) a prohibition on the resale of such Shares and
Options within Ontario in the absence of an applicable
exemption and a hold period relating to the Shares in the
United States. The foregoing share numbers and share values
assume a 1 for 10 consolidation of the common shares of Energy
Ventures Inc. (Delaware)
4.3.4 At the direction and written request of NRC, EVI agrees:
(a) to pay any portion of the sums payable to NRC under
Sub-Sections 2.3 and 4.3.1 to another Person or
Persons; and
(b) to issue any common shares of Energy Ventures Inc.
(Delaware), upon the exercise of any Option, to
another Person or Persons, subject to compliance with
applicable securities laws.
4.4 Limit on Third Party NRC Licences
NRC agrees that during the Technical Collaboration Period it will not
for the Specified Uses grant any further licences or other rights to any third
parties in relation to either the NRC Base LI Technology or LI Enhancements
except that, in respect to only the NRC Base LI Technology as at the date
hereof, the NRC may grant rights without the right to sublicence to the NRC's
existing and proposed eligible licensees and users as set out in Schedule 2
attached hereto. With regards to LI Enhancements, the NRC may grant rights
including the right to sublicence in countries other than Canada to Samsung
Electronics Company ("Samsung") respecting LI Enhancements which are Arising
Intellectual Property as that term is defined in the agreement to be made
between NRC and Samsung, subject to the limitations on such right to licence to
be set out in such agreement.
4.5 LI Enhancements and Patents
4.5.1 Any intellectual property in the LI Enhancements other than
Arising Intellectual Property will be jointly owned by EVI and
NRC and any patents related thereto will be applied for
jointly by EVI and NRC. Patents respecting Arising
Intellectual Property will be applied for by NRC and Samsung.
4.5.2 The Licensee shall have the sole right to use and the
exclusive right to licence and sublicence the LI Enhancements
other than Arising Intellectual Property and respecting such
Arising Intellectual Property the Licensee shall have a non-
exclusive right to licence and sublicence for the Specified
Uses for countries other than South Korea.
4.5.3 The determination of the countries in which any LI Enhancement
Patents will be registered will be solely in the discretion of
the Licensee and all costs associated therewith will be borne
by the Licensee, subject to its right to deduct such costs
from Licensing Revenues and revenues from other LI related
sales of services as provided in the definition of the NRC
Entitlement in Section 1 herein.
4.5.4 In the event that EVI is not interested in patenting or
commercially exploiting a specific LI Enhancement, altogether
or in specific countries, EVI shall advise NRC of such fact
within 60 days from the date the particular LI Enhancement was
disclosed to EVI by NRC, or sooner if necessary to avoid the
loss of patent rights.
4.5.5 At NRC's request, EVI will then assign or assign back to NRC
all its rights or, if EVl's decision concerns only specific
countries, its rights for those specific countries, in such LI
Enhancement and EVI shall then not be entitled to use or
commercially exploit such LI Enhancement anywhere or in the
countries for which EVI assigned or assigned back its rights
to NRC.
4.5.6 Each of EVI and NRC agrees to provide to the other free of
payment, all information or explanations, data, computer
materials, software, patents and all other material related to
LI Enhancements which might be necessary to facilitate and
enable a patent application.
4.5.7 Each of EVI and NRC agrees to have itself and any Person
involved in the development of the LI Enhancements co-operate
in any way necessary to complete all papers and documents that
are reasonably necessary for the filing, processing and
issuance of intellectual property protection therefor in their
joint names and will assign and maintain itself in a position
to be able to assign as contemplated in this agreement its
intellectual property rights free of charge as may be
necessary or desirable in order to permit intellectual
property protection to be issued jointly.
4.5.8 EVI agrees to advise NRC of all licences or sub-licences
granted of LI Enhancements and to provide NRC a copy of same
within a reasonable period of time after the grant of any such
licence or sublicence.
4.6 Right of First Refusal
The NRC agrees, subject to pre-existing obligations to third parties,
to first offer to the Licensee any opportunities which may arise through the NRC
relating to any battery related technology, Energy Materials Field or other
energy-related technologies developed at the Institute for Chemical Process and
Environmental Technology.
4.7 One-Time Technical Assistance Grant
NRC agrees that at any time during the first three years of the Term it
will provide on a one-time basis at the Licensee's request free of charge up to
$25,000 (calculated at standard NRC rates) of technical assistance in connection
with the NRC Base LI Technology.
4.8 Technical Assistance Costs
Where the services of the NRC are utilized to provide technical
assistance in relation to the granting of rights to any third party, such
services will be provided at NRC's rates to EVI plus disbursements. Where such
costs are borne by the Licensee ("Technical Assistance Costs"), the Licensee
will be entitled to deduct these costs from any Licensing Revenues.
4.9 Technical Office Facilities
NRC agrees that during the Technical Collaboration Period it will
provide EVI at no charge with office facilities to be located initially at Room
209, Building M-2, Montreal Road, Ottawa, for use by EVI's Technical
Representatives from time to time. NRC additionally agrees to provide to EVI,
commencing January 1, 1999, at a gross annual rental of $9.00 per square foot,
paid monthly in advance, with no further obligation for taxes, utilities or
other occupancy costs, a facility of approximately 4000 square feet in Building
M16 for the purpose of establishing an EVI battery research laboratory. Both of
such facilities shall be subject to EVI's signing NRC's licence of occupation,
the form of which is attached hereto as Schedule 4.
5.0 TERMINATION
5.1 Termination without cause
EVI may give six months notice in writing at any time that it wishes to
terminate the Technical Collaboration Period and its obligations under
Sub-Section 4.2 herein, such termination to be effective at the end of the
Agreement Year next following the expiry of the notice period. In such event,
the Technical Collaboration Period and each party's respective obligations under
Sub-Section 4.2 will end on the last day of such Agreement Year, without
prejudice to rights accrued thereunder.
If NRC becomes unable to continue the technical collaboration because
of circumstances beyond its reasonable control, including government decisions
or actions, NRC may give six months notice in writing at any time that it wishes
to terminate the Technical Collaboration Period and its obligations under
Sub-Section 4.2 herein, such termination to be effective at the end of the
Agreement Year next following the expiry of the notice period. NRC may also give
six months notice in writing at any time that it wishes to terminate the
Technical Collaboration Period and its obligations under Sub-Section 4.2 herein
for any other reason, and termination in such event shall be effective at the
end of the Agreement Year next following the expiry of the notice period but no
earlier than July 31st 2008. In both of such events, the Technical Collaboration
Period and each party's respective obligations under Sub-Section 4.2 will end on
the last day of such Agreement Year, without prejudice to rights accrued
thereunder.
5.2 Termination with cause
5.2.1 In the event that one party defaults or breaches any of the
provisions of this agreement, the other party shall have the
right to terminate this agreement by giving written notice to
the defaulting party, but this act shall not prejudice the
right of a party to recover any sum due at the time of such
termination and shall not prejudice any cause of action or
claim of the terminating party accrued or to accrue on account
of any breach or default by the other party. However, if the
defaulting party cures the breach within sixty (60) days after
the notice is given, this agreement shall continue in full
force and effect.
5.2.2 This agreement, at the option of NRC, may be terminated
forthwith by NRC if:
a) EVI becomes bankrupt, or insolvent, or has a receiver
appointed to continue its operations, or passes a
resolution for winding up, or takes the benefit of any
statute relating to bankrupt or insolvent debtors or the
orderly payment of debts; or
b) EVI assigns any of its right under this agreement in any
manner and for any purpose, except as may be expressly
provided in this agreement, without the prior written
consent of NRC; or
c) the royalties, or any other amounts due under this
agreement are not paid as required and remain unpaid 60
days after notice of default has been given by NRC.
6.0 OTHER EFFECTS OF TERMINATION
6.1 Termination without cause
6.1.1 Upon the issuance of a Termination Notice pursuant to Sub-Section 5.1, the
NRC Entitlement under Sub-Section 4.3.2 will decline as follows:
(a) if the Termination Notice was issued by EVI:
6.1.1.1 for the 18 months following the
effective date of termination - 100% of NRC Entitlement
6.1.1.2 for the next 18 months - 80% of NRC Entitlement
6.1.1.3 for the next 18 months - 60% of NRC Entitlement
6.1.1.4 for the next 18 months - 40% of NRC Entitlement
6.1.1.5 for the next 18 months - 20% of NRC Entitlement
6.1.1.6 thereafter - 0% of NRC Entitlement
(b) if the Termination Notice was issued by NRC:
6.1.1.7 for the 18 months following the
effective date of termination - 50% of NRC Entitlement
6.1.1.8 for the next 18 months - 40% of NRC Entitlement
6.1.1.9 for the next 18 months - 30% of NRC Entitlement
6.1.1.10 for the next 18 months - 20% of NRC Entitlement
6.1.1.11 for the next 18 months - 10% of NRC Entitlement
6.1.1.12 thereafter - 0% of NRC Entitlement,
6.1.2 Upon the issuance of a Termination Notice pursuant to Sub-Section 5.1, if
the effective date of termination is earlier than July 31st 2008, NRC in
addition to the deceline in the NRC Entitlement as described in Sub-Section
6.1.1, will also transfer back to Energy Ventures Inc. (Delaware) 20,000 Shares
per year for every year remaining until July 31st 2008.
6.1.3 After the effective date of termination of the Technical Collaboration
Period:
6.1.3.1 NRC will be entitled to licence any third party without
restriction worldwide to use the NRC Base LI Technology except
that no party may be granted the right to sublicence and the
NRC agrees not to grant a licence for any country respecting
which the Licensee has funded in whole or in part the
registration of patents relating to the NRC Base LI
Technology.
6.1.3.2 At such time that the NRC's entitlement has declined to nil
pursuant to Sub- Section 6.1 herein, the NRC will be entitled
to licence without the right to sublicence third parties to
use the LI Enhancements except in countries where existing
sublicences issued by the Licensee are in effect.
6.1.4 Subject to the terms of Sub-Section 6.2 herein, the Licensee's rights
under the NRC LI Technology Licence will continue in accordance with the terms
set out herein notwithstanding the termination of the Technical Collaboration
Period.
6.2 Termination with cause
6.2.1 After termination of this agreement by NRC pursuant to
Sub-Section 5.2, EVI shall not be entitled to use or commercially exploit any
NRC Base LI Technology anywhere (subject to Sub-Section 6.2.3 below). If such
termination occurs during the Technical Collaboration Period, said Technical
Collaboration Period and each party's respective obligations under Sub-Section
4.2 will also end upon termination.
6.2.2 Upon termination of this agreement by NRC pursuant to Sub-Section
5.2, licensees or sub-licensees of EVI of the NRC Base LI Technology shall also
be informed by written notice of the termination of this agreement. Such
licences or sub-licences shall not automatically terminate, provided that such
licensees or sub-licensees notify NRC, within sixty (60) days of receipt of the
above notice, of their desire to have their licence converted into a direct
licence from NRC on terms and conditions not more onerous than those of the said
licence or sub-licence. For any period before termination or conversion of said
licences or sublicences, EVI shall continue to pay NRC the full NRC Entitlement
for Licensing Revenues from said licences or sub-licences.
6.2.3 Upon termination of this agreement by NRC pursuant to Sub-Section
5.2, EVI shall deliver a detailed statement to NRC of the inventory of all
products which use the NRC Base LI Technology then existing and not Sold by EVI
as at that date. EVI shall retain the right to Sell such products and shall pay
the NRC Entitlement on such Sales for a period of one year. At the end of that
year, any remaining inventory of such products shall be destroyed.
6.2.4 Upon termination of this agreement by either party pursuant to
Sub-Section 5.2, any provisions of this agreement that were intended to survive
termination shall survive such termination, particularly provisions on
warranties, confidentiality, indemnification and arbitration.
7.0 REPRESENTATIONS AND WARRANTIES
7.1 NRC represents and warrants that:
7.1.1 It has the capacity, right and authority to enter into this
agreement;
7.1.2 The NRC LI Patents described in Schedule 1 have been either
issued by or filed as the case may be with the appropriate
authorities within the jurisdictions indicated in Schedule 1
hereto.
7.1.3 To the best of its knowledge and belief, the NRC Base LI
Technology does not infringe any patents, trade marks, trade
names, copyright or other industrial, intellectual or
proprietary rights owned by any third parties; and
7.1.4 The entering into of this agreement will not result in a
contravention of its constating documents or a breach of, or
default under, any law, regulation, agreement, commitment or
undertaking by which it or any of its affiliates is bound.
7.2 EVI represents and warrants that:
7.2.1 It has been duly incorporated and is currently in good
standing under the law of its jurisdiction of incorporation
and has the capacity, right and authority to enter into this
agreement; and
7.2.2 The entering into of this agreement will not result in a
contravention of its constating documents or a breach of, or
default under, any law, regulation, agreement, commitment or
undertaking by which it or any of its affiliates is bound.
7.3 Limited Warranties
7.3.1 Each of EVI and the NRC warrants that it will perform the
obligations required herein in a professional manner
conforming to generally-accepted practices for scientific
research and development, provided that because of the nature
of such endeavours, no specific result is promised.
7.3.2 Neither EVI nor the NRC will provide to the other, without so
stating, any technical information the use of which is known
by them to infringe the rights of others, provided that
neither EVI nor the NRC warrants that technical information
conveyed to the other does not infringe the rights of others
under a present or future patent.
7.3.3 Neither EVI nor the NRC warrants the validity of patents under
which rights may be granted pursuant to this agreement, or
makes any representation as to the scope of patents or that
inventions may be exploited without infringing the rights of
others.
7.3.4 Neither EVI nor the NRC warrants the correctness or accuracy
of data supplied, advice given or opinions expressed.
8.0 CONFIDENTIALITY
8.1 Non-Disclosure of Proprietary Information
Neither EVI nor NRC ( each a "Receiving Party") shall directly or
indirectly, disclose or use, at any time, either during the currency of this
agreement or subsequent to its termination, any secret or any confidential
information concerning the other party's processes, methods, formulae, apparatus
specifications, materials and sources of supply thereof, customers, their
identities and requirements, discoveries, inventions, patents (including
applications and rights in either), contracts, finances, personnel, their duties
and capabilities, research plans, policies and intentions, including matters not
technically trade secrets ("Proprietary Information"), the dissemination of
knowledge whereof might prove prejudicial to the other party, other than to
their employees, associates, consultants, independent contractors, customers,
licensees, sub-licensees, joint venturers and partners who have a need to know
the information disclosed in the course of their duties who shall be advised of
these confidentiality requirements and agree to be bound thereby. The disclosing
party is responsible for any improper use or disclosure by such persons.
8.2 Exclusions from Proprietary Information
Proprietary Information does not include:
8.2.1 Information which can be established as having been known by
the Receiving Party prior to the disclosure of such
information by the other party;
8.2.2 Information which can be demonstrated to have been in the
public domain at the time of disclosure, or which has
subsequently been made a part of the public domain by the
disclosing party or others, without the fault of the Receiving
Party;
8.2.3 Information disclosed by one party and specified in writing as
not constituting Proprietary Information; or
8.2.4 Information subsequently disclosed to the Receiving Party by a
third party having no obligation of secrecy to the disclosing
party.
8.3 Receiving Party's Responsibilities
The Receiving Party will receive and maintain the Proprietary
Information at all times as confidential and will safeguard the Proprietary
Information in the same manner as that in which it protects its own confidential
information.
8.4 Return of Proprietary Information
All samples, drawings, specifications, written materials, notes and
other data forming part of the Proprietary Information made by the Receiving
Party will be and remain the property of the other party, and will be returned
to the other party forthwith upon demand. At the request of either party, the
other party will deliver a statutory declaration signed by a senior officer to
the effect that all of this property has been returned.
8.5 Legal Requirement to Disclose
This agreement will not operate to prevent disclosure by the Receiving
Party as required by law, provided that, forthwith upon becoming aware of a risk
of being required to make disclosure by law, the Receiving Party will advise the
disclosing party of the alleged requirement.
9.0 INDEMNIFICATION
9.1.1 EVI shall indemnify and save harmless Her Majesty and the NRC,
their employees and agents, from and against, and be
responsible for, all claims, demands, losses, costs including
solicitor and client costs, damages, actions, suits or
proceedings, all in any manner based upon, arising out of,
related to, occasioned by or attributable to any acts or
conduct of EVI, its employees, agents, whether by reason of
negligence or otherwise arising directly from the
manufacturing, distribution, shipment, offering for sale or
sale of the Licenced LI Technology or any Other Technology.
9.1.2 NRC shall have the right to defend any such action or
proceeding with counsel of its own selection.
9.1.3 Notwithstanding Sub-Section 9.1.1, EVI shall not be liable for
negligence or wrongful acts of the NRC and its employees or
agents and the NRC shall indemnify and save harmless EVI for
such negligence or wrongful acts of the NRC and its employees
or agents.
10.0 ARBITRATION
10.1 In the event that any disagreement arises between the parties hereto with
reference to this Agreement or any matter arising hereunder and upon which
the parties cannot agree, then every such disagreement shall be referred
to arbitration pursuant to the provisions of the Commercial Arbitrations
Act (Canada) ("Arbitrations Act") and in accordance with the provisions of
this section.
10.2 For the purposes of the foregoing Sub-Section 10.1, the following
provisions shall govern any arbitration hereunder:
10.2.1 Either party may by written notice to the other party request
that the disagreement be referred to arbitration with the reference being to a
single arbitrator mutually agreed to by all of the parties provided that, if the
parties are unable to agree on an arbitrator within fifteen days of deemed
receipt of the written notice, the arbitration shall be to three arbitrators,
one of whom shall be appointed by EVI and one shall be appointed by the NRC
within twenty days of deemed receipt of the written notice (and each party shall
provide notice to the other party of the arbitrator so appointed within twenty
days of the deemed receipt of the written notice requesting the arbitration) and
the third arbitrator shall be appointed by the arbitrators appointed by the
parties and such third arbitrator shall be the chairman provided further that if
either NRC or EVI fails to give notice of the appointment of an arbitrator as
herein provided the reference shall be to any arbitrator appointed in accordance
with this clause and such arbitrator shall be considered to have been mutually
agreed to by each of the parties;
10.2.2 The award may be made by the majority of the arbitrators where
the reference is to three or more arbitrators;
10.2.3 If the arbitrators have allowed their time or extended
time for making an award, as provided in the Arbitrations Act, to expire without
making an award or if the chairman shall have delivered to the parties to the
arbitration a notice in writing stating that the arbitrators cannot agree or if
there is not a majority of the arbitrators in agreement, any party to the
arbitration may apply to the courts or to a Judge thereof to appoint an umpire
who shall have the like power to act in the reference and to make an award as if
they had been duly appointed by all the parties to the submission and by the
consent of all the parties who originally appointed the arbitrators thereto; and
10.2.4 If an umpire is appointed pursuant to the foregoing Sub-Section
10.2.3, such umpire shall make his or her award within one month after the
original or extended time appointed for making the award of the arbitrators has
expired or on or before any later date to which the parties to the reference
agreed in writing, or if the parties have not agreed, then within such time as
the court or judge appointing such umpire may deem proper.
10.3 There shall be no appeal from the award of the arbitrators or umpire in
accordance with the provisions of the Arbitrations Act.
11.0 OTHER TERMS
11.1 Announcements
Neither EVI nor NRC will make any public announcement or statement
regarding the arrangements contemplated herein without the prior consent of the
other, and both parties will consult with each other upon any jointly issued
news release with respect to such arrangements, unless either party is compelled
to make such statements by judicial or administrative process or, in the opinion
of its respective legal counsel, by the requirements of law or the applicable
regulations of any stock exchange or governmental authority.
11.2 Assignment
EVI may assign any or all of its rights and obligations hereunder to an
EVI Group Company and, upon such assignment and notification of the same to NRC,
EVI will be relieved of all obligations under this agreement.
11.3 Notice
Any notice or communication to be given or made under this agreement
must be in writing and will be deemed to be properly given or made on the
earliest of the following:
(a) actual delivery;
(b) seventy-two hours after being sent by commercial courier
service; and
(c) the business day following which any telegram or telecopier
message is sent.
if sent to the addresses and to the attention of the persons set out
below:
If to EVI or the Licensee:
Energy Ventures Inc.
43 Fairmeadow Avenue,
Toronto, Ontario
M2P 1W8
Attention: D. Wayne Hartford, President
Telecopier number: (416) 733-8407
and to:
Cassels Brock & Blackwell,
Suite 2100, Scotia Plaza,
40 King Street West,
Toronto, Ontario,
M5H 3C2
Attention: Bruce Clark
Telecopy: (416) 360-8877
If to NRC:
Institute for Chemical Process & Environmental Technology
Building M-12
Montreal Road
Ottawa, Ontario
K1A 0R6
Attention: Head of Business Development
Telecopier number: (613) 957-8231
Addresses may be changed by notice given in accordance with this
provision.
11.4 Interpretation of Agreement
The inclusion of headings in this agreement is for convenience of
reference only and shall not affect the construction or interpretation hereof.
Unless the context otherwise requires, the masculine shall include the feminine
and the neuter and vice-versa and the singular shall include the plural and
vice-versa.
11.5 Invalidity of Provisions
Each of the provisions of this agreement is distinct and severable and
a declaration of invalidity or unenforceability of any provision by a court of
competent jurisdiction is not to affect the validity or enforceability of any
other provision.
11.6 Entire Agreement
This agreement constitutes the entire agreement between the parties
pertaining to the subject matter of this agreement. There are no warranties,
representations or agreements forth or referred to in this agreement. No
reliance is placed on any representation, opinion, advice or assertion of fact
made by any party or its directors, officers and agents to any other party or
its directors, officers and agents, except to the extent that the same has been
reduced in writing and included as a term of this agreement.
11.7 Waiver or Amendment
Except as expressly provided in this agreement, no amendment or waiver
of this agreement will be binding unless executed in writing by the party to be
bound thereby. No waiver of any provision of this agreement will constitute a
waiver of any other provision nor will any waiver of any provision of this
agreement constitute a continuing waiver unless otherwise expressly provided.
11.8 Governing Law
This agreement is to be governed by and construed in accordance with
the laws of the Province of Ontario, Canada.
11.9 Counterparts
This agreement may be signed in counterparts. Each counterpart will
constitute an original document and all counterparts, taken together, will
constitute one and the same instrument. IN WITNESS WHEREOF THE PARTIES HAVE
EXECUTED THIS AGREEMENT BY THEIR OFFICERS DULY AUTHORIZED TO DO SO AT THE
RESPECTIVE PLACES INDICATED WITH EFFECT AS OF THE 1ST DAY OF MARCH, 1997.
NATIONAL RESEARCH COUNCIL OF CANADA
Per: ____________________________
ENERGY VENTURES INC.
Per: ____________________________
D. Wayne Hartford
President
Per: ____________________________
Peter F. Searle
Vice President
<PAGE>
SCHEDULE I
NRC PATENTS AND PATENT APPLICATIONS
1. Materials for Use as Cathodes in Lithium Ion Cells. Isobel J. Davidson,
Roderick S. McMillan and John J. Murray. Assigned to NRC. Filed July 9,
1993; Issued 6 December, 1994. US Patent #5,370,949. Canadian patent
application #2,163,265.
2. Method of Forming a Stable Form of LiMnO2 as Cathode in Lithium Cell.
Isobel J. Davidson, Roderick S. McMillan and John J. Murray. Filed
April 26, 1995; Issued April 9,1996. US Patent #5,506,078. Canadian
patent application #2,163,182.
3. Electrolyte for a Secondary Cell. Zhi X. Shu, Roderick S. McMillan and
John J. Murray. Assigned to NRC. Filed April 15, 1994; Issued June 25,
1996. US Patent #5,529,859.
4. Electrolyte for a Secondary Cell. Zhi X. Shu, Roderick S. McMillan and
John J. Murray. Assigned to NRC. Filed October 6, 1995; Issued November
5, 1996. US Patent #5,571,635.
5. Method of Forming a Stable Form of LiMnO2 as Cathode in Lithium Cell.
Isobel J. Davidson, Roderick S. McMillan and John J. Murray. Filed
April 26, 1995; U.S. patent application #08/429,001. One limited usage
claim allowed and will issue in about 3 months. CIP action in progress
for broader usage claims.
Note that in number 2 above the patent is for a method and is 10
claims.
<PAGE>
SCHEDULE 2
NRC's EXISTING AND PROPOSED ELIGIBLE
LICENSEES AND USERS OF THE NRC BASE TECHNOLOGY
The Electrofuel Manufacturing Company Limited,
21 Hanna Avenue,
Toronto, Ontario
M6K 1W9
Telephone: 416-535-1114
Fax: 416-535-2361
Attention: Dr. Sankar Das Gupta
Westaim Technologies,
10101, 114th Street,
Fort Saskatchewan, Alberta
T8L 3W4
Telephone: 403-992-5043
Fax: 403-992-5187
Attention: Dr. Jack Wolstenholme
EXHIBIT 6.2
AGREEMENT FOR RESEARCH,
DEVELOPMENT AND LICENSING OF TECHNOLOGIES
BETWEEN
ENERGY VENTURES INC. (CANADA)
AND
PACIFIC LITHIUM LIMITED
PLL
October 13, 1999
AGREEMENT FOR RESEARCH, DEVELOPMENT
AND COMMERCIALISATION OF TECHNOLOGIES
<PAGE>
PARTIES
1. ENERGY VENTURES INC. (CANADA) a duly incorporated company having
its registered office in Canada (with its affiliates, called
"EVI") and
2. PACIFIC LITHIUM LIMITED a duly incorporated company having its
registered office in New Zealand (with its affiliates, called
"PLL")
Background
A. EVI is the sole and exclusive world-wide licensee and/or owner of
the proprietary rights in certain valuable Products and Processes
comprising lithium manganese oxide compounds for use as cathodes
in battery applications developed and/or owned by National
Research Council of Canada ("NRC") which proprietary rights
include patents, copyright and confidential information.
B. EVI wishes NRC and PLL to carry out additional research and
development on the Products and Processes to develop them into
commercially feasible processes and products.
C. In the event that NRC and PLL are able to work together to
develop their respective Products and Processes to produce
commercially feasible Products and Processes, PLL will elect to
exercise the License Rights to be granted by EVI under this
Agreement.
D. EVI grants PLL the rights to the Licensed Products set out in
this Agreement on the terms and conditions in this Agreement.
THE PARTIES AGREE
1. The terms set out in Parts 1, 2 and 4 of this Agreement shall
apply as from the Commencement Date.
2. The terms set out in Parts 1, 2, 3 and 4 of this Agreement shall
apply in the event that the preconditions set out in Part 3 are
satisfied.
THIS AGREEMENT WAS EXECUTED as of the 13th day of October 1999
SIGNED by PACIFIC LITHIUM
LIMITED in accordance with
its Constitution:
_________________________________ _________________________________
Signature of authorised person Signature of authorised person
_________________________________ _________________________________
Office held Office held
_________________________________ _________________________________
Name of authorised person (print) Name of authorised person (print)
SIGNED by ENERGY VENTURES INC. (CANADA)
in accordance with its Constating Documents:
_________________________________ _________________________________
Signature of authorised person Signature of authorised person
President and Chief Executive Officer Vice President of Finance and
Treasurer
D. Wayne Hartford Peter F. Searle
Name of authorised person (print) Name of authorised person (print)
<PAGE>
PART 1
Interpretation
Presumptions of interpretation
1.0 Unless the context otherwise requires, a word which denotes:
1.1 The singular denotes the plural and vice versa;
1.2 Any gender denotes the other genders; and
1.3 A person includes an individual, a body corporate and a
government.
2.0 Unless the context otherwise requires, a reference to:
2.1 Any legislation includes any regulation or instrument made
under it and where amended, re-enacted or replaced means that
amended, re-enacted or replacement legislation;
2.2 Any other agreement or instrument where amended or replaced
means that agreement or instrument as amended or replaced;
2.3 A Clause, Schedule or annexure is a reference to a clause of,
annexure to, schedule to or exhibit to this Agreement;
2.4 A group of persons includes any one or more of them;
2.5 A party or parties is a reference to a party to or the parties
to this Agreement; and to their affiliates ("affiliate" having
the same meaning given to it in section 1(4) of the Ontario
Business Corporations Act); and
2.6 A thing or amount is a reference to the whole and each part of
it.
Joint and several
3.0 An Agreement warranty representation or obligation which binds or
benefits 2 or more persons under this Agreement binds or benefits those
persons jointly and separately.
Successors and assigns
4.0 A person includes the trustee, executor, administrator, successor in
title and assign of that person. This Clause must not be construed as
permitting a party to assign any right under this Agreement.
Business day
5.0 A business day is a day during which banks are open for general banking
business in Ontario.
6.0 Unless the context otherwise requires, a term of this Agreement which
has the effect of requiring anything to be done on or by a date which
is not a business day must be interpreted as if it required it to be
done on or by the next business day.
Definitions
7.0 Where commencing with a capital letter:
"Commencement Date" means 9 August 1999
"Confidential Information" means, in respect to each disclosing party,
all information provided by that party including its Intellectual
Property, and all other information relating to its processes,
business and products where knowledge of such information is not in
the public domain and might reasonably be regarded by the receiving
party to be confidential.
"Confirmation Date" means the date on which PLL gives notice of its
intention to take up its License Rights under Clause 20 but in any
event shall be not later than 31 March 2000.
"Contract Years" refers to the 12 month periods commencing on 1 April
2000.
"Intellectual Property" means, in respect to each party, all
intellectual property of such party and of any related entity
including the patents, patents pending, copyright, secret information
and processes, all trade marks, trade names, know-how and all other
information which is commercially sensitive or commercially valuable
to that party;
"License Rights" means the rights for PLL to take a license of the
Licensed Products in accordance with the terms of Part 3 of this
Agreement.
"License Term" means the period starting on 1 April 2000 and
continuing until the last expiry date of the Patents.
"Licensed Products" means all Intellectual Property and Confidential
Information with respect to the Products and Processes owned by EVI or
licensed or assigned to it and/or owned by NRC, either wholly or
jointly with PLL or any other persons.
"Minimum Guaranteed Royalty Fees" means the Minimum Guaranteed Royalty
Fees payable by PLL set out in column 4 of SCHEDULE D.
"Patents" means the patents for the Products set out in Schedule A and
such other patents owned by EVI or NRC which are added by mutual
agreement with PLL to Schedule A during the License Term.
"Processes" means the processes relating to the synthesis of Products
and "PLL's Processes" shall mean the processes developed by PLL prior
to, during and after the Research and Development Program which enable
or will enable it to synthesise the Products on a commercial basis.
"Products" means lithium manganese oxide-based products for use as
cathodes in battery applications which have been made using the
Processes developed by or licensed or assigned to EVI or by PLL and
EVI during the conduct of the Research and Development Program or R&D
program, and such other products as the parties may from time to time
include but which shall exclude Products developed by PLL prior to or
outside of the Research and Development Program or R&D program.
"R&D" means the research and development program referred to in Clause
13.2.
"Research and Development Contributions" means fees payable by PLL to
EVI on account of NRC's costs in carrying out the Research and
Development Program pursuant to Clause 13.1.
"Research and Development Program" means the research program set
forth in SCHEDULE B.
"Royalty Fees" means the fees or share of revenue payable by PLL to
EVI on the Licensed Products set out in SCHEDULE C.
"$" and "dollars" mean US dollars.
"Territory" means the World
Extension of definitions
8.0 Where a word or phrase is given a defined meaning, another part of
speech or other grammatical form in respect of that word or phrase has
a corresponding meaning.
<PAGE>
PART 2
Research and Development of Processes and Products
Conduct of Research and Development Program
9.0 PLL shall use its best efforts to conduct the Research and Development
Program with NRC and EVI in accordance with the timetable, protocols,
objectives and procedures set out in Schedule B.
10.0 The Research and Development Program shall be carried out by the
personnel set out in Schedule B or by such other persons who shall be
acceptable to PLL, NRC and EVI.
11.0 The Research and Development Program shall be carried out at PLL and
NRC's respective research centres and PLL shall give the researchers
access to all necessary facilities to enable the Research and
Development Program to be conducted efficiently. EVI shall ensure that
NRC cooperates with PLL in relation to the Research and Development
Program.
12.0 PLL shall appoint one person to an Oversight Committee and EVI shall
ensure NRC also appoints one person. The Oversight Committee shall
supervise the conduct of the Research and Development Program and
shall be responsible for resolving all issues relating to the day to
day conduct of the Research and Development Program.
Costs of the Research and Development Program and of R&D 13.0 PLL shall pay EVI:
13.1 The Research and Development Contributions in respect to the
Research and Development Program at the rate of $22,225 per
calendar month commencing on Commencement Date and monthly
thereafter, terminating on the expiry of three month's notice
given by PLL of its intention to cease participation in the
Research and Development Program, such notice not to be given
before 1 January 2000, such that the total Research and
Development Contributions required to be paid by PLL in
respect to the Research and Development Program shall be not
less than $200,000; and
13.2 In respect of R&D required by PLL to be carried out by NRC,
following the completion of the Research and Development
Program, for further research and development of the Licensed
Products or Products, such fee amount, not to be less than
$100,000 per Contract Year, as is stipulated by PLL, and such
further amounts per Contract Year as PLL and EVI shall agree
PROVIDED THAT if PLL wishes to stipulate an amount below
$100,000 in any Contract Year, it shall only be entitled to
license any new Products developed by EVI or NRC in and after
that Contract Year on the commercial terms that EVI shall
determine and PROVIDED FURTHER that all R&D must be documented
in a manner similar to that of Schedule B and agreed to by
both EVI and NRC.
Grant of rights to Licensed Products
14.0 EVI grants to PLL and PLL accepts the following:
14.1 The sole and exclusive rights to exploit those Licensed
Products exclusively licensed or assigned to EVI by NRC as at
the Commencement Date.
14.2 The non-exclusive rights to exploit those Licensed Products
which are licensed to EVI or jointly owned by EVI with any
other party following license or assignment to EVI by NRC as
at the Commencement Date
for a term commencing on the Commencement Date and terminating on the
later of 31 March 2000 or the date of effective termination of this
Agreement. During this term, EVI shall not itself use for commercial
purposes (except for research and development) nor shall it license
any of the rights granted to PLL under this Agreement to any other
person and shall ensure that NRC shall do the same.
Ownership of jointly developed Products
15.0 Any new Products conceived or first reduced to practice in the course
of or as a result of the Research and Development Program or the R&D
program shall, subject to Clause 13.2, be assigned into the joint
ownership of PLL and EVI and shall either be licensed exclusively to
PLL pursuant to this Agreement if PLL exercises its License Rights or
may be used by PLL and EVI independently of each other if PLL does not
exercise its License Rights PROVIDED THAT where the Products have been
developed using the intellectual property rights of any third person,
the parties shall be subject to the rights of such third person as to
the ownership and rights to the new Products.
For further clarification, prior to 1 April 2000, PLL agrees not to
sell Licensed Products or Products in commercial quantities to any
person, without the written permission of EVI.
Protection of the Intellectual Property in the jointly developed Products
16.0 PLL shall either at its discretion or at the request of EVI, file and
keep current in the joint names of EVI and PLL such patent
applications as are reasonably required to protect the interests of
EVI and PLL in the Intellectual Property for the jointly developed
Products in the countries that the parties consider appropriate. The
costs of applying for, prosecuting and maintaining such patent
applications shall be borne by PLL.
17.0 EVI shall at the request of PLL, provide PLL with all documents
required by PLL to effect the filing of the patent applications and
shall ensure NRC provides the same, including assignments of rights
signed by the inventors employed by NRC.
Ownership of Processes
18.0 EVI acknowledges:
18.1 as at the date of execution of this Agreement, PLL is the
owner of PLL's Processes and that neither EVI nor NRC have
developed their know-how to the point that they can synthesise
the Products on a commercially viable basis.
18.2 for itself and NRC, that all additions to PLL's Processes
conceived or first reduced to practice in the course of or as
a result of the Research and Development Program shall be
assigned into the sole and exclusive ownership of PLL.
<PAGE>
PART 3
Licensing of Processes and Products
Confirmation of uptake of License Rights
19.0 This Part 3 shall commence and be in full force and effect if PLL in
its absolute discretion determines that the jointly developed Processes
and Products are capable of producing processes and products which meet
PLL's target specifications (which include performance, price, ability
to be commercially manufactured, stability and other factors) and gives
notice to EVI that it takes up the License Rights hereunder.
Part 3 conditional
20.0 The application of this Part 3 is conditional upon PLL confirming its
wish to take up the License Rights on or before 31 March 2000 or such
later date agreed by EVI, failing which, this Part 3 shall have no
effect.
Grant of License Rights
21.0 EVI or, at the election of EVI any related company of EVI, in respect
of any part of the following rights, grants to PLL and PLL accepts the
following for the License Term:
21.1 The sole and exclusive rights to exploit the Licensed Products
owned by EVI or exclusively licensed or assigned to EVI by NRC
as at the Confirmation Date.
21.2 The non-exclusive rights to exploit the Licensed Products
owned by EVI or jointly owned by EVI with any other party or
non-exclusively licensed or assigned to EVI by NRC as at the
Confirmation Date.
21.3 The exclusive rights to exploit the Licensed Products and
Processes and Products either owned by EVI or licensed or
assigned to EVI by NRC or jointly owned by EVI with PLL
following licensing or an assignment to EVI by NRC which exist
at 1 April 2000 or which arise at any time during the License
Term, subject to the provisions of Clause 13.2.
Should EVI elect that the grant of the above rights be in part or in
total by a related company of EVI, the parties agree, in such event,
to execute such appropriate other agreement or agreements containing
the terms herein agreed.
Consideration for License Rights 22.0 PLL shall pay to EVI the following:
22.1 The Minimum Guaranteed Royalty Fee for the first Contract Year
of $100,000 which shall be paid within 90 days of the
Confirmation Date; and
22.2 Either:
(a) The Royalty Fees calculated on the license fees and
royalties or on the net sales of manufactured Licensed
Products and Products in each Contract Year, as set
out in Schedule C, subject to adjustment pursuant to
Clauses 25 and 26; or
(b) The Minimum Guaranteed Royalty Fees of each Period or
Contract Year as set out in Column 4 of Schedule D.
whichever shall be the greater
PROVIDED THAT
(c) respecting the first Contract Year only, the amount
so computed shall be reduced by the $100,000 to be
paid as per Clause 22.1;
(d) the amounts paid by PLL to EVI in respect of R&D as
per Clause 13.2 shall be credited to PLL as
non-refundable payments on account of the Minimum
Guaranteed Royalty Fees of the Contract Year of
receipt of payment;
(e) The Minimum Guaranteed Royalty Fees payable
respecting any Contract Year shall be adjusted to
reflect the actual selling price of Licensed Products
or Products and of battery cells utilising the
Licensed Products or Products.
23.0 The Royalty Fees, shall be calculated quarterly and payable no later
than 30 days following the end of each Contract Year quarter. The
payment respecting the final quarter of any Contract Year shall be
adjusted as required to attain at least the Minimum Guaranteed Royalty
Fees for that Contract Year.
24.0 Research and Development Contributions shall be treated by EVI as
non-refundable advance payments of the Minimum Guaranteed Royalty Fees
through 31 March 2000. Amounts paid by PLL to EVI in respect of R&D as
per Clause 13.2 shall be credited to PLL as non-refundable payments on
account of the Minimum Guaranteed Royalty Fees as set out in Column 4
of Schedule D of the applicable Contract Year or on account of Royalty
Fees of such year.
Adjustment to Royalty Fees 25.0 EVI acknowledges that:
25.1 PLL is the licensee of products and processes developed and
owned by third parties (including Massachusetts Institute of
Technology) and that there may be advantages in combining
those third parties' know-how with the Licensed Products or
Products;
25.2 It will join in negotiations with PLL and such third parties
and shall in good faith, use its best efforts to agree on the
amount of Royalty Fees or royalties to be paid by PLL to EVI
and the third parties provided that the total Royalty Fees or
royalties payable by PLL to all parties shall not exceed the
Royalty Fees that would have been payable to EVI if the third
parties know-how had not been used. Multiple Royalty Fees
shall not be due to EVI if the sale, use, lease or
manufacture of any Licensed Products or Products is covered
by more than one of the Patents. Nothing in this Clause shall
oblige EVI to accept a reduction in the Royalty Fees due to
it.
26.0 If PLL funds R&D as per Clause 13.2 in an amount below $100,000 for any
Contract Year within the first five years of the License Term, the
license set out in this Agreement shall cease to be "sole and
exclusive" for Contract Years subsequent to such year and the Minimum
Guaranteed Royalty Fees as set out in Column 4 of Schedule D shall
reduce by:
26.1 one third for the sixth to tenth Contract Years of the License
Term subsequent to such year;
26.2 two thirds for the eleventh to fifteenth Contract Years of the
License Term subsequent to such year;
and thereafter be at zero.
Payment of Patent costs
27.0 PLL shall manage the prosecution, grant and continuing registration of
all patents filed or required by the parties to be filed in respect to
the Licensed Products or Products and shall promptly pay all such
costs.
Target Sales
28.0 PLL shall use its best endeavours to:
28.1 Construct and commission a pilot plant capable of producing
commercial quality Products on or before the Confirmation
Date; and
28.2 Achieve the target sales of Products set out in SCHEDULE D.
Information and Audit
29.0 EVI shall be entitled to receive:
29.1 Quarterly reports from PLL detailing research and development,
manufacturing, marketing and sales activities in the preceding
Contact Year quarter, within 30 days of the end of such
quarter;
29.2 Such information that EVI may reasonably require to calculate
the amount of Royalty Fees computed as per Schedule C; and
29.3 Advice of all sublicenses granted by PLL respecting Licensed
Products or Products and, within a reasonable period of time
after the grant of any such sublicense, a certified copy of
such sublicense agreement.
30.0 EVI may from time to time, by its representative or by an independent
accountant or auditor, examine or audit the records of PLL relating to
any information which PLL has provided to EVI or which PLL is required
to have provided to EVI but has failed to do so.
31.0 EVI shall pay the cost of any inspection or audit carried out pursuant
to the immediately preceding Clause if the audit or inspection
establishes that information provided by PLL to EVI was complete and
correct.
32.0 PLL shall pay the cost of any inspection or audit carried out pursuant
to Clause 30 if the audit or inspection is required to obtain
information which PLL has failed to provide or if the audit or
inspection establishes that information provided by PLL to EVI was
incorrect or incomplete other than in a particular which is trivial or
minor.
Collaborative marketing
33.0 PLL acknowledges that EVI wishes PLL to sublicense the use of the
Licensed Products or Products by battery manufacturers for maximum
generation of Royalty Fees. PLL and EVI agree to collaborate on the
identification, presentation and marketing of sub-licenses of the
Licensed Products or Products to battery manufacturers and such other
potential sub-licensees as the parties consider appropriate from time
to time. PLL shall not refuse to grant a sub-license of the License
Rights to any person who meets the criteria reasonably set by PLL and
EVI for a suitable licensee except with the prior approval of EVI, such
approval not to be unreasonably withheld.
Termination of exclusivity of License Rights
34.0 The exclusivity of the License Rights may be reduced to non-exclusive
License Rights by:
34.1 EVI, in the event that PLL fails to meet a) the Minimum
Guaranteed Royalty Fees in any two consecutive Contract Years
and b) the accumulative Minimum Guaranteed Royalty Fees of the
same two consecutive Contract Years, or
34.2 PLL, in the event that it reasonably believes that it will be
unable to meet the Minimum Guaranteed Royalty Fees respecting
Contract Years ending 31 March 2003 or later,
and in such circumstances:
(a) the Minimum Guaranteed Royalty Fees shall reduce in
accordance with Clause 26 PROVIDED THAT if PLL has
paid EVI Royalty Fees of at least $1,000,000 as at
that date, the Minimum Guaranteed Royalty Fees shall
then not apply to PLL; and
(b) EVI may grant License Rights to any other person or
persons on such terms and conditions as it considers
appropriate.
(c) where EVI grants License Rights to another person on
terms and conditions more favourable than those
applying to PLL under this Agreement, EVI shall
extend the more favourable terms and conditions to
PLL.
<PAGE>
PART 4
General Terms and Conditions
Ownership of Intellectual Property
35.0 PLL acknowledges and agrees that EVI has license or other rights to
the Intellectual Property in respect to EVI's and NRC's Processes and
Products. In order to protect and maintain EVI's and NRC's rights in
the above, PLL shall:
35.1 Use EVI's and NRC's Intellectual Property solely in accordance
with this Agreement and in accordance with all instructions,
rules and procedures prescribed by EVI and NRC from time to
time;
35.2 Not orally or in writing attack or contest, including by or in
any administrative or judicial action or proceeding before any
governmental authority, the ownership of EVI's or NRC's
Intellectual Property nor will PLL orally or in writing
disparage the name, the Intellectual Property or the
reputation of EVI or NRC.
36.0 EVI acknowledges and agrees on behalf of itself and NRC, that PLL has
sole and exclusive rights to the Intellectual Property in respect to
PLL's Processes and PLL's Products. In order to protect and maintain
PLL's rights in the above, EVI shall (and shall ensure that NRC shall
also):
36.1 Use PLL's Intellectual Property solely in accordance with this
Agreement and in accordance with all instructions, rules and
procedures prescribed by PLL from time to time;
36.2 Not orally or in writing attack or contest, including by or in
any administrative or judicial action or proceeding before any
governmental authority, the ownership of PLL's Intellectual
Property nor orally or in writing disparage the name, the
Intellectual Property or the reputation of PLL.
37.0 EVI warrants and undertakes to PLL that EVI and/or its related
companies have full right, power and entitlement to grant to PLL the
License Rights over all of NRC's Licensed Products and Products and
NRC's Processes set out in this Agreement and NRC shall provide PLL
with such evidence as PLL shall reasonably require to establish such
claim.
Rights in the Intellectual Property Upon Termination of this Agreement 38.0 On
termination of this Agreement PLL and EVI will:
38.1 Immediately cease to use the Intellectual Property of the
other (including, in the case of PLL ceasing to use the
Intellectual Property of NRC), except for Intellectual
Property jointly owned by PLL and EVI;
38.2 Not thereafter do or display or suffer or permit to be done or
displayed any act matter or thing which may lead or induce or
shall be calculated or likely to lead or induce members of the
public to believe that the parties are still connected or
associated in any way with each other or are still entitled to
market or distribute the Products
and EVI shall ensure that NRC shall also comply with the obligations of
this Clause as if it were EVI.
39.0 If any party fails to comply with Clause 38.2 then the other party by
its employees and agents may enter the defaulting party's premises and
remove all of its Intellectual Property and material relating to its
Intellectual Property. All costs and expenses incurred in so doing
shall be recoverable as a debt owing by the defaulting party.
Confidentiality
40.0 No party will (and EVI shall ensure that NRC shall not) disclose to
any person any Confidential Information, unless that disclosure is
expressly authorised in writing by the owner of such Confidential
Information.
41.0 Other than may be necessary to reasonably carry out either party's day
to day commercial activities, neither party shall (and EVI shall
ensure that NRC shall not) disclose the terms of this Agreement nor
issue any promotional material or other public announcement or
disclosure in respect to the existence or nature of the relationship
between PLL, EVI and NRC without the prior approval of all of such
persons in writing.
Specific secrecy obligations
42.0 Each of the Parties shall (and EVI shall ensure that NRC shall):
42.1 Treat as confidential and keep absolutely secret, all the
Confidential Information received by it from the other party;
42.2 Take all proper and effective precautions to prevent the
disclosure of the Confidential Information and to preserve the
secrecy and confidentiality of the Confidential Information
including, without limitation, taking all necessary action to
prevent unauthorised persons from obtaining access to the
Confidential Information whether by a direct or indirect
exposure to it or otherwise;
42.3 Take all reasonable steps to ensure that its employees or
agents also observe the secrecy requirements of this
Agreement; and
42.4 Return to the owner all physical or written records containing
the Confidential Information or documentation relating to or
concerning the Confidential Information including copies of
documentation then in existence immediately upon the
termination or expiration of this Agreement.
Circumstances when disclosure of Confidential Information is permitted
43.0 A party is relieved of its obligations to preserve the confidentiality
of the Confidential Information if and only to the extent that:
43.1 Such Confidential Information is or becomes generally publicly
available other than as a result of a breach of this Agreement
by the party; or
43.2 Such Confidential Information was developed independently by
the party; or
43.3 Specific disclosure was required by law.
Best endeavours
44.0 Each of the parties shall do (and EVI shall ensure that NRC will do)
all things necessary to carry out the terms of this Agreement to the
fullest effect in accordance with best business practice. In
particular, each of the parties shall:
44.1 Diligently and fully exploit (or support the exploitation of)
the License Rights under this Agreement; and
44.2 Keep free from conflicting enterprises or any other activities
which would be detrimental to or interfere with the conduct of
this Agreement.
Prohibitions
45.0 None of the parties shall (and EVI shall ensure that NRC shall not):
45.1 Use the Intellectual Property of the other parties except in
the manner permitted in this Agreement;
45.2 Be a party to the doing of any act whereby the goodwill trade
or business of the other party may be prejudicially affected;
45.3 Hold itself out as an affiliate of the other;
45.4 Pledge the credit of the other party;
Indemnity and Warranties
46.0 Each of the parties unconditionally and irrevocably indemnifies the
other against any loss, liability, costs or expenses which the other
party may incur because it or NRC:
46.1 Fails to pay any moneys due and payable to the other party (or
within any applicable period of grace) or in the manner
required;
46.2 Fails to perform any of its obligations under this Agreement
or under any other contractual arrangement between it and the
other party;
46.3 Has infringed the intellectual property rights of any other
person.
And it will on demand pay to the other party the amount of that loss,
liability, cost or expense.
Right to prosecute infringements of the Intellectual Property
47.0 PLL shall have the right under its control and at its own expense to
prosecute any third party infringements of EVI or NRC's Intellectual
Property so long as it is the sole and exclusive licensee of EVI's and
NRC's Intellectual Property. EVI shall cooperate with PLL (and shall
ensure NRC's cooperation) on any action brought by PLL under this
Clause subject only to PLL paying EVI and NRC's reasonable costs.
48.0 Nothing in Clause 47 shall oblige PLL to take any action that it does
not consider to be in its best interests. However, in such
circumstances, EVI may at its discretion and cost, take such action and
any recovery obtained by EVI shall be the property of EVI. PLL shall
cooperate with EVI on any action brought by EVI under this Clause
subject only to EVI paying PLL's reasonable costs.
Termination
49.0 PLL shall have the right to terminate this Agreement at the end of any
Contract Year for any reason upon at least 12 month's written notice to EVI.
50.0 Either Party may elect to terminate this Agreement by giving notice in
writing to the other party of its intention to do so if the other
party:
50.1 Commits a breach of any of the provisions of this Agreement
and fails to rectify the breach (if capable of being
rectified) within 30 days of being required to do so in
writing other than, in the case of PLL, a failure to meet the
target sales as set out in Schedule D;
50.2 Commits an act of bankruptcy or fails to contest within ten
working days of service of any petition in liquidation;
50.3 Becomes the subject of any proceedings to obtain an order or
resolution for its winding up (except as part of a bona fide
reconstruction scheme);
50.4 Has a receiver/manager, official manager or provisional
liquidator appointed over the whole or part of its
undertakings or assets;
50.5 Has an execution or other process of any court or authority or
any distress levied upon any of its property without it being
paid out, set aside or withdrawn within 14 days of its issue;
50.6 Has a substantial part of its assets resumed, confiscated or
forfeited;
50.7 Agrees with the other party in writing to terminate this
Agreement at the end of any Contract Year; or
50.8 After remedying any default in respect to which notice
requiring it to remedy such default was given, continues to
engage in the same non-compliance whether or not corrected
after such notice.
Consequences of Termination or Expiration
51.0 In the event that this Agreement expires or is terminated:
51.1 All rights of PLL under this Agreement will terminate;
51.2 PLL will forthwith;
(a) Pay to EVI any outstanding Research and Development
Contributions, or fees in respect of R&D, or Royalty
Fees or Minimum Guaranteed Royalty Fees, or charges
due to NRC or EVI at the effective date of
termination or expiration within 30 days of the
effective date of termination or expiration;
(b) Cease to hold itself out as a licensee of the
Licensed Products or Products or that it is
associated with NRC or EVI in any way;
(c) Cease using NRC's or EVI's Intellectual Property and
the Licensed Products or Products except those
Licensed Products or Products jointly owned by PLL;
(d) Return to NRC and EVI all documents and other
material or matters relating to their respective
Intellectual Property and the Licensed Products or
Products except those Licensed Products or Products
jointly owned by PLL.
52.0 Termination or expiration of this Agreement shall be without prejudice
to any claim any party may have against the other or others under this
Agreement as at the date of effective termination or expiration.
General Acknowledgements
53.0 Each of the parties acknowledges that:
53.1 This Agreement contains all the terms conditions and
obligations of the parties.
53.2 It shall make, do perform and execute all documents acts
matters and things required to ensure that no term of this
Agreement shall be breached by it.
Notices
54.0 Any notice, demand or other document under or relating to this
Agreement will be sufficiently served if delivered personally or if
sent by E-mail, fax, or prepaid registered letter to the party to be
served at the address of such party at such address as may from time
to time be notified in writing by such party to the other parties.
55.0 Any notice, demand or other document will be deemed to have been
served at the time of delivery or, if service is effected in any other
manner described, at the time when it would in the ordinary course be
delivered.
Amendment
56.0 This Agreement may only be varied by the written agreement of the
parties.
Approvals and consent
57.0 Except when the contrary is stated in this Agreement, a party may give
or withhold an approval or consent to be given under this Agreement in
that party's absolute discretion and subject to those conditions
determined by the respective party.
58.0 A party is not obliged to give its reasons for giving or withholding a
consent or for giving a consent subject to conditions.
Counterparts
59.0 This Agreement may be executed in a number of counterparts and if so
executed, the counterparts taken together constitute one Agreement.
No Waiver
60.0 No failure by a party to exercise any power given to it or to insist
upon the strict compliance by the other or others with any obligations
or conditions and no customary practice of the parties or variances
with the terms of this Agreement shall constitute a waiver of that
party's right to demand exact compliance with the terms of this
Agreement other than in relation to breaches which have been waived
nor shall a waiver by it of any particular default affect or impair
its right in respect of any subsequent default of the same or
different nature, nor any delay or omission by that party to exercise
any right arising from default shall affect or impair its rights as to
the said default or any subsequent default.
Further assurance
61.0 Each party shall promptly execute all documents and do all things that
another party from time to time reasonably requests to effect, perfect
or complete this Agreement and all transactions incidental to it.
Legal costs
62.0 The Parties shall each pay all their own legal and other expenses
relating directly or indirectly to the negotiation, preparation and
execution of this Agreement and all documents incidental to it.
Severance
63.0 In the event of illegality, each of the terms of this Agreement is
severable from the other terms of this Agreement and the severance of
one term does not affect the other terms.
Dispute resolution
64.0 The parties agree that any dispute arising out of or relating to this
Agreement shall be resolved solely by:
64.1 Negotiation between the chief executive officers of the
parties in good faith discussions, such discussions to be held
within 5 working days of one party notifying the other of a
dispute and the nature of such dispute;
64.2 If the parties fail to resolve the dispute through mediation
within 120 working days, either party shall have the right to
pursue any other remedies available to it.
65.0 Should PLL confirm its wish to take up the License Rights as per this
Agreement, PLL shall, after the Confirmation Date and after receipt of
the sum of $1 to be paid by EVI to PLL, issue to EVI 100,000 fully paid
Class B ordinary shares in the capital of PLL in consideration for the
support provided to PLL by EVI. Such 100,000 fully paid Class B shares
of PLL are as presently constituted, adjusted as appropriate to give
effect to share subdivisions, consolidations, mergers and
amalgamations, stock dividends, distributions in property and other
corporate changes.
66.0 This Agreement shall be governed by the laws of the Province of
Ontario, Canada, except that any questions affecting the construction
or effect of any of the Patents shall be determined by the law of the
country in which the Patent shall have been granted.
<PAGE>
SCHEDULE A
PATENTS
NRC Patent Portfolio
1. Li2CrxMn2-xO4 Cathode Materials:
WO 9501935 Jan. 19, 1995 Novel Materials for Use as Cathodes in
Lithium Electrochemical Cells
CA 2,163,265 Dec. 6, 1994 Novel Materials for Use as Cathodes in
Lithium Electrochemical Cells
US 5,370,949 Dec. 6, 1994 Materials for Use as Cathodes in Lithium
Electrochemical Cells
AU 7,118,294 Feb. 6, 1995 Novel Materials for Use as Cathodes in
Lithium Electrochemical Cells
2. Orthorhombic LiMnO2
WO 9505684 Feb. 23, 1995 Use of a Stable Form of LiMnO2 as Cathode in
Lithium Cell
AU 7,454,894 Mar. 14, 1995 Use of a Stable Form of LiMnO2 as Cathode in
Lithium Cell
US 5,506,078 Apr. 9, 1996 Method of Forming a Stable Form of LiMnO2 as
Cathode in Lithium Cell
US 5,629,112 May 13, 1997 Stable Form of LiMnO2 as Cathode in Lithium
Cell (supplements US 5,506,078)
CA 2,163,182 May 18, 1997 Use of a Stable Form of LiMnO2 as Cathode in
Lithium Cell
US 5,747,194 May 5, 1998 Use of a Stable Form of LiMnO2 as Cathode in
Lithium Cell (supplements US 5,506,078 and
US 5,629,112)
3. Electrolyte containing chloroethylene carbonate
US 5,529,859 Jun. 25, 1996 Electrolyte for a secondary cell
US 5,571,635 Nov. 5, 1996 Electrolyte for a secondary cell
(continuation of US 5,529,859)
CA 2,186,273 Apr. 7, 1997 Electrolyte for a secondary cell
4. Electrolyte containing fluoroethylene carbonate
WO 9815024 Apr. 9, 1998 Electrolyte comprising fluoro-ethylene
carbonate and propylene carbonate, for
alkali metal-ion secondary battery
AU 4,374,097 Apr. 24, 1998 Electrolyte comprising fluoro-ethylene
carbonate and propylene carbonate, for
alkali metal-ion secondary battery
5. Patent application to be filed by 15 October 1999
Patent to be filed by 15 October 1999 which
includes cathode inventions made up to and
including 31 March 1999 and which is a joint
invention by NRC and Samsung Advanced
Institute of Technology.
6. Patent application to be filed in conjunction with PLL
Patent application to be filed in
conjunction with PLL to include any arising
IP from 1 April 1999 related to cathode
materials and/or process development
improvements.
SCHEDULE B
RESEARCH AND DEVELOPMENT PROGRAM
Development of Commercial LixCryMnzO2 Cathode Materials
Timescale:
9 months
Overall goal:
To prepare reproducible pilot plant batches (200 kg) of LixCryMnzO2 -based
cathode material meeting or exceeding the following market-driven requirements:
o 200 mAh/g capacity at 25 oC using a 0.2C rate
o 140 mAh/g capacity at -20 oC using a 0.2C rate
o capacity at 1C rate >90% of capacity at 0.2C rate
o maximum charging voltage of 4.3 V
o smooth discharge curve between ca. 4.2 and 2.8 V
o fade rate <10% at 55 oC over 100 cycles
o safety better than LiCoO2
o cost of production lower than LiCoO2
Core personnel resources:
NRC
o Rod McMillan (Project Manager for NRC)
o Isobel Davidson (Senior Research Officer) 75%
o Yves Grincourt (Research Assistant - Electrochemical) 75%
o Post-doctoral fellow 100%
o Technical Officer 1 100%
o Technical Officer 2 100%
PLL
o Paul Pickering (Project Manager for PLL)
o Brett Ammundsen (Materials Development) 75%
o Research Scientist (Materials Development) 75%
o Hans Desilvestro (Electrochemical) 60%
o Research Technician 1 (Synthetic) 100%
o Research Technician 2 (XRD - structural analysis) 75%
o Research Technician 3 (Electrochemical) 90%
o Research Technician 4 (Electrochemical) 90%
o David Hassell (Process Engineering) 75%
o Process Engineer 100%
o Process Technician 1 100%
o Process Technician 2 100%
This project will be jointly managed between NRC and PLL. NRC's representative
will be Dr Rod McMillan and PLL's representative will be Dr Paul Pickering. Dr
McMillan will be responsible for work performed at NRC, Dr Pickering will be
responsible for work performed at PLL
Laboratory and equipment resouces:
NRC
o Preparative labs
o Laboratory furnaces
o Benchtop spray dryer
o Electrochemical testing facility
o AC impedance spectrometer
o X-ray diffraction (XRD)
o Thermal analysis (TGA-DSC)
o Accelerated rate calorimeter (ARC)
o AA
o BET surface area
o Particle sizer
o Gas pycnometer
o Scanning electron microscope (SEM)
o X-ray photoelectron spectrometer (XPS)
PLL
o Preparative labs
o Laboratory furnaces
o Large-scale furnaces
o Electrochemical testing facility
o AC impedance spectrometer
o X-ray diffraction
o AA and ICP
o High-resolution SEM (University of Auckland)
Program
The program is divided into inter-related tasks. Each task has well-defined
objectives and to each task are assigned persons who will be overall responsible
for guiding and coordinating the task to ensure that the objectives are met
within the timescale, and that relevant information is communicated to those
responsible for related tasks. While responsibility for individual tasks has
been assigned variously to the NRC and PLL, it is nonetheless envisaged that
work will be cooperative with contributions from both parties to all tasks.
For approximately the first half of the program, a strong effort at both centres
will be directed toward materials development at the laboratory scale and
electrochemical test cell development. In the second half of the program,
resources at PLL will be more focussed on scale-up of process and production,
with the NRC both contributing to this and continuing materials development.
Task 1: Develop compositions
Coordinators Isobel Davidson (NRC) & Brett Ammundsen (PLL)
Key objectives:
o Prepare LixCryMnzO2-based compounds with controlled composition and
particle size/structure designed to exceed the minimum market-defined
criteria for rate-related capacity and stability of capacity.
o Determine the best composition for scale-up and commercialisation.
Work plan
1.1 Establish chemical composition range for material
o PLL to reproduce LixCr0.5Mn0.5O2 by coprecipitation, and to optimise
coprecipitation procedure (including temperature/time/gas requirements for
subsequent processing) to produce material showing equivalent or better
electrochemical properties compared with spray-dried samples.
o NRC to optimise spray-drying procedure (including
temperature/time/atmosphere requirements for subsequent processing).
o Parallel exploration of varying composition using spray drying (NRC)
and coprecipitation (PLL).
1.2 Establish influence of synthesis route and conditions
o Simplify synthetic procedure
o investigate formation and stability of compositions as a function of
temperature/time/atmosphere.
o analysis of each process step by XRD, AA and TGA
o Investigate alternative process routes using readily available dry
precursors.
1.3 Investigate alternative formulations
o Investigate partial and total substitution of Cr by Ni, Fe, Co, Ti, V or Al.
Task 2: Examine crystal structure and particle morphology
Coordinators Isobel Davidson (NRC) & Brett Ammundsen (PLL)
Key objectives:
o Obtain data relevant to Task 1 and feed back to Task 1 observations and
correlations in combination with electrochemical data from Task 3.
Work plan
2.1 Determine effect of composition on crystal structure
o XRD
2.2 Determine effect of synthesis route and reaction conditions on crystal
structure and particle morphology
o XRD, SEM, particle size analysis, BET, oxidation state analysis
2.3 Determine influence of alternative formulations on crystal structure and
phase stability
o XRD
Task 3: Electrochemical characterisation and testing of samples
Coordinators Hans Desilvestro (PLL) & Yves Grincourt (NRC)
Key objectives:
o Obtain data relevant to Task 1 and feed back to Task 1 observations and
correlations in combination with structural/morphological data from Task 2.
Work plan
3.1 Establish reproducibility of electrochemical data between NRC and PLL.
o Optimise electrode formulation and cell configuration.
o Exchange of electrodes, cells, and cell hardware between NRC and PLL
3.2 Optimisation of test cell assembly
o Investigate electrochemical conditions to increase rate-related capacity and
minimise capacity fade
o Optimise stack pressure
o Optimise for Li metal and Carbon anodes
3.3 Investigation of intercalation mechanisms and rate-limiting factors
o In-situ pulse experiments on different time scales during charge-discharge
o AC impedance specroscopy
o dQ/dV plots
o XRD, chemical analysis, and thermal stability of cycled materials at
various states of charge and as a function of first charge conditions
3.4 Extended cycling tests
o Determine influence of composition and synthesis conditions on temperature-
and rate-related capacity, and on cycling stability.
Task 4: Develop synthetic procedures toward production process
Coordinator Brett Ammundsen (PLL)
Key objectives:
o Reproduce compounds prepared in Task 1 (retaining electrochemical
performance characteristics) using commercially viable synthesis procedures
streamlined toward scale-up and production.
Task 5: Scale-up trials (100 g to 5 kg)
Coordinators David Hassell and Brett Ammundsen (PLL)
Key objectives:
o Prepare LixCryMnzO2 -based compounds developed in Task 1 (and Task 9) as
reproducible 100 g and 5 kg batches.
Task 6: Scale up to 100 T per annum pilot plant
Coordinator David Hassell (PLL)
Key objectives:
o Produce reproducible 200 kg batches of the selected material (retaining
electrochemical performance characteristics of the small batch samples) in
the pilot plant.
Task 7: Verify reproducibility of composition, structure & morphology for
scale-up samples
Coordinators Isobel Davidson (NRC) & Brett Ammundsen (PLL)
Key objectives:
o Obtain data for samples produced in Tasks 5 & 6 and feed back to Tasks
5 & 6 observations and correlations.
Task 8: Electrochemical testing of scale-up samples
Coordinator Hans Desilvestro (PLL)
Key objectives:
o Obtain data for samples produced in Tasks 5 & 6 and feed back to Tasks
5 & 6 observations and correlations.
Work plan
8.1 Extended cycling tests
o Determine reproducibility and influence of synthesis conditions on
temperature- and rate-related capacity, and on cycling stability.
Task 9: Continued material development to enhance properties
Coordinator Isobel Davidson (NRC)
Key objectives:
o Continue development of LixCryMnzO2-based compounds to further improve
electrochemical characteristics after achievement of initial performance
goals.
o Feed new developments into the loop of scale-up to commercial product.
<PAGE>
SCHEDULE C
ROYALTY FEES
Royalty Fees of each Contract Year to be calculated as:
a) 33% of the license or other fees earned by PLL from the sub-licensing to a
third party of the rights to the Licensed Products or Products whether such
fees are paid by the sub-licensee in one sum or by installments, and
b) 4% of Net Sales where Licensed Products or Products are manufactured by
PLL, any related party of PLL or by any other party.
PROVIDED THAT
1) When the amount of Royalty Fees payable by PLL to EVI re any Contract Year
reaches the higher of $1 million or the Minimum Guaranteed Royalty Fees for that
Contract Year, the percentage of the license fees payable by PLL to EVI under
paragraph a) above shall then reduce from 33% to 25% on the balance of the
license fees upon which Royalty Fees are payable to EVI during that Contract
Year; and
2) "Net Sales" shall mean gross sales of Licensed Products or Products less
sales taxes, freight, insurances, reasonable sales persons' or agents'
commissions and packaging costs: and
3) In the event that PLL or any related party of PLL uses the Licensed Products
or Products in its manufacture of cells or batteries, the Royalty Fees payable
to EVI shall be the higher of (1) 4% of the best price that PLL or any related
party of PLL or any licensed manufacturer of the Licensed Products or Products
sells the Licensed Products or Products calculated on the Licensed Products or
Products used by PLL or any related party of PLL in its manufacturing process,
or (2) 1% of the Net Sales of cells or batteries utilising the Licensed Products
or Products which are sold by PLL or any related party of PLL.
<PAGE>
SCHEDULE D
<TABLE>
Target Sales
- --------------------------------- ------------------------ ------------------------- --------------------------
Period or Contract Year ending Guaranteed cell Cell values based on Minimum Guaranteed
31 March volumes containing the Guaranteed Cell Royalty Fees based on
licensed cathode. volumes at a cost of cell cost of $2.00 per
$2.00 per cell. cell.
(See Note 1 below) (See Note 1 below) (See Note 1 below)
- --------------------------------- ------------------------ ------------------------- --------------------------
<S> <C> <C> <C>
2000 Nil Nil $200,000
2001 Nil Nil $100,000
2002 500,000 $1,000,000 $100,000
2003 5,000,000 $10,000,000 $200,000
2004 10,000,000 $20,000,000 $400,000
2005 25,000,000 $50,000,000 $1,000,000
2006 50,000,000 $100,000,000 $2,000,000
2007 75,000,000 $150,000,000 $3,000,000
2008 and thereafter (See Note 2 below) (See Note 2 below) (See Note 2 below)
- --------------------------------- ------------------------ ------------------------- --------------------------
Notes:
1. An indicative cell cost value of $2.00 per cell has been used in
calculating the Minimum Guaranteed Royalty Fees. If the cell cost
values reduce to below $2.00 per cell and there is no corresponding
increase in the sale volumes of the cells so that the Minimum
Guaranteed Royalty Fees are achieved, then the parties shall negotiate
in good faith to either reduce the Minimum Guaranteed Royalty Fees or
to convert this Agreement to a non-exclusive arrangement. The term
"cost" means the aggregate of the raw materials cost, costs of
conversion and other costs including production overheads incurred in
the manufacture of the cell.
2. The above targets shall, in Contract Years ending 31 March 2008 and
later, increase each Contract Year by a percentage equivalent to the
overall world market $ of sales increase of similar Products, applied
to the previous Contract Year's actual values.
</TABLE>
This is the final page of the Agreement.
EXHIBIT 6.3
AGREEMENT
The Energy Venture Inc. Group of companies( EVI) will give to the Young Poong
Corporation( YP ), a six month option on a license for the use of the EVI
proprietary Nickel Zinc technology on the following terms.
YP will provide AA and AAA battery making parts and materials to EVI for
use in making samples of the technology. EVI will provide samples to YP within
120 days and YP will test the samples and provide the data to EVI. In the event
that YP is interested in the technology, they will complete a manufacturing test
using their existing battery equipment.
If, on or before the six month period is up, YP decides that they wish to buy a
license, EVI agrees to negotiate in good faith to reduce the price by $500,000
US from the standard license price and will negotiate a 3 % royalty that can be
further reduced over time or above particular volumes.
In addition EVI and YP agree to negotiate in good faith for YP to become a
partner with EVI in the manufacturing of these cells or to become a contract
manufacturer. Both parties agree to negotiate in good faith any other terms and
conditions for this agreement and EVI will guarantee that they will offer terms
that are as good or better than any other equivalent license or agreement that
is in effect at that time.
In the event that no license is entered into within eight months of the last
signing date, neither party shall have any further obligation or liability to
the other party under the terms of this agreement.
Signed by C .J. Yu. Date 14 Feb 2000
On Behalf of Young Poong Corporation
Signed by D. W. Hartford Date 21 Feb 2000
On Behalf Of Energy Ventures Inc.
EXHIBIT 6.4
Industrial Research Assistance Program
Contribution Agreement
Project No.: 342399
This Agreement is made in duplicate -
Between: National Research Council Canada
200 Town Center Court, Suite 1101
Scarborough, Ontario
M1P 4X8
(herein called the NRC)
And: Energy Ventures Inc. (Canada)
43 Fairmeadow Avenue
Toronto, Ontario
M2P 1W8
(herein called the Firm)
1. This agreement comes into effect on the March 15, 1999 and terminates on the
March 15, 2000.
2. The NRC agrees to contribute up to a maximum of $200,000 for research and
development undertaken by the Firm as described in the attached Statement of
Work (SW) and in accordance with the attached Basis of Payment (BP) and
Conditions of Contribution (CC).
3. The Firm agrees to undertake the work described in the Statement of Work and
understands and accepts all the Conditions of Contribution.
4. This agreement shall become null and void if not signed and returned to NRC
within thirty (30) days of the signature date of the authorized officer of the
NRC.
- --------------------------------------------------------------------------------
National Research Council Canada
/s/ Roy J. Crew March 12, 1999
-------------------------- -----------------------
Mr. Roy J. Crew Date
Regional Director, Ontario
Energy Ventures Inc. (Canada)
/s/ Wayne Hartford March 17, 1999
-------------------------------- -----------------------
Mr. Wayne Hartford, Date
President
- --------------------------------------------------------------------------------
<PAGE>
Statement of Work SW-1
Project No.: 342399
Project Title
Reseach of Alkaline Fuel Cells
Objective(s)
The primary objective of this research project is to develop an alkaline fuel
cell that has twice the energy density and is cost reduced relative to existing
technology, for it to be practical to compete against internal combustion
engines. This fuel cell will find application in electric or hybrid vehicles,
golf carts, stand-by and remote electric power source etc.
Following are the specific quantifiable objectives of this project:
i) Design of commercially viable 1kW fuel cell unit.
ii) Nominal output voltage to be 0.8 volts DC per cell.
iii) Maximum output current density to be 300 mA / sq. cm at 0.8 volts.
iv) Cost to be 10% of existing fuel cell technology. Target market price to be
$100 - $200 / kW. Note that Ballard fuel cell costs over $1,500 / kW.
v) Achieve fuel cell efficiency of 60% at 200 mA / sq. cm. and improve energy /
performance ratio by 40% by uniform current conduction.
vi) Achieve efficiencies of 150 watts per kilogram.
vii) Research bipolar technology to increase the energy density by 2 times
relative to existing technology.
viii) Significantly increase operating life by 10 - 20 times by operating only
when required. This is expected to extend the fuel cell life to 3 - 4 years or
200,000 miles for electric vehicles (EV).
x) Provide an environmentally friendly output of pure water.
xi) Provide heat management to maintain maximum cell temperature of 80* C by
circulating electrolyte.
Plan of Work
Following is the plan of work for this research project, which will be conducted
by the company personnel in cooperation with three subcontractors - Kordesch &
Associates Inc, MacNor Corporation, and National Research Council / ICPET. This
project is of one year duration, with anticipated starting date of March 15,
1999.
I. Electrode Preparation
Activities:
o Set-up test facilities.
o Research and design matrix of electrodes.
o Perform single cell electrical test.
o Perform life test of cell.
Risk: Medium - High
Schedule: From March 15, 1999 to March 15, 2000
Resources: Systems Designer, Scientist, NRC, MacNor and Kordesch
& Associates
Deliverables: Completed and tested electrodes
II. Electrode Stacks
Activities:
o Research and design electrode stacks
o Perform hand assembly of stacks
o Perform electrical tests
o Perform thermal and water tests
Risk: Medium
Schedule: From August 15, 1999 to March 15, 2000.
Resources: Hardware Engineer, Scientist, Kordesch & Associates,
NRC, and MacNor.
Deliverables: Completed and tested electrode stacks
III Battery Design
Activities:
o Battery cell pack design
o Perform hand assembly
o Perform tests
Risk: Medium
Schedule: From September 15, 1999 to March 15, 2000
Research: Hardware Engineer, Scientist, Kordesch & Ass, NRC,
and MacNor
Deliverables: Prototype battery pack modules completed and tested
IV Control Systems
Activities:
o Assess technical requirements
o Develop model and simulation
o Design and hand-build control system
o Perform test of hand built system
o PCB Design
o PCB build and test
Risk: Medium
Schedule: From June 15, 1999 to March 15, 2000
Resources: Hardware Engineer, Scientist, Kordesch & Associates,
NRC, and MacNor
Deliverables: Designed and tested battery control system
V Catalyst Research
Activities:
o Select families of catalysts
o Perform experimentation on various catalysts
o Optimize catalysts for cost and performance
Risk: Medium - High
Schedule: From April 15, 1999 to March 15, 2000
Resources: System Designer, Kordesch & Associates and NRC
Deliverables: Select and optimized catalyst
VI Test
Activities:
o Perform test of fuel cell in appliances and vehicles in lab environment.
o Perform redesign
o Retest in application environment.
Risk: Low - Medium
Schedule: From December 15, 1999 to March 15, 2000
Resources: System Designer, Hardware Engineer, Scientist,
Kordesch & Associates, NRC, and MacNor
Deliverables: Completed and tested alkaline fuel cell system
<PAGE>
Basis of Payment BP-1
Project No.: 342399
(Note: The Goods and Services Tax (GST) will not be reimbursed by NRC and the
Firm must delete any GST costs from invoices prior to submission to NRC for
Payment.)
1.0 NRC agrees to reimburse the Firm for work performed on the project as
follows:
o Fifty percent (50%) of the actual salary costs (excluding
benefits) incurred for Senior Scientist, two other Scientists
and a Hardware Engineer, estimated at $75,000; and
o Thirty three percent (33%) of the actual
consultant/subcontractor costs, estimated at $125,000.
1.1 The Firm agrees to invoice NRC monthly in arrears for costs incurred.
1.2 The Firm agrees to provide proof of costs incurred with each claim.
1.3 The Firm agrees to provide NRC the reports on the dates outlined below.
The Firm acknowledges that failure to comply with these requests will
cause the payments of current and subsequent claims to be delayed or
stopped.
1.4 NRC may agree to the reallocation of funds between the above payment
categories provided that the NRC is advised in advance of the reasons
for the proposed changes and that the NRC is in agreement for the need
of such changes.
1.5 Any changes to personnel supported by NRC or any changes to their
salaries must be discussed and approved by the NRC prior to invoicing.
2.0 Sources of Funding
IRAP (24.4%) $200,000 max.
FIRM (49.1%) $402,350 est.
Investment Tax Credits (26.5%) $216,650 est.
Total Project Costs $819,000 est.
The Firm acknowledges that any other government funding is entirely a
matter between itself and the different level of government, and NRC cannot give
any assurance about the amount.
3.0 Summary of NRC's Support by Fiscal Year
Fiscal Year 1998/99 (15 March, 1999 to 31 March, 1999) $8,000 max.
Fiscal Year 1999/2000 (1 April, 1999 to 15 March, 2000) $192,000 max.
NRC's Total Contribution $200,000 max.
Claims for allowable project costs incurred in a given fiscal year
(April 1 to March 31) must be submitted by April 10 of the following fiscal
year. The maximum amount per fiscal year cannot be exceeded without prior
approval of NRC.
4.0 Reports and Meetings Schedule
Interim Report due on September 30, 1999
Final Report due on 15 March, 2000.
5.0 Special Conditions
None
<PAGE>
National Research Council Conseil national de recherches CC-1 of 2
Canada Canada
Conditions of Contribution
This Contribution Agreement is conditional upon the Firm's adherence to all
conditions set out below. A breach of any of the following conditions, or a
submission to NRC of false or misleading information, is grounds for suspension
or immediate termination of NRC's financial assistance to the project, in
addition to any other action permitted by law. NRC will notify the Firm, in
writing, of any such suspension or termination. Failure on the part of NRC to
act on any breach does not constitute a waiver of NRC's right to act on that or
any other breach of the following conditions.
1. The Firm must undertake the project as described in the Statement of Work.
Any significant change proposed in relation to anything that is written in
the Statement of Work or the Basis of Payment, requires an amendment to
this agreement signed by both the Firm and NRC.
2. The Firm must submit reports and claims to NRC as specified in the Basis
of Payment. Payment of claims is contingent upon receipt of reports.
3. The Firm must notify NRC in writing if it seeks or receives financial
assistance for the project from a government at any level, beyond that
disclosed in the Firm's proposal for the project. In such cases, NRC
reserves the right to reduce the amount of its contribution to the
project.
4. The Firm must maintain adequate records of the research conducted for the
project and of direct and indirect costs incurred on the project. Upon
reasonable written notice by NRC, the Firm must make such records
available to authorized representatives of NRC for inspection, auditing,
or copying, and must permit authorized representatives of NRC to have
access to the Firm's facilities and personnel for the purposes of
inspection and interviewing. The Firm must obtain an audit of the project
from an external auditor upon the request of NRC. The auditor is required
to follow "Instructions for External Auditors" which will be supplied by
NRC. This clause 4 remains in effect for two years after the termination
of the project.
5. The Firm must maintain data relating to the economic benefits traceable to
the project for at least the first five years of their commercial
significance to the Firm, and provide NRC with such data upon request.
6 The Firm must demonstrate, to the satisfaction of NRC, acceptable
performance of the project, and the capability of continuing the project.
The Firm must permit NRC to inspect the facilities used by the Firm in
connection with the project, and to discuss the project with
IRAP-supported personnel.
7. The Firm must contribute its agreed portion of the total project costs. If
the Firm has not contributed its share as agreed in the Basis of Payment,
or if the funds were not spent as intended, NRC shall be entitled to claim
a refund up to the percentage by which the Firm's contribution has fallen
short of the agreed amount.
8. The Firm must make reasonable efforts to protect intellectual property
arising from the project. If a patent appears possible but the Firm does
not want to apply for it, the Firm must offer to assign ownership of the
invention to NRC, without charge. If information arising in the project
has commercial utility and is protected by copyright or confidentiality,
but will not be used by the Firm, the Firm must discuss with NRC the
possibility of transferring it to NRC or to a third party.
<PAGE>
National Research Council Conseil national de recherches CC-2 of 2
Canada Canada
9. The Firm must obtain prior written consent from NRC if, at any time during
the project or within five years after the end of the project, the Firm
intends:
(a) to enter into third party agreements that would limit the Firm's
control of the results derived from the project,
(b) to do part of the project outside Canada,
(c) to manufacture using the results of the project outside Canada, or
(d) to sell, assign, transfer, or otherwise dispose of any rights to
intellectual property arising out of the project to any person or
organization outside Canada, or to any government other than the
Government of Canada.
10. The Firm must indicate in writing, or by a clear label, the
confidentiality of any specific information which it wishes to be treated
as confidential by NRC. Protection from third-party access to confidential
business information supplied to NRC is provided by the federal Access to
Information Act.
11. No person will receive a direct benefit from this contract if that person
is subject to, and not in compliance with, a Conflict of Interest and
Post-Employment Code, either the one for Public Office Holders, for the
Public Service, or for NRC Employees. (NOTE: post-employment rules mainly
affect persons in the NRC "MG" category, the public service categories
"Senior Manager" and above, ministerial staff, and Governor in Council
appointees.)
12. The Firm must maintain environmental protection measures in relation to
the project that satisfy the requirement of all relevant regulatory
bodies. The Firm must comply with protocols that have been established in
relation to aspects of the project involving human subjects, animals, and
biohazardous material.
13. This agreement terminates immediately if the Firm ceases operations,
assigns its rights under this agreement, enters into receivership, or
becomes insolvent or bankrupt.
14. The Firm must indemnify NRC in respect of any claim against NRC by a third
party resulting directly or indirectly from the project. The Firm must not
take action against NRC for failure or delay in performance caused by
circumstances beyond NRC's reasonable control, nor for incorrectness of
data supplied, advice given, or opinions expressed in relation to the
project.
15. Either party may terminate this agreement for any reason, by giving the
other party notice in writing. A notice given by NRC must allow at least
two months before the termination. The Firm shall have no obligation to
NRC to work on the project after notice is given or received, and NRC
shall not reimburse costs incurred subsequent to the termination date, nor
any costs incurred at a rate greater than the typical rate before the
notice was given. Any termination is without prejudice to the rights and
obligations of the parties which have accrued before termination, and the
obligations to protect intellectual property and submit reports continue.
9 May 1995 [END]
EXHIBIT 6.5
- 1 -
EQUIPMENT LEASE
THIS LEASE made this 22nd day of October, 1998.
B E T W E E N:
ASTRIS INC. and ASTRIS ENERGI INC., 2394 Dunwin Drive,
Mississauga, Ontario L5L 1J9 ("Lessor")
- and -
ENERGY VENTURES INC. (CANADA), having its principal place of
business at 43 Fairmeadow Avenue, Toronto, Ontario M2P 1W8.
("Lessee")
The parties hereto agree as follows:
1. LEASE
Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, all machinery, equipment, jigs, fixtures, materials, work-in-process,
furniture and other property physically located on the date hereof at the above
address of the Lessor (which machinery, equipment, jigs, fixtures, materials,
work-in-process, furniture and other property has not changed substantially for
at least 90 days), including without limitation the machinery, equipment and
other property set out in the schedule made a part hereof. All such machinery,
equipment and other property described in all said schedule is hereinafter
collectively called "Equipment".
2. TERM
The term of this lease respecting each item of Equipment
commences upon the date hereof and ends on the date 10 years from the date
hereof.
3. RENT AND PURCHASE OPTION
(a) The aggregate rent for the Equipment (exclusive of the Goods and
Services Tax) shall be equal to $45,000.00 (U.S.) per year, being $450,000.00
(U.S.) in the aggregate, prepayable in full by way of the issuance of an
aggregate of 200,000 common shares of Energy Ventures Inc. to the Lessor. The
Lessor acknowledges that the trading of such shares by it is subject to
applicable securities laws.
(b) In the event of the bankruptcy, insolvency or appointment of a
receiver of any assets of the Lessor or any affiliate of the Lessor or in the
event of the completion of the term of this lease, whichever comes first, the
Lessee shall have the right to purchase the Equipment at any time thereafter on
payment to the Lessor of $1.00.
(c) The Lessee shall pay to the Lessor or remit to the appropriate
taxation authority the Goods and Services Tax payable hereunder provided the
Lessor is a GST Registrant and provides the Lessee with the information
necessary to claim an input tax credit. Lessee shall pay GST on the monthly
rental payments on receipt of a monthly invoice from Lessor setting out the
monthly equivalent rental amount, the applicable GST and the registration number
of the Lessor.
4. USE AND LOCATION
Lessee shall use the Equipment in a careful and proper manner
and shall comply with and conform to all material laws and regulations in any
way relating to the possession, use or maintenance of the Equipment. Lessor
acknowledges that Lessee will relocate the Equipment to the facilities of the
National Research Council of Canada in Ottawa or elsewhere and consents to any
such relocation.
5. ALTERATIONS
Lessee may make any alterations, additions, improvements and
other changes to the Equipment without the prior written consent of Lessor.
6. INSURANCE
Lessee shall keep the Equipment insured against all risks of
loss or damage and shall carry liability insurance covering the Equipment.
7. ASSIGNMENT
Without the prior written consent of Lessor, Lessee may assign or
transfer this lease, the Equipment or any part thereof, or any interest therein.
8. ENTIRE AGREEMENT
This lease constitutes the entire agreement between Lessor and
Lessee and it shall not be amended, altered or changed except by a written
agreement signed by the parties hereto.
9. NOTICES
Service of all notices under this lease shall be sufficient if
given personally or mailed to the party involved at its respective address
hereinbefore set forth, or at such address as such party may provide in writing
from time to time. Any such notice mailed to such address shall be effective two
business days after the date mailed by registered mail, duly addressed.
10. GENDER, NUMBER
Whenever the context of this lease requires, the masculine
gender includes the feminine or neuter, and the singular number includes the
plural and whenever the word "Lessee" is used herein, it shall include all
assignees of Lessee.
11. TITLES
The titles to the paragraphs of this lease are solely for the
convenience of the parties, and are not an aid in the interpretation of the
instrument.
12. TIME
Time is of the essence of this lease and each and all of its
provisions.
The parties hereto have executed this Lease on the day and
year first above written.
Lessor: Lessee:
ASTRIS INC. ENERGY VENTURES INC. (CANADA)
Per: Per:
----------------------------------- -------------------------
ASTRIS ENERGI INC. Per:
-------------------------
Per:
-----------------------------------
EXHIBIT 6.5/B
LICENCE AGREEMENT
THIS AGREEMENT made as of the 22nd day of October 1998,
between
ASTRIS ENERGI INC.
2394 Dunwin Drive
Mississauga, Ontario,
L5L 1J9
and
ENERGY VENTURES INC. (CANADA)
43 Fairmeadow Avenue,
North York, Ontario,
M2P 1W8
LICENSOR and LICENSEE hereby agree as follows:
1. Definitions
In this agreement the following terms are used as mentioned below:
ALKALINE FUEL CELLS means fuel cells (i.e. electrochemical cells utilizing fuel
and oxidizer) with alkaline electrolyte.
GROSS SALES means in respect of LICENSED ARTICLES sold in the ordinary course of
business:
(a) to a customer and not returned the gross invoice price for each
separate sale (considered to occur when a product is delivered), net of trade,
promotional, quantity or cash discounts actually allowed, rebates granted and
taken, any direct sales tax including Goods and Services Tax, customs duty,
insurance, special packing and freight charges set out separately in the
invoice; and
(b) If a LICENSED ARTICLE is incorporated as part of a product, the
price of the LICENSED ARTICLE will, where reasonably possible, be identified
separately on any invoice. When a distinct price for a LICENSED ARTICLE is not
identified on an invoice, the sale value shall be calculated as above, using an
average of prices billed in typical recent sales of equivalent LICENSED ARTICLES
or products, and if there are no such sales, then the price of the LICENSED
ARTICLE shall be deemed to be that portion of the sale price of the product as
manufacturing cost of the LICENSED ARTICLE relates to the manufacturing cost of
the product. LICENSEE shall, upon request, provide evidence satisfactory to
LICENSOR, acting reasonably, of such manufacturing costs;
LICENSED ARTICLES of this contract are alkaline fuel cells, alkaline fuel cell
systems and their composite parts such as alkaline fuel cell electrodes any
other alkaline fuel cell or alkaline fuel cell system components embodying or
otherwise utilizing the TECHNOLOGY.
LICENSEE means Energy Ventures Inc. (Canada), its successors and assigns.
LICENSOR means Astris Energi Inc. and Astris Inc., their successors and assigns.
SPECIFIED USES means rights to use in the field of manufacturing, research and
development, marketing and commercial production including the right to
sublicence in whole or in part any of such uses to third parties worldwide.
TECHNOLOGY means the technology of ALKALINE FUEL CELLS developed by the
LICENSOR, comprising know-how, procedures, recipes, designs and patterns, as
well as patents and patent disclosures other relevant documents as provided by
the LICENSOR and set out in a Schedule attached hereto.
2. Grant of licence
LICENSOR grants to LICENSEE a nonexclusive worldwide licence to use the
TECHNOLOGY for the SPECIFIED USES.
3. Access to TECHNOLOGY
LICENSOR agrees to disclose and provide information related to the
TECHNOLOGY to the LICENSEE, to the extent required to enable the LICENSEE to use
the TECHNOLOGY for the purposes stated herein. LICENSOR further agrees to direct
their officers, directors, employees and consultants (and particularly Jiri K.
Nor) to disclose and provide such information as such person or persons possess.
4. Royalties
LICENSEE agrees to pay LICENSOR a ROYALTY as follows:
(a) basic royalty of $25,000 (twenty five thousand dollars), on the day
of execution of this agreement, on account of royalties payable respecting year
one of the agreement;
(b) royalty on
(i) GROSS SALES of LICENSED ARTICLES manufactured by
LICENSEE; and
(ii) licence fees and royalties received by LICENSEE
for a sublicense of TECHNOLOGY;
calculated as follows:
2.5% during the first four years,
2% during the next six years.
LICENSEE agrees to pay the royalties accrued in the course of a
calendar year in the first 90 days of the calendar year following. For purpose
of this agreement, year one will be the period beginning on the effective date
of this agreement and ending on 31 December 1999 and years two to ten shall be
2000 to 2008 respectively.
(c) Beginning with year two, alternate minimum royalty of $10,000 shall
be payable if the royalties accrued under Clause 4(b) do not reach or exceed
this amount.
(d) The obligation of the LICENSEE to pay royalties will cease at the
end of year 10 (on 31 December 2008) or when the royalties paid to LICENSOR
reached the sum of $5,000,000 in the aggregate, whichever happens first. From
that point on, the LICENSEE will enjoy a perpetual, fully paid, royalty free
licence.
(e) LICENSEE shall pay to LICENSOR or remit to the appropriate taxation
authority the Goods and Services Tax respecting ROYALTIES provided LICENSOR is a
GST registrant and provides LICENSEE with the information necessary to claim an
input tax credit.
5. Additional Licences
LICENSOR shall be free to grant further licences concerning the
TECHNOLOGY, except to parties sublicensed by LICENSEE.
6. Secrecy
Neither LICENSEE nor LICENSOR (each a "Receiving Party") shall directly
or indirectly, disclose or use, at any time, either during the currency of this
agreement or for five years subsequent to its termination, any secret or any
confidential information concerning the other party's processes, methods,
formulae, apparatus specifications, materials and sources of supply thereof,
customers, their identities and requirements, discoveries, inventions, patents
(including applications and rights in either), contracts, finances, personnel,
their duties and capabilities, research plans, policies and intentions,
including matters not technically trade secrets ("Proprietary Information"), the
dissemination of knowledge whereof might prove prejudicial to the other party,
other than to their employees,
associates, consultants, independent contractors, customers, licensees,
sub-licensees, joint venturers and partners who have a need to know the
information disclosed in the course of their duties who shall be advised of
these confidentiality requirements and agree to be bound thereby. The disclosing
party is responsible for any improper use or disclosure by such persons.
Proprietary Information does not include:
a) Information which can be established as having been known by the
Receiving Party prior to the disclosure of such information by the other party;
b) Information which can be demonstrated to have been in the public
domain at the time of disclosure, or which has subsequently been made a part of
the public domain by the disclosing party or others, without the fault of the
Receiving Party;
c) Information disclosed by one party and specified in writing as not
constituting Proprietary Information; or
d) Information subsequently disclosed to the Receiving Party by a third
party having no obligation of secrecy to the disclosing party.
(e) Information required to be disclosed at law.
7. Term and Termination
This contract comes into force on the effective date when signed by
both parties, and will terminate on 31 December 2008 or when the aggregate
royalty amount of $5,000,000 had been reached as outlined in 4(d). In either
case the licence will become a perpetual, fully paid, royalty free licence and
will survive this contract without limitation.
Either party may terminate this agreement where the other party is in
material breach (including non payment of any ROYALTIES) of any of the terms of
this agreement and such other party does not remedy the breach within 30 days of
receipt of written notification of the nature of the breach or if the other
party is subject to an execution or any other process of any Court which becomes
enforceable against the other party or if a distress or analogous process shall
be levied upon the property of such other party or if such other party shall
become insolvent or commit an act of bankruptcy or make an assignment in
bankruptcy or bulk sale of its assets or a bankruptcy petition is filed or
presented against the other party or if the other party shall cease to carry on
business in the ordinary course. If the LICENSOR shall become insolvent or
commit an act of bankruptcy or
make an assignment in bankruptcy or bulk sale of its assets or a bankruptcy
petition is filed or presented against it or if LICENSOR shall cease to carry on
business in the ordinary course, then the licence will become a perpetual, fully
paid, royalty free licence and will survive this contract without limitation.
8. Succession in Title
This contract is also valid for and binding upon the legal successors
of both parties.
9. Alteration
Alterations and supplements to this contract are valid only if they
have been agreed upon by both parties in the form of a written and signed
contract.
10. Relevant Law, Jurisdiction
This contract is subject to the Laws of the Province of Ontario,
Canada. All disputes under this contract shall be settled by arbitration
conducted in the Municipality of Metropolitan Toronto, in accordance with the
provisions of the Arbitration Act, 1991 (Ontario).
For the purposes of the foregoing Section 10, the following provisions
shall govern any arbitration hereunder:
Either party may by written notice to the other party request that the
disagreement be referred to arbitration with the reference being to a single
arbitrator mutually agreed to by the parties provided that, if the parties are
unable to agree on an arbitrator within fifteen days of deemed receipt of the
written notice, the arbitration shall be to three arbitrators, one of whom shall
be appointed by LICENSOR and one shall be appointed by the LICENSEE within
twenty days of deemed receipt of the written notice (and each party shall
provide notice to the other party of the arbitrator so appointed within twenty
days of the deemed receipt of the written notice requesting the arbitration) and
the third arbitrator shall be appointed by the arbitrators appointed by the
parties and such third arbitrator shall be the chairman provided further that if
either party fails to give notice of the appointment of an arbitrator as herein
provided the reference shall be to any arbitrator appointed in accordance with
this clause and such arbitrator shall be considered to have been mutually agreed
to by each of the parties;
The award may be made by the majority of the arbitrators where the
reference is to three or more arbitrators. If the arbitrators have allowed their
time or extended time for making
an award, as provided in the Arbitration Act, to expire without making an award
or if the chairman shall have delivered to the parties to the arbitration a
notice in writing stating that the arbitrators cannot agree or if there is not a
majority of the arbitrators in agreement, any party to the arbitration may apply
to the courts or to a Judge thereof to appoint an umpire who shall have the like
power to act in the reference and to make an award as if they had been duly
appointed by all the parties to the submission and by the consent of all the
parties who originally appointed the arbitrators thereto. If an umpire is
appointed pursuant to this paragraph, such umpire shall make his or her award
within one month after the original or extended time appointed for making the
award of the arbitrators has expired or on or before any later date to which the
parties to the reference agreed in writing, or if the parties have not agreed,
then within such time as the court or judge appointing such umpire may deem
proper.
The decision arrived at by the arbitrator shall be final and binding
and no appeal shall lie therefrom except as to matters of law.
11. Notice
Any notice or communication to be given or made under this agreement
must be in writing and will be deemed to be properly given or made on the
earliest of the following:
(a) actual delivery;
(b) seventy-two hours after being sent by commercial courier
service; and
(c) the business day following which any telegram or telecopier
message is sent.
if sent to the addresses and to the attention of the persons set out
below:
If to LICENSEE:
Energy Ventures Inc. (Canada)
43 Fairmeadow Avenue,
Toronto, Ontario,
M2P 1W8
Attention: D. Wayne Hartford, President
Telecopier number: (416) 733-8407
and to:
Cassels Brock & Blackwell,
Suite 2100, Scotia Plaza,
40 King Street West,
Toronto, Ontario,
M5H 3C2
Attention: Bruce Clark
Telecopy: (416) 360-8877
If to LICENSOR:
Astris Energi Inc.
2394 Dunwin Drive
Mississauga, Ontario,
L5L 1J9
Attention: Jiri K. Nor, P. Eng., President
Telecopier number: (905) 844-4522
Addresses may be changed by notice given in accordance with this
provision.
AGREED TO this 22nd day of October 1998.
ASTRIS ENERGI INC.
per ________________
ENERGY VENTURES INC. (CANADA)
per _______________
per _______________
EXHIBIT 6.6
T&G and EVI Partnership
Extension to Letter of Commitment of October 1998
This letter is to serve as an extension to the Letter of Commitment (hereinafter
LoC- I ) co-signed by the parties thereto, namely T&G Corporation, of Lebanon,
CT, USA (T&G) and Energy Ventures Inc., of Toronto, Ontario, Canada (EVI), on
October 19th and 22nd, 1998, respectively, a copy of which is attached hereto
and is an integral part hereof.
It is the intent of the parties hereto that, pending the incorporation of the
new company, the execution of the associated Shareholder Agreement and of the
License and Research & Development Agreement, all referred to in LoC-1, that the
existing collaboration between the parties hereto should continue, as defined in
LoC-1 and herein. The terms additional to LoC-1 are as follows:
1. The object of the collaboration shall be to commercialize the
electro-permeable (EPM) materials developed and patented by T&G by
selling the EPM materials, by engaging in the joint development of the
materials and applications for them and by entering into agreements to
license the use of EPM materials to third parties.
2. The fields in which collaboration may occur shall be electro-chemical
energy systems based on lead/acid, nickel/zinc, copper/zinc,
zinc/manganese-dioxide, zinc/air couples, fuel cells and, in the
pharmaceutical sector, wound care, together with such other fields of
uses shall be mutually agreed by the parties from time to time during
the period of the collaboration defined herein.
3. The parties shall share equally in the net revenues arising from their
collaboration, after deduction of direct costs associated with such
revenues and subject to the "balancing" of mutually agreed prior and
future expenditures by either party in the development of the
technology and in the operation of this collaborative venture. The
agreed prior investment by T&G is $500,000. The balancing of
investments shall be achieved by allocating 75% of net revenue
disbursements to the party with the larger investment until the
investments by each are equal.
4. If collaboration between the parties hereto is extended through the
formation of a new company, as envisaged in the Letter Agreement of
October 19th and 22nd 1998, referred to above and attached hereto, the
financial arrangements specified in Paragraph 3, above, shall remain in
effect.
5. Management of the collaborative activities shall be by mutual agreement
of the parties, with the limitation that neither party shall be
empowered to commit the other party to any expenditure or other actions
without the agreement of that other party.
6. The term of this Agreement shall be for a period of three years from
the execution hereof. The Agreement shall renew automatically unless
one of the parties shall give notice of its wish to terminate the
Agreement sixty days prior to the end of the initial term or 60 days
prior to any anniversary thereof.
Signed and approved on behalf of EVI Signed and Approved on Behalf of T&G
By: /s/ D.W. Hartford By: /s/ A.H. Horne
Name: D.W. Hartford Name: A.H. Horne
Date: July 6th 1999 Date: 5 July 1999
<PAGE>
On EVI Letterhead
T&G and EVI Partnership
Letter of Commitment
October 22nd 1998,
This letter is to serve as confirmation that the parties Energy Ventures Inc.
(Canada (EVI) and T&G Corporation are entering into a partnership agreement
through a new company to be incorporated in Ontario Canada with initial
ownership established at 51% EVI and 49% T&G.
The purpose of this partnership is to fully exploit certain technologies
substantially under the business terms that are outline in a draft license and
Research and Development dated September 15th 1998 that has been rejected in
favor of the partnership. This partnership will be governed by a shareholders
agreement that is in preparation and will be approved by both parties however
both parties agree to operate with October 1st 1998 as the effective starting
date.
EBI is responsible for preparing the closing documents required and both parties
agree to use best efforts to execute the final documents as soon as possible.
Signed and Approved on behalf of EVI
D.W. Hartford Date Oct 22, 1998
Signed and Approved on behalf of T&G
A.H. Horne Date Oct 19, 1998
EXHIBIT 6.7
CONSULTING AGREEMENT
THIS AGREEMENT made this 23 day of March, 2000
BETWEEN:
ENERGY VENTURES INC. (CANADA) and its successors and
assigns (EVI)
and
DR. KARL KORDESCH and KORDESCH AND ASSOCIATES
(together known as the consultants)
WHEREAS EVI is engaged in the development and marketing of
technology and owns, controls or participates in ventures owning
or controlling technologies, patented and secret methods,
processes and formulas, and may from time to time engage in the
marketing, licensing, manufacturing or production of
technologies, products or commodities and acquire or develop
additional technologies, processes methods and formulas referred
to as enhancements: AND WHEREAS the consultants desire to provide
services and expertise to EVI to assist in the development and
marketing of the EVI technologies and enhancements; AND WHEREAS
in connection with the provision of these services and expertise
to EVI, even though not directly engaged in such development and
manufacture, are by reason of their duties, informed with respect
to such technologies and enhancements and are enabled to
contribute new improvements on existing technologies and
enhancements: AND THEREFORE EVI and the consultants, in
consideration of the respective mutual agreements herein, agree
with each other as follows:
I. SERVICES
EVI hereby retains the consultants to provide such consulting
services and expertise as are reasonably requested from time to
time by EVl specificallv related to Lithium, Nickel based bobbin
systems with cathodes other than Manganese, Zinc Carbon hybrid
systems, Fuel cells and related technologies.
2. CONSULTING ENTITLEMENT
The consultants shall be entitled to receive options for 50,000
common shares of EVI Delaware at an option price of $.50 US per
share exersizeable until December 31st, 2000 or thirty days after
the termination of this agreement, whichever comes first. In
addition, the consultants will bill services at a rate that is
pre-approved by EVI.
3. EXPENSES
All disbursements, costs and other expenses made or incurred by
the Consultants in providing these services shall be expenses of
and shall be borne by EVI providing EVI has pre-approved the
nature and extent of these expenses
4. PAYMENT OF ENTITLEMENT AND EXPENSES
The Consultants shall submit to EVI, not later than 10 business
days following the end of each month during which services were
provided by the Consultants to EVI, an invoice setting out the
provision of services provided to EVI and any disbursements costs
and expenses. Any taxes payable are solely the responsibility of
the Consultants and the Consultants hereby indemnify EVl in
connection therewith. In order to comply with the applicable
legislation, EVI may be required to withhold amounts from
payments to be made respecting the Entitlement, sufficient to
satisfy taxation requirements. All parties agree to use best
efforts to minimize any tax impact while complying with
applicable legislation.
5. EXCLUSIVE ARRANGEMENT
The services to be provided by the Consultants to EVI are to be
deemed to be exclusive and the Consultants acknowledge that,
during the term hereof and for a term of one year thereafter,
they shall not be able to render service or advice to any other
persons or businesses engaged in a similar field to that of EVI,
or to compete or assist or advise any other person or business
which may be competing against Evi or its subsidiaries,
affiliates and assigns, except to Electric Auto Corporation of
Fort Lauderdale and then only in the area of Alkaline Fuel Cells.
6. BEST EFFORTS
During the period of providing services to EVI, the Consultants
shall devote their expertise and best efforts to such duties
assigned to them by EVI and will faithfully and diligently serve,
and endeavor to further the interests of EVI.
7. BENEFIT OF ENHANCEMENTS
Any and all enhancements, inventions and improvements thereon
which the Consultants may conceive or make during the period of
providing services to EVI, relating or in any way connected with
any of the technologies or enhancements or other matters in which
EVl bas been or may become interested, shall be the sole and
exclusive property of EVI and the Consultants will, whenever
required to do so by EVI, execute any kind of applications,
assignments and instruments which EVI shall deem necessary in
order to apply for and obtain patents for such inventions or
improvements and in order to assign and convey to EVI the sole
and exclusive right, title and interest in and to such
enhancements, inventions, improvements, applications and patents.
The Consultant's obligations to execute the documents referred to
above, continue beyond the termination of the agreement with
respect to any and all enhancements, inventions or improvements
conceived or made by them while providing services to EVI. Such
obligations shall be binding on the Consultants assigns,
executors, administrators or other representatives.
8. CONFIDENTIALITY
The Consultants shall not directly or indirectly, disclose or
use, at any time, either during or subsequent to the period of
their services to EVI, any secret or any confidential information
concerning EVI' s processes, methods, formulas, apparatus
specifications, materials and sources of supply thereof,
customers, their identities and requirements, discoveries,
inventions, patents (including applications and rights in
either), contracts, finances, personnel, their duties and
capabilities, research plans, policies and intentions, including
matters not technically trade secrets, the dissemination of
knowledge whereof my prove prejudicial to EVI, other than to
their employees, consultants, associates or students in the
course of their duties who shall be advised of the
confidentiality and agree to be bound thereby. The Consultants
are responsible for any improper use or disclosure by such
person.
9. TERM
The term of this agreement shall be from the date of signing unit
December 31st, 2003 and this agreement supersedes all previous
agreements which shall deem to have been completed with all
rights assigned to EVI and all payments due or received to the
Consultants.
10. DUTIES ON TERMINATION
On the date of the termination of this agreement, the Consultants
shall receive all approved expenses incurred to the date of
termination and the Consultants shall return to EVI all plans
drawings, models, samples papers, notes, books or other equipment
or documents belonging to EVI or relating to its business.
11. SEVERABILITY
If any provision of this agreement is determined to be invalid or
unenforceable in whole or in part, such invalidity or
unenforceability shall attach only to such provisions or part
thereof and the remaining part of such provision and all other
provisions hereof shall continue in full force and effect.
12. NOTICE
Any communication shall be in writing and may be given by
personal delivery, registered mail or telecopier transmitted
addressed to the recipient ass indicated below or to such other
address or phone number as may in writing, advise the other and
will be deemed made on actual delivery or receipt.
13. GOVERNING LAW
The agreement shall be governed by and construed in accordance
with the laws of the Province of Ontario, Canada. In the event of
the assignment of the benefits of this agreement by EVI, the
governing law may have to, at the option of EVI's assignee, be
moved to the applicable jurisdiction of EVI's assignee.
14. ASSIGNMENTS
This agreement shall be binding upon and enure to the benefit of
EVI and its successors and assigns though it may not be assigned
by the Consultants without EVI's prior written permission
15. ENTIRE AGREEMENT
This agreement constitutes the entire agreement between the
parties pertaining to the subject matter of this agreement. There
are no warranties, representatives agreements forth or referred
to in this agreement. No reliance is placed on any
representation, opinion, advice or assertion of fact made by any
party or directors, officers and agents to any other party or its
directors, officers and agents except to extend that the same has
been reduced in writing and included as a term of this agreement.
IN WITNESS THEREOF we have executed the agreement as of the day,
month and year first above written.
Dr. Karl Kordesch Energy Ventures Inc.
/s/ Karl Kordesch PER /s/ D. Wayne Hartford
Kordesch & Associates Inc. D. Wayne Hartford, President
PER /s/ Karl Kordesch
Dr. Karl Kordesch, President WITNESS: /s/ David J. Trudel
EXHIBIT 6.8
NORTHERN SECURITIES INC.
150 York Street
Suite 1814
Toronto, Ontario
M5H 3S5
February 25, 2000
Energy Ventures Inc.
45 Fairmeadow Avenue
Toronto, Ontario
M2P 1W8
Attention: Wayne Hartford, President and CEO
Dear Sirs:
Re: Proposed Financing Programme
Northern Securities Inc. ("NSI") hereby agrees to act as exclusive agent for
Energy Ventures Inc. ("EVI") in connection with a proposed two stage, best
efforts offering of debentures and warrants (the "Stage 1 Offering") to be
created and issued by EVI pursuant to the following terms and conditions set out
in the term sheet attached Schedule A which is incorporated herein by reference
and of special warrants (the "Stage 2 Offering") to be created and issued by EVI
pursuant to the following terms and conditions set out in the term sheet
attached Schedule B which is incorporated herein by reference. Each of the Stage
1 and Stage 2 Offerings are collectively referred to as the Financing.
General Agency Terms: NSI's right to act as the EVI's exclusive agent in
respect of the Stage 2 Offering shall be contingent
upon completion of the Stage 1 Offering.
Selling Jurisdictions: The Provinces of British Columbia, Alberta, Ontario
and other Provinces of Canada designated by NSI (the
"Qualifying Jurisdictions") offshore and in the United
States pursuant to Rule 144A or other available
exemptions from registration and elsewhere where the
Stage 1 and Stage 2 Offerings may be lawfully made
without the legal requirement to prepare and file a
prospectus, registration or similar offering document.
<PAGE>
Exclusive Right: NSI is granted the right of first refusal to act as
lead or co-lead manager of any public or private
offering of securities in Canada and to act as a
managing underwriter (with a minimum of 50%
participation) in any public or private offering of
securities by EVI for a period of two (2) years from
the date of completion of the Stage 2 Offering.
NSI is also granted the right of first refusal to act
as financial advisor in connection with any merger or
acquisition involving EVI for a period of two (2)
years from the date of completion of the Stage 2
Offering.
Currency: All amounts are in Canadian dollars.
Indemnity: The indemnity appended as Schedule C hereto is
incorporated herein by reference and forms a part of
this Agreement. The provisions of Schedule C shall
survive completion of the Offerings and shall continue
in full force and effect of the benefit of NSI.
Agency Agreement: NSI and EVI shall prior to the completion of each of
the Stage 1 Offering and the Stage 2 Offering
negotiate, in good faith, an agency agreement which
shall incorporate the terms and conditions hereof and
contain such additional representations, warranties
and covenants and indemnities and contribution
provision and conditions customary for transactions of
this nature.
If the foregoing accurately reflects your understanding of the terms of the
Offering, please execute this letter where indicated below and return a copy
(personally, by facsimile or by courier) to Northern Securities Inc., Suite
1814, 150 York Street, Toronto, Ontario, M5H 3S5, Attention: Vic Alboini,
facsimile number: (416) 214-9554 prior to 5:00 p.m on February 25, 2000,
whereupon this letter shall become a binding agreement between us.
Yours very truly,
Northern Securities Inc.
Per: ____________________________
Vic Alboini
Chairman & Chief Executive Officer
The foregoing accurately reflect the terms of the transaction which we are to
enter into and such terms are hereby agreed to.
<PAGE>
ACCEPTED this 25th day of February, 2000.
Energy Ventures Inc.
Per: ____________________________
Wayne Hartford
President & Chief Executive Officer
<PAGE>
SCHEDULE A
TERM SHEET FOR STAGE 1 OFFERING
Issuer: Energy Ventures Inc.
Size of Offering: $750,000
Purchased Securities: $750,000 principal amount of 10% unsecured debentures
(the Debentures due on the date (the "Maturity Date")
which is 6 months following the Debenture Closing
Date. The Maturity Date of any Debenture may be
accelerated at the option of the holder to the date of
closing any new offering of equity securities
completed prior to the Maturity Date, including,
without limitation, the Stage 2 Offering.
Closing: As agreed between NSI and EVI but not later than 60
days following the date hereof failing which either
party may terminate this engagement.
Interest: Interest on the Debentures shall be due and payable
upon the Maturity Date. NSI shall withhold and hold in
escrow the sum of $37,500, being equivalent to
interest on the above debentures to the Maturity Date,
and shall pay out such amount without interest to the
holders of the Debentures as their respective
interests may appear on the Maturity Date.
Warrants: Purchasers of the Debentures will also receive common
share purchase warrants ("Warrants") on the basis of 1
Warrant for each $1.00 principal amount of debentures
purchased. Each Warrant will entitle the holder to
purchase 1 common share at $2.00 at any time up to the
close of business on the date which is the third
anniversary date of the Debenture Closing Date.
Price: 100%
Agent: Northern Securities Inc. NSI shall have the right to
include other investment dealers in the selling group
at NSI's discretion.
<PAGE>
Description of Agency: NSI will act as EVI's exclusive agent to offer the
Debentures and Warrants (collectively the
"Securities") on a best efforts private placement
basis. NSI is not obliged under any circumstances to
purchase any Common Shares but may choose to do so in
its sole discretion.
Due Diligence: Prior to the Debenture Closing Date, EVI shall allow
NSI and their representatives to conduct all due
diligence investigations which NSI may reasonably
require to fulfil their obligations as agents.
Conditions to NSI's
Obligations: NSI's obligations to EVI hereunder are conditional
upon usual market outs and upon NSI being satisfied
with its due diligence review.
Use of Proceeds: Research and Development, recruitment of additional
technical staff and working capital.
NSI's Fees: (i) 8.0% of gross proceeds of the Stage 1 Offering
(the Commission); (ii) a $20,000 non-refundable work
fee upon execution of this engagement which shall be
credited against the commission payable on the closing
date of the Stage 2 Offering; (iii) a $5,000 fee for
acting as escrow agent for interest as provided above
payable on the Debenture Closing Date; and (iv) a
$4,000 expense allowance payable upon the Debenture
Closing Date.
Compensation Option: NSI shall also receive 75,000 compensation warrants
entitling each compensation option entitling NSI to
purchase one Common Share at $2.00 at any time prior
to the date that is two years from the Debenture
Closing Date.
Costs and Expenses: Whether or not the Stage 1 Offering is completed,
offering costs and expenses are to be borne by EVI,
including the reasonable costs of NSI and its
designated legal counsel (not to exceed $20,000
exclusive of GST and disbursements), all payable on
the Debenture Closing Date. If the Stage 1 Offering is
not completed within 60 days from the date hereof,
NSI's expenses to be borne by EVI will not exceed
$5,000 including GST.
Pledge of Asset Coverage: The principal shareholder of the Corporation shall
pledge with NSI Common Shares of EVI, with a market
value of $2,250,000, by way of non-recourse guarantee
for the due performance of the Corporation's
obligations under the Debentures.
<PAGE>
SCHEDULE B
TERM SHEET FOR STAGE 2 OFFERING
Size of Offering: Minimum $6 million
Maximum $10 million or such greater amount as is agreed
Purchased Securities: Special Warrants ("Special Warrants"). Subject to
adjustment in certain events, each Special Warrant
shall be exercisable, for no additional consideration,
to acquire one common share ("Common Share") of the
Corporation.
Price: In the context of the market.
Agent: Northern Securities Inc. NSI shall have the right to
include other investment dealers in the selling group
at NSI's discretion.
Closing Date: On or before the date which is six months after the
Debenture Closing Date or such other date as NSI and
EVI may agree (the "Equity Closing Date").
Description of Agency: NSI will act as EVI's exclusive agent to offer up to
$10,000,000 Special Warrants on a best efforts private
placement basis. NSI is not obliged under any
circumstances to purchase any Special Warrants but may
choose to do so in its sole discretion. In the event
NSI does not provide evidence of firm commitments by
investors to purchase at least $750,000 of Special
Warrants on or before the date which is four months
from the Debenture Closing Date, EVI will have the
option to seek alternate financing through another
agent or investment dealer.
Due Diligence: Prior to the Equity Closing Date and prior to the
filing of the (final) prospectus qualifying the Common
Shares issuable on exercise of the Special Warrants,
the Corporation shall allow NSI and its
representatives to conduct all due diligence
investigations which NSI may reasonably require to
fulfil its obligations as agent and to responsibly
execute the certificate required of it in the
preliminary prospectus and the (final) prospectus.
Conditions to NSI's
Obligations: NSI's obligations to EVI hereunder are conditional
upon usual market outs and upon NSI being satisfied
with its due diligence review.
<PAGE>
Use of Proceeds: Research and Development and to fund strategic
alliances.
NSI's Fees: (i) 8.0% of gross proceeds of the Offering (the
"Commission"); (ii) a non-refundable work fee of
$25,000 to be paid upon completion of the Stage 1
Offering which will be credited against the Commission
payable on the Equity Closing Date; and (iii) an
expense allowance of $8,000 payable on the Equity
Closing Date.
Compensation Option: NSI shall receive compensation warrants entitling it
to acquire such number of compensation options as is
equal to 10.0% of the number of Common Shares issuable
on the exercise of the Special Warrants purchased
pursuant to the Stage 2 Offering. Each compensation
option shall entitle NSI to purchase one Common Share
at a price equal to the issue price of the Special
Warrants at any time prior to 5:00 p.m. (Toronto time)
on the third anniversary of the Equity Closing Date.
The compensation warrants will be exercisable on the
same basis as the Special Warrants described above and
the compensation options issuable on exercise of the
compensation warrants will be qualified pursuant to
the Final Prospectus (to the extent permitted under
applicable securities laws), and will be subject to
customary anti-dilution protection. In exercising the
compensation options (whether in whole or in part),
NSI may, at its sole discretion, in lieu of satisfying
the exercise price in cash, elect to receive that
number of Common Shares of the Corporation equal to
the quotient of:
X (FMV - $Y)
------------
FMV
Where,
X = the number of compensation options to be
exercised;
Y = the exercise price of the compensation
options; and
FMV = the closing price of the Common Shares on
the principal stock exchange or quotation
system on which the Common Shares are then
listed or quoted for trading on the trading
day immediately prior to such election by
NSI.
<PAGE>
Costs and Expenses: Whether or not the Stage 2 Offering is completed,
offering costs and expenses are to be borne by EVI,
including the reasonable costs of NSI and its
designated legal counsel (not to exceed $35,000
exclusive of GST and disbursements), all payable on
the Equity Closing Date. If the Stage 2 Offering is
not completed within 120 days from the date of
completion of the Stage 1 Offereing, NSI's expenses to
be borne by EVI will not exceed $10,000 including GST.
Exercise and
Prospectus Conditions: (A) The Special Warrants shall be exercisable by the
holders thereof at any time and will be automatically
exercised at 5:00 p.m. (Toronto time) on the earlier
of the following dates (such date being the Expiry
Date): (i) the fifth business day after a receipt is
issued by the last of the relevant securities
regulatory authorities in the Qualifying Jurisdictions
(the Securities Regulators) for a (final) prospectus
qualifying the Common Shares issuable on the exercise
of the Special Warrants; and (ii) one year after the
Equity Closing Date.
(B) The Corporation shall also use its best efforts to
(i) file a preliminary prospectus with the Securities
Regulators qualifying the issuance of the Common
Shares upon the exercise of the Special Warrants
forthwith after the Closing Date; (ii) promptly
resolve all comments received or deficiencies raised
by the Securities Regulators; and (iii) file and
obtain receipts from the Securities Regulators for the
(final) prospectus (the Final Prospectus) in the
Qualifying Jurisdictions as soon as possible after
such regulatory comments deficiencies have been
resolved and in any event prior to the date that is
120 days following the Closing Date (the
"Qualification Deadline"). Should the Corporation fail
to do so, its obligations shall continue in effect
until the Expiry Date.
Obligation to List: EVI shall, if so required by NSI at NSI's sole option,
apply for the listing of its Common Shares on the
Canadian Venture Exchange in order that such listing
will be completed concurrently with obtaining receipts
from the Securities Regulators for the Final
Prospectus.
Offering Memorandum: EVI shall prepare an Offering Memorandum at NSI's sole
option.
<PAGE>
SCHEDULE C
STANDARD INDEMNIFICATION AGREEMENT FOR NORTHERN SECURITIES INC.
In consideration of providing professional services pursuant to the engagement
to advise and assist Energy Ventures Inc. ("EVI"), EVI agrees to indemnify and
hold harmless Northern Securities Inc. ("NSI") and its affiliates, and the
respective directors, officers, employees, partners, agents and shareholders of
NSI (each such person or company being herein referred to herein as an
"Indemnified Person"), to the full extent lawful, from and against all losses,
claims, damages, liabilities, obligations or expenses (collectively, the
indemnifiable Loss) incurred by each Indemnified Person related to or arising
out of any activities performed or role assumes in connection with the Agreement
whether performed before or after the execution of the Agreement to which this
Indemnity is a Schedule.
EVI will reimburse monthly each Indemnified Person for all expenses reasonably
incurred by or on behalf of such Indemnified Person in connection with
investigating, preparing or defending any action or claim relating to or in
connection with the Agreement or which may result in an Indemnifiable Loss to a
maximum of $5,000 in the case of each such Indemnified Person to a maximum of 10
persons, including payment to NSI at the applicable standard per diem rate for
time expended by a director, officer, employee partner or agent of NSI or any
affiliate attending at or participating in such investigation, preparation or
defence, provided that the Indemnified Person shall make prompt repayment to EVI
of all amounts so paid to it for which a court of competent jurisdiction is a
final judgment determines that Indemnified Person is not entitled to
indemnification pursuant to the provisions hereof.
EVI will not be responsible for any Indemnified Loss of any Indemnified Person
which is, and no Indemnified Person shall have any liability (direct, indirect,
in contract, in tort or otherwise) to EVI except, for damages, liabilities,
obligations or expenses incurred by or on behalf of EVI which are determined by
a final judgment of a court of competent jurisdiction to have resulted from
actions taken or not taken by such Indemnified Person dishonestly, illegally, in
bad faith or through negligence or wilful misconduct.
NSI agrees to notify EVI promptly of the assertion of any claim or the
commencement of any investigation or proceeding relating to the performance of
the Agreement in respect of which indemnification may be sought hereunder
provided that the failure by NSI to do so shall not relieve EVI from its
obligations or liabilities hereunder, except to the extent that such failure has
materially and adversely affected EVI's ability to reduce the amount of the
Indemnified Loss. NSI shall, and shall use its reasonable efforts to cause other
relevant Indemnified Parties to, cooperate with EVI in responding to any such
investigation or defending any such proceeding.
<PAGE>
Upon the assertion of any claim against or the commencement of any investigation
or proceeding involving any Indemnified Person EVI may, and shall if reasonably
requested by an Indemnified Person, participate in such action, investigation or
proceeding and assume the defence of any proceeding in respect of which
indemnification may be sought hereunder, including the employment of counsel of
EVI's selection who are satisfactory to the Agents, acting reasonably, the fees
and disbursements of which counsel shall be paid by EVI. Upon such assumption,
NSI shall provide such assistance and documentation relating to the
investigation or proceeding as EVI may reasonably request and, except as
provided below, EVI shall not be liable for the fees and disbursements of
counsel retained by any Indemnified Person in connection with such investigation
or proceeding. In any investigation or proceeding the defence of which EVI has
assumed, any Indemnified Person shall have the right to participate and to
retain its own counsel, the fees and disbursements of which shall be paid by
such Indemnified Person unless (i)EVI and the Indemnified Person have agreed in
writing to the retention of such counsel; or (ii) both EVI and the Indemnified
Person are subject to the investigation or are parties to the proceeding and the
representation of both by the same counsel would be inappropriate due to, or
could give rise to, actual or potential differing or conflicting interests
between them.
EVI shall not be responsible for any settlement of any proceeding effected
without its prior written consent, but shall indemnify each Indemnified Person
from and against any Indemnified Loss incurred by reason of any settlement made
with its consent or any final judgment in favour of the plaintiff. EVI will not,
without the prior written consent of NSI (not to be unreasonably withheld),
settle, compromise or consent to any judgment or decision in any proceeding in
respect of which indemnification may be sought hereunder unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Person from all liability arising out of such proceeding.
If for any reason (other than a determination based on dishonesty, illegality,
bad faith, negligence or wilful misconduct as contemplated herein) the
indemnification provided hereby is unavailable to an Indemnified Person or is
insufficient to hold an Indemnified Person harmless, EVI shall contribute to the
Indemnified Loss incurred by the Indemnified Person in a proportion appropriate
to reflect not only the relative benefits received by EVI on the one hand and
all Indemnified Persons on the other hand, but also the relative degrees of
fault of EVI and of all Indemnified Persons and any other equitable
considerations, provided that EVI shall in any event contribute to the amount
paid or payable by any Indemnified Person as a result of an Indemnified Loss any
excess of such amount over the amount of the fees actually received by NSI and
all affiliates pursuant to the Agreement.
<PAGE>
In connection with or as a result of the Agreement, NSI or any affiliate may
also be engaged to act for EVI in one or more additional capacities, and the
terms of the Agreement or any such additional engagement may be contained in one
or more separate written agreements and may be modified from time to time by
agreement of the parties. This indemnity shall apply to the Agreements, to any
such additional engagement and to any modification of the terms of any of them
and shall remain in full force and effect following the completion or
termination of any or all of them. This indemnity shall be binding on and endure
to the benefit of EVI and each Indemnified Person and the respective successors,
assigns, heirs and personal representatives of each of them, and to the extent
necessary or appropriate may be enforced by NSI as trustee for any other
Indemnified Person. This indemnity shall be in addition to any rights that any
Indemnified Person may have at common law or otherwise.
Notwithstanding any other provision in this indemnity, no Indemnified Person can
rely on the indemnity if the Indemnified Person has acted dishonestly,
illegally, in bad faith, negligently, or by wilful misconduct.
EXHIBIT 6.9
THIS EMPLOYMENT AGREEMENT made as of the 1st day of August, 1999.
B E T W E E N:
Energy Ventures Inc. (Canada), a corporation incorporated
under the laws of Ontario with Head Office located at 43
Fairmeadow Avenue, North York, Ontario, M2P 1W8
(herein called "EVI")
OF THE FIRST PART;
- and -
Terrance (Terry) B. Kimmel, of 1152 St. Moritz Court, Orleans,
Ontario, K1C 2B3 ,
(herein called the "Employee")
OF THE SECOND PART;
WHEREAS EVI carries on the business of research and
development of proprietary technology respecting electro-chemical battery cells
and components thereof for license, manufacture and/or sale (the "Business");
AND WHEREAS EVI and the Employee have agreed upon the terms of
the employment of the Employee by EVI;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged), EVI and the Employee hereby agree as follows:
1. EVI hereby employs the Employee and the Employee agrees to be so employed on
the terms and conditions herein contained.
2. The Employee's position shall be Vice President and General Manager of EVI
and his responsibilities, duties and authority shall be as established from time
to time by the Board of Directors of EVI and shall include prime responsibility
for the administration, direction, research activities and results thereof of
the EVI laboratory located on the NRC campus in Ottawa.
3. Throughout the term of this agreement, the Employee shall devote all of his
working time and attention to the business and affairs of EVI and shall not
during such working time, without the consent in writing of EVI, undertake any
other business or occupation or become an employee or agent of any other
corporation, partnership, firm, individual or other entity (a "Person").
4. EVI shall employ the Employee at an annual salary of $100,000.00 per annum
during the first year of this agreement and amounts that are no less per annum
to be determined by EVI, in consultation with the Employee, at the time of the
establishment of each annual financial plan of EVI during each subsequent year
(the "Base Salary"), payable at such times as other payroll payments are made by
EVI.
5. EVI shall pay all expenses actually and properly incurred and vouchered by
the Employee in furtherance of the Business, including all travel expenses and
all entertainment expenses incurred in connection with the Business, provided
that EVI may from time to time determine the maximum amount which may be so
expended by the Employee and provided that any major expense item (in excess of
$500.00) is to be approved in advance by EVI. Respecting use of the Employee's
automobile on EVI business, EVI agrees to pay the rates per kilometer as are
permitted by Revenue Canada without requiring taxable benefits to be assessed,
currently $0.35 for the first 5,000 kilometres per calendar year and $0.25 per
kilometre thereafter.
6. The Employee is entitled to vacations of up to 4 weeks in respect of each
full year of employment, provided that such vacations may be taken only at such
times as the Employee and EVI may from time to time reasonably determine having
regard to the operations of EVI. The Employee is also entitled to be covered at
EVI's expense by a benefits package, extending to the Employee's immediate
family, which provides life insurance, disability insurance, medical, surgical,
hospital, and dental benefits the details of which are to be established to
mutual satisfaction.
7. EVI shall recommend to the Board of Energy Ventures Inc. ("Delaware") the
immediate issue to Employee of options
a) respecting 100,000 common shares of Delaware, such options to be issued at
U.S. $1.50 per common share, to expire August 1st 2002, and to be
exercisable immediately upon issue.
b) respecting 100,000 common shares of Delaware, such options to be issued at
U.S. $1.50 per common share, to expire August 1st 2003, and to be
exercisable no earlier than August 1st 2000 provided the Employee is on
such date in the employment of EVI.
c) respecting 100,000 common shares of Delaware, such options to be issued at
U.S. $1.50 per common share, to expire August 1st 2004, and to be
exercisable no earlier than August 1st 2001 provided the Employee is on
such date in the employment of EVI.
Any such options are to be exercisable during the period of the
Employee's employment by EVI and for a period of 90 days after Employee ceases
to be an EVI employee for any reason, including without limitation death,
disability, resignation, retirement or termination with or without cause.
Employee acknowledges that the ability of EVI to provide the foregoing
stock options is subject to compliance with applicable securities legislation.
In the event such legislation prohibits or limits the ability of Delaware to
provide the option rights, EVI or Delaware shall provide benefits to Employee
which are as similar as is reasonably possible having regard to such
legislation.
8. The term of the Employee's employment shall commence on the date hereof and
shall continue until terminated in accordance with the provisions of paragraphs
9, 10 or 12 hereof.
9. EVI may terminate the employment of the Employee forthwith, without notice
and without payments in lieu of notice (and without any other payments which may
be contemplated herein except for earned and unpaid Base Salary and expenses),
for any cause which would entitle EVI at law to terminate the services of the
Employee without either notice or compensation in lieu of notice, including
without limitation a breach by the Employee of the provisions of paragraph 15 or
16 hereof (collectively "Termination for Cause").
10. (a) If the Employee through bona fide illness, physical or mental, shall be
unable to devote his full time and attention to the business and affairs of EVI
as required by this agreement, he shall, as long as such disability continues,
be entitled to receive the Base Salary payable to him by EVI for a period of
three months from the commencement of such disability, provided that the amount
payable to the disabled Employee shall be reduced by the amount of any payments
received by him under any policy of disability insurance taken out by EVI.
(b) EVI may terminate the employment of the Employee forthwith, without
notice or payment in lieu of notice (and without any other payments which may be
contemplated herein except for earned and unpaid Base Salary and expenses, and
Base Salary during the three month period referred to in paragraph 10(a)) if the
Employee is disabled within the meaning of this paragraph for three months.
11. For the purposes of paragraph 10, the period of disability shall be deemed
to commence on the first working day that the Employee does not attend to the
business and affairs of EVI on the basis required by this agreement, statutory
holidays and vacations excepted, and in calculating the period of disability,
unless and until the Employee shall have returned to attending to the business
and affairs of EVI on the basis required by this agreement for 30 consecutive
normal working days, the said period of disability shall be deemed to have
continued without interruption.
12. Subject to the provisions of paragraph 14 hereof, EVI may terminate the
employment of the Employee, for any reason whatsoever, by giving the Employee
notice that his services are not required and by the payment of a lump sum equal
to one month of the Employee's Base Salary for every full year worked, with a
minimum of 6 months of Base Salary and a maximum of 12 months of the Base
Salary.
13. The Employee hereby acknowledges and agrees that payment of the amounts
referred to in paragraphs 9, 10, and 12 will constitute full and final
settlement of all claims he may have against EVI in connection with his
employment by EVI, including all amounts payable as salary or bonus.
14. In the event that greater compensation in lieu of notice is required to be
given by EVI to the Employee pursuant to the Employment Standards Act (Ontario),
paragraph 12 hereof shall be construed as providing for the payment of such
greater amount.
15. The Employee acknowledges and agrees that all confidential records, material
and information and copies thereof, all patent, trade mark, copyright and other
intellectual property rights and all trade secrets (including without limitation
inventions, discoveries and methods of processing and production) concerning the
business or affairs of EVI shall remain the exclusive property of EVI. During
the Employee's employment and at all times thereafter, the Employee shall not
divulge the contents of such confidential records or any of such confidential
information or trade secrets to any Person other than to EVI or EVI's qualified
employees, and the Employee shall not, following the termination of his
employment hereunder for any reason, use the contents of such confidential
records or such confidential information or trade secrets for any purpose
whatsoever. Under no circumstances shall the Employee remove any books, records
or documents or copies thereof (whether or not confidential) from EVI's office,
nor shall the Employee make any copies of any such books, records or documents
or copies thereof for use outside EVI's office, except as specifically required
to carry out his responsibilities hereunder.
16. (a) The Employee hereby agrees that he will not at any time during the term
of his employment with EVI or for a period of one year from the date of
termination of such employment for any reason:
(i) divulge to any Person the names of any Person who, during the
term of the Employee's employment with EVI was a supplier,
customer or client of EVI;
(ii) directly or indirectly, solicit, interfere with or endeavour
to direct or entice away from EVI any Person who, during the
term of the Employee's employment with EVI was a customer,
client or any Person in the habit of dealing with EVI; or
(iii)interfere with, entice away or otherwise attempt to obtain the
withdrawal of any Person who, during the term of the
Employee's employment with EVI was an employee or contractor
of EVI.
(b) The Employee agrees that he will not at any time during the term of
his employment with EVI or for a period of six months from the date of
termination of such employment for any reason directly or indirectly, in any
manner whatsoever, including, without limitation, either individually or in
partnership or jointly, or in conjunction with any other Person, as principal,
agent, shareholder or in any other manner whatsoever, carry on or be engaged in
any business which is substantially similar to the business then carried on by
EVI within any part of Canada or the United States where the business of EVI is
then being carried on or where EVI with the actual knowledge of the Employee is
then in an advanced state of planning to either acquire or establish operations
(a "Competitive Business") or be concerned with or interested in or lend money
to, guarantee the debts or obligations of or permit his name or any part thereof
to be used or employed by any Person engaged or concerned with or interested in
any Competitive Business.
(c) The foregoing covenants are given by the Employee acknowledging
that he has specific knowledge of the affairs of EVI and that EVI carries on and
intends to carry on business throughout Canada and the United States.
(d) In the event that any clause or portion of this paragraph 16 should
be unenforceable or be declared invalid for any reason whatsoever, such
unenforceability or invalidity shall not affect the enforceability or validity
of the remaining portions of the covenants and such unenforceable or invalid
portions shall be severable from the remainder of this agreement.
(e) The Employee hereby acknowledges and agrees that all restrictions
contained in this agreement are reasonable and valid and all defences to the
strict enforcement thereof by EVI are hereby waived by him.
17. Without intending to limit the remedies available to EVI, the Employee
acknowledges that damages at law will be an insufficient remedy to EVI in view
of the irrevocable harm which will be suffered if the Employee violates the
terms of paragraph 15 or 16 and agrees that EVI may apply for and have
injunctive relief in any court of competent jurisdiction specifically to enforce
any such covenants upon the breach or threatened breach of any such provisions,
or otherwise specifically to enforce any such covenants and hereby waives all
defences to the strict enforcement thereof by EVI.
18. In the event that any provision herein or part thereof shall be deemed void
or invalid by a court of competent jurisdiction, the remaining provisions or
parts thereof shall be and remain in full force and effect. If, in any judicial
proceeding, any provision of this agreement is found to be so broad as to be
unenforceable, it is hereby agreed that such provision shall be interpreted to
be only so broad as to be enforceable.
19. This agreement constitutes the entire agreement between the parties hereto
with respect to the employment of the Employee and any and all previous
agreements written or oral, express or implied, between the parties hereto or on
their behalf relating to the employment of the Employee by EVI are hereby
terminated and cancelled, and each of the parties hereto hereby releases and
forever discharges the other of and from all manner of actions, causes of
action, claims, demands whatsoever under or in respect of any such agreement.
20. (a) Any notice in writing required or permitted to be given to the Employee
hereunder shall be sufficiently given if served on the Employee personally or
mailed by registered mail postage prepaid addressed to the Employee at his last
address known to EVI. Any such notice mailed as aforesaid shall be deemed to
have been received by and given to the Employee four business days following the
date of mailing.
(b) Any notice in writing required or permitted to be given to EVI
hereunder shall be sufficiently given if delivered personally or mailed by
registered mail postage prepaid addressed to the President of EVI at 43
Fairmeadow Avenue, North York, Ontario, M2P 1W8. Any such notice mailed as
aforesaid shall be deemed to have been received by and given to EVI four
business days following the date of mailing.
(c) Either party may at any time give notice in writing to the other of
any change of address of the party giving such notice and from and after the
giving of such notice the address therein specified shall be deemed to be the
address of such party for the giving of notices hereunder.
21. This agreement shall be governed by and interpreted under the laws of the
Province of Ontario.
22. (a) This agreement is personal to the Employee and may not be assigned by
him.
(b) Except as aforesaid, this agreement shall enure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns, including, in the case of the Employee, his heirs, executors and
administrators.
23. Time shall be of the essence of this agreement and of every part hereof.
24. The Employee acknowledges that:
(a) he has read and understood this agreement; and
(b) he has obtained independent legal representation in connection with
this agreement and the provisions hereof, or has been advised to
obtain such advice.
IN WITNESS WHEREOF the parties hereto have executed this agreement as of
the date first written above.
SIGNED, SEALED AND DELIVERED )
)
in the presence of: )
)
____________________________ )
Signature of Witness ) Terrance (Terry) B. Kimmel
)
____________________________ )
Name of Witness )
)
Energy Ventures Inc. (Canada)
Per:
) D. Wayne Hartford, President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001048407
<NAME> ENERGY VENTURES, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 140,636
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<CURRENT-ASSETS> 155,012
<PP&E> 914,605
<DEPRECIATION> 147,407
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<CURRENT-LIABILITIES> 645,621
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0
0
<COMMON> 1,246,802
<OTHER-SE> 154,108
<TOTAL-LIABILITY-AND-EQUITY> 922,210
<SALES> 0
<TOTAL-REVENUES> 44,736
<CGS> 0
<TOTAL-COSTS> 549,491
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<INTEREST-EXPENSE> 19,622
<INCOME-PRETAX> (524,377)
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<NET-INCOME> (524,377)
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