The following revised submission is in response to staff comments in a
letter to Sustainable Development International, Inc., dated April 22,
1999.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D. C., 20549
Form 10-SB
General Form for Registration of Securities of Small Business Issuers
(Under Section 12(b) or (g) of the Securities Exchange Act of 1934)
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC.
(Exact name of registrant as specified in charter)
Nevada 86-0857752
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10240 - 124TH Street, Suite 208
Edmonton, Alberta, Canada T5N 3W6
(Address of Principal Executive Office) (Zip Code)
(780) 488-9193
( Telephone Number)
Securities To Be Registered Under Section 12(b) of the Act:
Title of each Class Name of each Exchange on which
To Be Registered each Class is to be Registered
None None
Securities To Be Registered Under Section 12(g) of the Act:
Common Stock, $0.001 Par Value
(Title of Class)
<PAGE>
TABLE OF CONTENTS
Item 1. Description of Business
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Description of Property
Item 4. Security Ownership of Certain Beneficial Owners and Management
Item 5. Directors, Executive Officers, and Control Persons
Item 6. Executive Compensation
Item 7. Certain Relationships and Related Transactions
Item 8. Legal Proceedings
Item 9. Market for Common Equity and Related Stockholder Matters
Item 10. Recent Sales of Unregistered Securities
Item 11. Description of Securities
Item 12. Indemnification of Directors and Officers
Item 13. Financial Statements
Item 14. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure
Item 15. Financial Statements and Exhibits
<PAGE>
INTRODUCTORY STATEMENT
Sustainable Development International, Inc., has prepared this Form
10SB on a voluntary basis to make available reportable information about
the Company to existing shareholders and others interested in the
activities of the Company.
ITEM 1. DESCRIPTION OF BUSINESS
Overview
Sustainable Development International, Inc., a Nevada corporation (the
"Company") is a development stage company formed in 1998 to commercialize
innovative technologies in the environmental energy from waste, and
alternative power system industries. The Company's goal is to acquire
technology rights and licenses from patent holders and others, then secure
a market, and raise sufficient capital to build, own, and operate
facilities throughout the world.
We have obtained the rights in Germany from Enviro-Mining Inc. for
technologies which when combined can produce a high grade low sulfur diesel
fuel meeting European standards for diesel fuel. The EMI Process is an
alternative to the present waste disposal methods by converting automotive
waste oil into light heating oil and high quality diesel fuel. (See
"Intellectual Property")
We have added separate innovations to the processing package to
provide stability to the products, which meet the lower sulphur standards
required in Europe. The Company has combined these technologies under the
operating name of The EMI Process (EMI). The objective is to establish the
most appropriate system, which will meet the operating, technical, and
business objectives to be operated by us in Europe.
Industry Description and Outlook
The collection of waste oil has been long established in most
industrialized nations. As a general figure, the amount of waste oil
collected per capita is approximately 10 Litres annually. Estimations of
the total waste oil produced in the nation of Germany have been estimated
at 1,200,000 tons annually. All waste oil is not collected. A percentage is
lost in the combustion process, some is not disposed of in an existing
collection system, and some is simply burned. A net amount of 650,000 tons
of waste oil per year is reported by the Mineral Oil Association of
Germany.
Waste oil is considered hazardous and as such the handling of this
waste, disposal, and collection methods are heavily regulated in Germany. A
specific list of waste collectors is approved to transport this waste,
along with manifests as to how many liters are produced, which locations
produces/collects this oil, and any variation as to seasonal effects.
The types of oil collected are important for our process and our
environmental permitting. Approximately 320,000 tons of this used engine
oil is of extremely high quality in Germany. Automobile laws stringently
require regular oil changes be done and overall car maintenance must be
performed regularly in order to be road worthy. These check ups are made on
a regular basis and must be completed to retain ones license. Secondly,
considering the value individuals place in owning and maintaining their
vehicles in Germany, oil changes are more frequent than is the standard in
North America.
<PAGE>
The type of oils to be processed include, engine, hydraulic, and
transmission oils primarily from automobiles, military vehicles, and heavy
equipment. The quality of the oil and its collection will be strictly
adhered to in order to fall under the 4.4 BimscH procedure. This is the
standard set out by the environment departments for the collection disposal
and transport of waste oil.
Input - Waste Oil
The primary source of the type of waste oil we require are lube oil
change shops, the machining industry, and military vehicles which produce
engine and hydraulic waste oils. Germany has been a developed industrial
country for over 50 years. They are highly recognized as being world
leaders in manufacturing, chemicals, and heavy industry. The present and
future growth of industry will shift to more service, and knowledge based
efforts. However, automobile usage will remain high for the foreseeable
future resulting in a relatively stable waste oil market in the 650,000 ton
range per year.
Output - Diesel Fuel
The price of diesel fuel fluctuates seasonally and over time, yet
remains much higher than North American prices due to the importation of
fuels into Germany. The price of diesel fuel FOB German Refinery before
national sales and mineral oil taxes has been as high as $0.21 US per liter
and is currently in the $0.15-$0.17 US range. Our calculations are based on
the conservative assumption of a $0.15 US purchase price.
The diesel fuel industry is very price sensitive. There are multiple
refinery sources. Buyers will shift to an alternative source based on price
points, fuel quality, and price stability. Environmental considerations are
usually not considered. Environmental concerns are only addressed when
legislation is involved requiring purchases be based on a percentage coming
from a recycled source or government incentives providing a lower overall
cost to the buyer. These considerations are not current law in Germany. We
are not expecting these to arise in the near future.
German regulations only state waste oil disposal by "burning" must be
reduced and "recycling" must increase. Recycling to diesel fuel is not
mandated. The Company's plan is to become a preferred recycling option by
virtue of its inherent advantages. In summary, price, stable supply, and
quality of the diesel fuel are the factors to be considered by our
potential customers.
The Company's consumer base for our diesel fuel includes transport
companies, gas stations, and two sizable diesel fuel distributors. The
ultimate end users are the transportation industry, small independent
trucks, diesel autos, trailer trucks, and city/tour buses.
The Company's Oil Recycling Process
Our oil recycling process has been developed to solve a worldwide
problem of removing used oil from the environment in a safe and non-
polluting way. Most countries have developed collection methods to remove
this hazardous waste from their communities with new emphasis on diversion
<PAGE>
from existing landfills. Registered waste oil transporters are tracked to
determine annual volumes, and disposal methods. The majority of the waste
oil enters refineries for upgrading and blending, or is burned in the
cement industry.
Process-Operations
The EMI Process surpasses an older patented system developed in the
mid 1970s. The new process is an updated version whereby automotive
engine oil is de-watered and enters a thermal treatment unit whereby the
hydrocarbon chains are cracked (broken). The treated oil enters a condenser
unit to recover light fuels, diesel, and naphtha. The light fuels are
recaptured to heat the initial cracking unit, while the diesel and heating
oil continues on to further processing. The last stage treats the product
to provide the appropriate sulphur, acid, odor, and chlorine levels, while
providing stability to the fuel for longer shelf life. The end product of
the process is a good quality heating oil, naphtha, bottoms, and diesel
fuel for resale.
Product Research and Development
The EMI technology is currently being utilized by Great Northern
Processing in Indiana, USA as part of their distillation process. The EMI
Process engineers and consultants to the technology continue to improve and
modify the system for better performance, increased output and final
product quality. The design of the recycling facilities includes numerous
advanced safety features. These features include the recycling of stack
gases in the burner unit to avoid contaminants, often found in other
systems, from being vented into the atmosphere. The system is operated at
low pressure to minimize the risk of explosions compared to other waste oil
systems. Further, the computer sensors though out the system monitor
temperatures, pressures, through puts, and other factors to avoid dangers
which can be advanced warned against.
Future Operations
As of this date, the Company is in a development stage with no current
operations. Upon commencement of operations, the Company anticipates
establishing the following operational functions:
Production and Service Delivery Procedure.
The production of diesel fuel is monitored and frequently tested
to ensure excellent quality for the end user. fuel is stored in a
clean tank area for final pick-up. The diesel fuel product will be
trucked via 30,000 Litre plus transport tanker vehicles owned and
operated by Hasenauer Transporte to its final destination.
Production and Service Capability
The system is designed to operate at a safe temperature with full
computer integration providing the operators with current information
on systems and foreseeable problems. In our Primary Plan we are using
a continuous flow process to ensure a constant supply of finished
product in the event of normal shutdown and maintenance of either
unit.
The specification of the system is for 90,000 tons of waste oil input.
Downtime start-up delays or increases in waste volume can be regulated
through our units with a throughput potential of 100,000 tons.
<PAGE>
Market Analysis
The Company's target market is Germany, which is a substantial
industrialized economy with exceptionally high volumes of low sulfur, waste
oil supply. Germany has over 82 million inhabitants producing 1.1 billion
liters of waste lubricants, and 650 000 tons of used waste oil.
The size of the Company's target market using figures provided by the
Mineral Oil Association of Germany and the National Association of Waste
Oil Recyclers, represents 240,000,000 Liters of the Company's product. At
a market price of US$0.52 per Liter excluding sales tax for the high
quality diesel fuel, potential sales in the Germany market alone is
US$55,000,000 annually. It is unknown at this time how much of the target
market is achievable by the Company, if any.
Key trends/changes with our Target Market
Alternative Fuels.
Diesel may be displaced by alternative fuels in the future. More
efficient engines may not require as frequent oil changes decreasing
the supply of waste oil. As technologies develop, more efficient
engines will arrive, thus shrinking the diesel fuel market over time.
In any event, our market share is a very small portion of the markets
large size. We will be informed on these matters by monitoring the
markets and being involved with the "Altol Verband" national used oil
association, responding to trends that indicate any changes in our
market.
Price.
Price is a factor when dealing with oil prices. The Company's
largest source of operating income is initially anticipated to be from
the sale of produced oil, natural gas and possible natural gas
liquids. Therefore, the level of the Company's revenues and earnings
are affected by price at which these commodities are sold. In the
past, average annual sales prices for oil, natural gas and natural gas
liquids, has been erratic, with a recent history of rising oil price
per barrel but lower gas prices. It is likely that these prices will
continue to fluctuate in the future. Various factors beyond the
Company's control affect prices of oil, including;
* worldwide and domestic supplies of oil;
* the ability of the members of the Organization of Petroleum
Exporting Countries ("OPEC") to agree to and maintain oil price
and production controls;
* political instability or armed conflict in oil-producing regions;
* the price of foreign imports;
* the level of consumer demand;
* the price and availability of alternative fuels;
* the availability of pipeline capacity; and,
* changes in existing regulation and price controls.
<PAGE>
Market Test Results
The manufacturing rights and the engineering design of The EMI Process
have been verified by qualified engineers at Propak Industries in Airdrie,
Canada. Propak Industries fabricates gas, oil, and other hydrocarbon
facilities which are shipped around the world. Our relationship to Propak
Industries is solely as a third party purchaser.
Quality of diesel fuel.
Diesel was provided to PetroLabs of Germany, the official Fuel
Laboratory for the German Government to conduct an independent testing
of the final product. Material supplied by Enviro-Mining Inc. and
tested by PetroLabs confirmed that the low sulphur standards are
achievable. This third party verification is a required step in the
approval process of meeting European wide acceptability.
To gain nationwide and European wide acceptability, the Company
engaged TUV (Thuringen Unterprufung Verein), equivalent to The
Canadian Standards Association - CSA, to conduct a test to verify that
the Company meets and exceeds the requirements for EN 590 European
Diesel fuel. EN 590 Legislation is the standard for all diesel fuel
within the European community. The TUV verification and acceptability
is a crucial seal of approval. The Thuringen State examination
association currently is responsible to the industry as a third party
independent tester of fuels.
Competition
Although there are Company's with substantially greater financial
resources, there is minimal waste oil recycling being conducted in Germany
at the present. The Mineral Oil Association of Germany classifies an oil
recycler as a refinery which will accept waste oil as a blend to its
feedstock or a cement kiln using waste oil as a fuel for its energy
requirements. These refineries are referred to as waste oil recyclers. They
represent our competition for the feed stock.
Potential Competition
The current technology will allow us to recycle effectively today. Our
supply of waste oil is key. Technologies will continue to improve and
operating costs will decrease providing an ideal closed loop system for the
Company. In addition, our current competition may start a bidding war to
control the waste oil supply.
Competition is limited to the cement industry and refineries in very
defined regions of Germany which are not reliant on the waste oil as a
feedstock. Natural gas and other inputs are more efficient. Only one
competing technology originating out of Berlin exists for recycling used
waste oil. The system is in its experimental phase with low capacity and
throughput. Extensive research into other known processes confirms the lack
of fully commercialized conversion processes.
Competitive Operating Advantage
The systems are designed to be highly automated, enabling only 2
operators per shift to comfortably operate the plant. Each module will have
its own control panel with early warning systems and fail safe shut offs in
the event the operator is not present. This offers a reduced need to hire
many new employees. Employment expenses is a large component of operations.
Any cost savings in this area by way of economies of scale are very
beneficial for lower costs. These cost savings will provide us with an
opportunity to retain earnings for our further expansion on this site or
new locations throughout Germany.
<PAGE>
The system is designed to operate with little maintenance or down
time. This reliability offers us an opportunity to maximize the excess
capacity of the system, while allowing room for extra throughput.
Other systems in the refining industry require larger economies of
scale to operate. They present higher debt servicing, larger
infrastructure, and excessive overhead. Our systems are designed to be more
compact, operate in an open structure, and require minimal investment
relative to chemical and petrochemical superstructures.
From an environmental standpoint, our system will be highly monitored
and is designed to produce no harmful emissions or waste to the air, land,
or water.
Supply of Raw Material
The Company's waste oil supply base is established, registered waste
oil collectors. The Company's marketing plan is to switch existing
collectors from their current disposal locations based on:
* Freight. Costs of trucking in Germany are three times greater
than North America.
* Price. We will be competitive on waste oil purchasing with the
existing cement industry.
* Ecology. Ideology and concern for health issues will play a major
factor as awareness increases and the "baby boomers" of
industrialized nations become more health conscious.
* Stability. Contracts will provide a sense of comfort for an
industry facing many regulatory laws, shifts in community values,
and market price fluctuations.
* Law. A bill is awaiting approval in the European Community
eliminating burning as a method of waste oil disposal. The
existing collectors will be seeking facilities to divert their
waste to other recycling refineries which are near capacity at
this time. The Company's plan is to market to this group of
collectors.
The Company believes that an opportunity exists to capture a large market
share:
* First, companies are being forced to comply with German
legislation under the Oil Act to reduce burning activities, which
have adverse health effects on the population, to more
sustainable solutions.
* Second, locations where burning and refining industries are
unavailable will benefit by having a lower transportation fee.
The costs of transportation over greater distances in Germany are
very high and uneconomical.
<PAGE>
* Third, collectors face price fluctuations in the oil market, yet
when transferring to the Company's facility, once established,
they will be provided a supply contract with preferential price
and volume commitments. They will have price stability over the
long term.
Government Regulatory Restrictions
Government restrictions on the quality of final product, plant and
site operations, and environmental concerns must all be met. Emissions,
waste disposal, air, noise, groundwater, 24 hour operations and safety
permits must be attained. The Company is in the process of assessing the
extent and cost of compliance with the regulatory authorities. At this time
we are unable to provide an accurate assessment of time and cost of
compliance with the regulatory restrictions.
Germany, our target market, has adopted some of the strictest laws in
the world relating to the recycling and disposal of chemicals and waste.
The business of recycling and waste disposal is subject to various
governmental laws on both a federal and state basis in Germany. Further,
the regulations are becoming increasingly complex and recycling and
disposal more strictly regulated. These laws and regulations include
landfill disposal restrictions, hazardous waste management requirements and
air quality standards, as well as special permit and license conditions for
recycling and disposal of waste and outdated and or used products.
Once established, the Company's recycling center will be subject to
various federal, state and local laws and regulations and licensing
requirements relating to the collection, processing and recycling of
chemicals and waste. Requirements for registrations, permits and licenses
vary depending upon the locale in which the recycling center is located.
Management believes that further government regulation of the
recycling industry could have a positive effect on the Company's business;
however, there can be no assurance what course future regulation may take.
Under some circumstances, further regulation could materially increase the
costs of the Company's operations and have an adverse effect on the
Company's business. In addition, as is the case with companies handling
hazardous materials, under some circumstances, the Company may be subject
to contingent liability.
Present laws for disposal of waste oil by burning are becoming more
restricted. Our research indicates that burning could be abolished
completely in the next two years. Legislation from the European community
is in progress to strengthen the environmental laws pertaining to the
release of heavy metals to the atmosphere through burning methods. Such
burning has been linked to the cause of cancer in many countries.
Once this bill becomes law, the majority of the 34 current members of
the National Used Oil Recycling Association will face the challenge of
locating suitable approved disposal sites. Only a few refineries in Germany
have excess capacity to fill for used oil as a blend to their feedstock at
this time.
Environmental Matters
Hazardous Materials.
The Company's research and development, manufacturing and collection
processes involve the controlled storage, use and disposal of hazardous
materials. The Company is subject to federal, foreign, state, and local
laws and regulations governing the use, manufacture, storage, handling and
<PAGE>
disposal of such materials and certain waste products. Although the Company
believes that its safety procedures for handling and disposing of such
materials comply with the standards prescribed by such laws and
regulations, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of such an
accident, the Company may be held liable for any damages that result, and
any such liability could exceed the resources of the Company. There can be
no assurance that the Company will not be required to incur significant
costs to comply with environmental laws and regulations in the future, nor
that the operations, business or assets of the Company will not be
materially adversely affected by current or future environmental laws or
regulations.
Intellectual Property
The Company's success and ability to compete is dependent in part
upon its proprietary technology. The Company relies on a combination of a
"Limited Technology License Agreement," trade secret laws and non-
disclosure agreements to protect its proprietary technology. The Company
has obtained a license from the Enviro-Mining Incorporated, a company
controlled by officers and directors of the Company. The license is for a
period of thirty (30) years commencing on June 11, 1998, with renewable 10
year terms. The Limited Technology License Agreement requires the payment
of certain minimal annualized payments, and in the event of a default in
the payments, the Company could lose its rights to continue utilizing the
technology. Further, the Limited Technology License Agreement provides
that the Company "must commence construction in the first twelve (12)
months of this agreement, a plant of minimum capacity of 90,000 tons of
waste oil input in the Territory." The agreement, dated June 11, 1998,
further states that it shall be just cause for termination of the Licensee
of all license and marketing rights, if the Company has not commenced
construction of the first plant within the first year of the license
agreement, and an additional commercial scale plant every year thereafter
for the next 5 years. A recent Letter Agreement was executed between the
Company and Enviro-Mining which provides an extension until June 11, 2000
to commence construction of the first facility. It is unknown at this time
whether, if ever, the Company will obtain sufficient funding for the
construction.
The licensing of the proprietary process for the stabilization and
purification of gas/oil products has its place of origin from CANMET, the
principal research and development arm of the Ministry of Natural Resources
Canada. CANMET owns the intellectual property known as the CANPED process.
The CANPED process of waste oil processing was licensed to Par Excellence
Developments Inc. (PED), of Ontario Canada. On March 6, 1998 Enviro-Mining
Inc., a major shareholder of the Sustainable Development International,
Inc., entered into a "Sub-License Agreement" with PED, wherein the Enviro-
Mining Inc. obtained limited intellectual rights to utilize the CANPED
process of waste oil processing. PED subsequently approved the execution by
the Company and Enviro-Mining Inc. of the "Limited Technology License
Agreement," thus providing the Company with the use of the CANPED process.
The PED - Enviro-Mining Inc. "Sub-License Agreement" is currently limited
to Enviro Recycling GmbH to be built by the Company in or near the town of
Merkers, Germany and terminates on December 31, 2017. This termination date
coincides with the term of the Agreement between CANMET and PED. The rights
of the Company, in utilizing the proprietary process of waste oil
processing, is subject to the terms and conditions of the Agreement between
CANMET and PED. In the event of a termination of the rights of PED by
CANMET, then the Company's rights could concurrently be terminated.
<PAGE>
The company also seeks to protect its intellectual property rights by
limiting access to the distribution of its documentation and other
proprietary information. In addition, the Company enters into
confidentiality agreements with its employees and certain customers,
vendors and strategic partners. There can be no assurance that the steps
taken by the Company in this regard will be adequate to prevent
misappropriation of its technology or that the Company's competitors will
not independently develop technologies that are substantially equivalent or
superior to the Company's technologies.
The license has not been registered in Germany or the European Union.
Employees
As of December 31, 1998, the Company had 3 employees. Harold Jahn and
Lew Mansell are full time employees. All employees are located at the
Company's headquarters in Alberta, Canada. None of the Company's employees
are subject to any collective bargaining agreement.
The Company's proposed personnel structure can be divided into three
broad categories: management and professional, administrative, and project
personnel. As in most small Company's, the divisions between these three
categories are somewhat indistinct, as employees are engaged in various
functions as projects and work load demands.
The Company is dependent upon Harold Jahn, President, Chief Executive
Officer, and Secretary Treasurer of the Company, Lew Mansell, Senior Vice
President, and Garry R. Knull, Chief Financial Officer, both
internationally and nationally. The Company has entered into employment
agreements with Mr. Jahn. Further, upon receipt of additional capital
intends to apply for key man life insurance on the lives of Mr. Jahn, and
Mr. Mansell in the amount of $1,000,000 each. The Company's future success
also depends on its ability to attract and retain other qualified
personnel, for which competition is intense. The loss of Mr. Jahn, Mr.
Mansell, and the other individuals involved in key management positions, or
the Company's inability to attract and retain other qualified employees
could have material adverse effect on the Company.
Risks Associated with Year 2000 Problem
In less than one year, computer systems and/or software used by many
Company's may need to be upgraded to accept four digit entries to
distinguish 21st century dates from 20th century dates. As is the case with
most other Company's using computers in their operations, the Company
recognizes the need to ensure that its operations will not be adversely
impacted by software and/or system failures related to such "Year 2000"
noncompliance. Within the past twelve months, the Company has been
upgrading components of its own internal computer and related information
and operational systems and continues to assess the need for further system
redesign and believes it is taking the appropriate steps to ensure Year
2000 compliance. Based on information currently available, the Company
believes that the costs associated with Year 2000 compliance, and the
consequences of incomplete or untimely resolution of the Year 2000 problem,
will not have a material adverse effect on the Company's business,
financial condition and results of operations in any given year. However,
<PAGE>
even if the internal systems of the Company are not materially affected by
the Year 2000 problem, the Company's business, financial condition and
results of operations could be materially adversely affected through
disruption in the operation of the enterprises with which the Company
interacts. There can be no assurance that third party computer products
used by the Company are Year 2000 compliant. Further, even though the
Company believes that its current products are Year 2000 compliant, there
can be no assurance that under actual conditions such products will perform
as expected or that future products will be Year 2000 compliant.
Any failure of the Company's products to be Year 2000 compliant could
result in the loss of or delay in market acceptance of the Company's
products and services, increased service and warranty costs to the Company
or payment by the Company of compensatory or other damages which could have
a material adverse effect on the Company's business, financial condition
and results of operations.
The Company being a development stage Company has readily available
hard copy accounting records, invoices, and other paper trails which will
be up dated prior to year end 1999. Since the Company has not commenced
substantial operations, third parties non compliance with the Year 2000
issue will have minimal impact on the Company. The Company, in contracting
with new vendors, manufactures, and plants is pre-establishing the third
party's compliance with Year 2000 issues.
Additional Information
The Company intends to provide an annual report to its security
holders, and to make quarterly reports available for inspection by its
security holders. The annual report will include audited financial
statements.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, will file reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information may be
inspected at public reference facilities of the Commission at Judiciary
Plaza, 450 Fifth Street N.W., Washington D.C. 20549; Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; 7
World Trade Center, New York, New York, 10048; and 5670 Wilshire Boulevard,
Los Angeles, California90036. Copies of such material can be obtained from
the Public Reference Section of the Commission at Judiciary Plaza, 450
Fifth Street N.W., Washington, D.C.20549 at prescribed rates. For further
information, the SEC maintains a website that contains reports, proxy and
information statements, and other information regarding reporting companies
at (http://www.sec.gov). The Company maintains a website at
www.1sustainable.com.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Following discussion should be read in conjunction
with, and is qualified in its entirety by the Financial Statements section
included below.
With the exception of historical matters, the matters discussed herein
are forward looking statements that involve risks and uncertainties.
Forward looking statements include, but are not limited to, statements
concerning anticipated trends in revenues and net income, the date of
introduction or completion of the Company's products, projections
concerning operations and available cash flow. The Company's actual results
could differ materially from the results discussed in such forward-looking
<PAGE>
statements. The following discussion of the Company's financial condition
and results of operations should be read in conjunction with the Company's
financial statements and the related notes thereto appearing elsewhere
herein.
Overview
The Company, which was organized in May 1998, is a Development Stage
Company, engaged in the business of commercializing innovative
technologies in the environmental, energy from waste, and alternative
power system industries. The Company has a limited operating history and
has not generated revenues from the sale of any products. The Company's
activities have been limited to start up procedures. Consequently, we have
incurred the expenses of start-up and licensing. Future operating results
will depend on many factors, including the ability of the Company to raise
adequate working capital, demand for our services and products, the level
of competition and our ability to satisfy governmental regulations and
deliver company services and products while maintaining quality and
controlling costs.
Results of Operations
Period from May 27, 1998 (Inception) to October 31, 1998
The first year of operation for the Company achieved two main goals.
The formation of the Company's organization to pursue its business strategy
and obtaining the licensing of technology required to pursue the Company's
objectives.
Revenues. The Company is a development stage enterprise as defined in
SFAS #7, and has yet to generate any revenues. The Company is devoting
substantially all of its present efforts to: (1) developing its management
team and administrative network, (2) developing its market, and (3)
obtaining sufficient capital to commence full operations.
General and Administrative. General and administrative, legal and
consulting expenses for the period from May, 1998 to October 31, 1998 were
$52,111, of which $18,000 was paid to a director for his services.
Liquidity and Capital Resources
Cash and cash equivalents will be increasing primarily due to
commencement of operations. The receipt of funds from Private Placement
Offerings and loans obtained through private sources by the Company are
anticipated to offset the near term cash equivalents of the Company for
the next 12 months. Since inception, the Company has financed its cash
flow requirements through issuance of common stock. As the Company
commences operational activities, it may continue to experience net
negative cash flows from operations, pending receipt of sales revenues.
Further, the Company may be required to obtain additional financing to
fund operations through Common Stock offerings and bank borrowings, to the
extent available, or to obtain additional financing to the extent
necessary to augment its working capital.
<PAGE>
Over the next twelve months, the Company intends to commence revenue
generation by establishing operational facilities under development in its
target markets. However, the Company will continue the research and
development of its products, increase the number of its employees, and
expand its facilities where necessary to meet development and completion
deadlines. The Company believes, that existing capital and anticipated
funds from operations will not be sufficient to sustain operations and
planned expansion in the next twelve months. Consequently, the Company will
seek additional financing in order to such additional funds will be
available or that, if available, such additional funds will be on terms
acceptable to the Company.
No assurance can be made that such financing would be available, and if
available it may take either the form of debt or equity. In either case,
the financing could have negative impact on the financial conditions of the
Company and its Shareholders.
The Company anticipates that it will incur operating losses in the next
twelve months. The Company's lack of operating history makes predictions
of future operating results difficult to ascertain. The Company's
prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by Company's in their early stage of
development, particularly Company's in new and rapidly evolving markets
such as environmental technology. Such risks for the Company include, but
are not limited to, an evolving and unpredictable business model and the
management of growth. To address these risks, the Company must, among
other things, obtain a customer base, implement and successfully execute
its business and marketing strategy, continue to develop and upgrade its
technology and products, provide superior customer services and order
fulfillment, respond to competitive developments, and attract, retain and
motivate qualified personnel. There can be no assurance that the Company
will be successful in addressing such risks, and the failure to do so can
have a material adverse effect on the Company's business prospects,
financial condition and results of operations.
Initial financing is only to provide funds to prove the business
concept and to finish the development of the environmental technology.
Additional funds will be necessary to take the product to market. The
Company hopes to enter into additional funding arrangements through
strategic partnerships, merger, equity offering or debt offering. Nothing
has been secured as of this time.
Additionally, the Company recently received an extension of 12 months
for the commencement of construction of its first plant in Germany for oil
recycling. Further, the licensing fee of $300,000 on the initial plant in
Germany has been delayed until construction is completed. Although this
extension provides the Company with additional time in which to capitalize
the construction through the sale of the Company's securities or through
debt, there can be no assurance the Company will be able to generate the
funds required to commence construction, or complete construction once
started. In the event the Company is unable to commence construction
during the extension period, or in the alternative, obtain additional
extensions, then in that event the licensing rights held by the Company
would be cancelled, leaving the Company with substantially no assets or
means of generating revenues.
ITEM 3. DESCRIPTION OF PROPERTY
Office. The Company's main offices are located at 10240 - 124th
Street, Suite 208, Edmonton, Alberta, Canada , and its telephone
number is (780) 488-9193, Fax No. (780) 488-9100. The facility is a
leased approximately 600 square foot facility utilized in the
<PAGE>
following manner: a) administrative offices, b) professional offices,
c) miscellaneous. The headquarters is ideal to commencement the
pursuit of marketing activity throughout North America.
Technical Library - The Company maintains a technical library, which
is comprised of periodicals, trade journals, books, and other
documents related primarily to the basic sciences, government
regulations and industry materials.
Processing Plant - The manufacturing plant for the Company's products
is to be located in Merkers, Thuringia, Germany, where sufficient
processing equipment will be in place for production purposes. The
plant has not been acquired by the Company at this time.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners.
The following table sets forth certain information as of March 31,
1999 with respect to the beneficial ownership of Common Stock by (i) each
person who to the knowledge of the Company, beneficially owned or had the
right to acquire more than 5% of the Outstanding Common Stock, (ii) each
director of the Company and (iii) all executive officers and directors of
the Company as a group.
<TABLE>
Name of Beneficial Owner (1) Number Percent
of Shares Of Class
(2)
<S> <C> <C>
Sustainable Development Group(3) 9,500,000 69%
Enviro-Mining Inc. (4) 3,260,000 24%
Jeff Lea Investments (5) 20,000 1%
----------- --------
All Directors & Officers as a Group 12,780,000 94%
</TABLE>
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security, or the sole or
shared investment power with respect to a security (i.e., the power to
dispose of, or to direct the disposition of, a security). In
addition, for purposes of this table, a person is deemed, as of any
date, to have "beneficial ownership" of any security that such person
has the right to acquire within 60 days after such date.
(2) Figures are rounded to the nearest percentage.
(3) Sustainable Development Group is controlled by Harold Jahn.
(4) Enviro-Mining Inc. is owned 50% by Harold Jahn and 50% by Lew Mansell.
(5) Jeff Lea Investments is controlled by Garry Knull.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The following table sets forth the names, positions with the Company
and ages of the executive officers and directors of the Company. Directors
will be elected at the Company's annual meeting of shareholders and serve
for one year or until their successors are elected and qualify. Officers
are elected by the Board and their terms of office are, except to the
<PAGE>
extent governed by employment contract, at the discretion of the Board.
Harold Jahn and Lew Mansell are the only current full time employees of the
Company.
Executive Officers and Directors
<TABLE>
Name Age Title
<S> <C> <C>
Harold Jahn 29 President, CEO, Secretary/Treasurer, Director
Lew Mansell 52 Senior Vice President, Director
Garry R. Knull 52 Chief Financial Officer
</TABLE>
Duties, Responsibilities and Experience
Harold Jahn - President and Chief Executive Officer
Mr. Jahn has served as the Company's Chief Executive Officer, President,
and Chairman of the Board since May 1998. From mid 1995 until present Mr.
Jahn has been president of Enviro-Mining Inc. a company co-founded by Mr.
Jahn as a solution for recycling needs in the tire industry. Its mission
has expanded, developing a broader recycling mandate internationally with
the inclusion of innovative technologies in power generation and mining
equipment worldwide. From July, 1991, to July, 1997, Mr. Jahn was involved
in real estate sales. Mr. Jahn graduated from the University of Alberta
with a BA degree in International Relations and Economics in 1991. His
education contributed to his knowledge of business and government issues,
creativity in problem solving, strengthened concerns for sustainable
development, and managing projects in a timely manner.
Lew Mansell - Senior Vice President
Lew Mansell has served as a Senior Vice President and a Director of the
Company since June, 1998. From August, 1995, to June, 1998, Mr. Mansell was
the Vice President of Enviro-Mining, Inc. From 1993 until present Mr.
Mansell owned and operated INVEQ Services, a mortgage brokerage firm. Mr.
Mansell graduated with a B.Sc. in chemistry in 1968, and brings over 25
years of management skills to this position. His experience includes
polymer research, industrial sales and services in the manufacturing,
petrochemical, and corrosion industry. Since 1978, he has successfully
turned around several Company's implementing new quality control systems,
and production procedures. The marketing and commercialization of
innovative technologies became his focus from 1990.
Garry R. Knull - Chief Financial Officer
Garry R. Knull, CA, has served as Chief Financial Officer of the Company
since June, 1998. From 1979 until present Mr. Knull has been a senior
partner in the accounting firm of Knull, Hales & Chapelsy. He has been
involved in corporate and commercial accounting, auditing and providing
financial and taxation advice to a variety of clients. He is also Chief
Financial Officer of a midsize oilfield manufacturing and supply company.
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Company does not currently have a compensation committee of the
Board of Directors. However, the Board of Directors intends to establish a
compensation committee which is expected to consist of three inside
directors and the two independent members of the Board of Directors.
Stock Option Plan and Non-Employee Directors' Plan
The following descriptions apply to stock option plans, which the
Company has adopted; however, no options have been granted as of this date.
The Company intends to reserve for issuance an aggregate of 1,000,000
shares of Common Stock under a Stock Option Plan (the "Stock Option Plan")
and Non-Employee Directors' Plan described below (the "Directors' Plan")
which is planned to be adopted by the Company. These plans are intended to
encourage directors, officers, employees and consultants of the Company to
acquire ownership of Common Stock. The opportunity is intended to foster
in participants a strong incentive to put forth maximum effort for the
continued success and growth of the Company, to aid in retaining
individuals who put forth such efforts, and to assist in attracting the
best available individuals to the Company in the future.
Stock Option Plan
Officers (including officers who are members of the Board of
Directors), directors (other than members of the Stock Option Committee
(the "Committee") to be established to administer the Stock Option Plan and
the Directors' Plan) and other employees and consultants of the Company and
its subsidiaries (if established) will be eligible to receive options under
a the planned Stock Option Plan. The Committee will administer the Stock
Option Plan and will determine those persons to whom options will be
granted, the number of options to be granted, the provisions applicable to
each grant and the time periods during which the options may be exercised.
No options may be granted more than ten years after the date of the
adoption of the Stock Option Plan.
Unless the Committee, in its discretion, determines otherwise, non-
qualified stock options will be granted with an option price equal to the
fair market value of the shares of Common Stock to which the non-qualified
stock option relates on the date of grant. In no event may the option
price with respect to an incentive stock option granted under the Stock
Option Plan be less than the fair market value of such Common Stock to
which the incentive stock option relates on the date the incentive stock
option is granted.
Each option granted under the Stock Option Plan will be exercisable
for a term of not more than ten years after the date of grant. Certain
other restrictions will apply in connection with this Plan when some awards
may be exercised. In the event of a change of control (as defined in the
Stock Option Plan), the date on which all options outstanding under the
Stock Option Plan may first be exercised will be accelerated. Generally,
all options terminate 90 days after a change of control.
<PAGE>
Directors Plan
The Directors' Plan is intended to:
* Enable the Company to secure persons of requisite business
experience to serve on the Board of Directors,
* To motivate directors to enhance the future growth of the
Company by furthering their identification with the interests of the
Company and its stockholders, and
* To assist in retaining directors.
The Directors' Plan will provide for the grant of stock options to
persons who are members of the Board of Directors and who at the time they
joined the Board of Directors were not employees of the Company or any of
its affiliates ("Non-Employee Directors"). The Committee will administer
the Directors' Plan. Each of the Non-Employee Directors will receive an
option to purchase shares of Common Stock. Such options will vest in three
equal annual installments commencing on the first anniversary of such Non-
Employee Director's election. Options granted under the Directors' Plan may
not be exercised more than five years after the date of grant. No option
may be granted more than ten years after the date of the adoption of the
Directors' Plan. In the event of a change of control (as defined in the
Directors' Plan), the date on which all options outstanding under the
Directors' Plan may first be exercised is accelerated. Generally, all
options will terminate 90 days after a change of control.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth the cash compensation of the Company's
executive officers and directors during each of the fiscal years since
inception of the Company. The remuneration described in the table does not
include the cost to the Company of benefits furnished to the named
executive officers, including premiums for health insurance and other
benefits provided to such individual that are extended in connection with
the conduct of the Company's business. The value of such benefits cannot be
precisely determined, but the executive officers named below did not
receive other compensation in excess of the lesser of $50,000 or 10% of
such officer's cash compensation.
<TABLE>
Summary Compensation Table
Long Term
Annual Compensation Compensation
Name and Other Restricted
Principal Year Salary Bonus Annual stock Options Others
Position Compen-
sation
<S> <C> <C> <C> <C> <C> <C> <C>
Harold Jahn 1998 $18,000 -0- -0- -0- -0- -0-
(1)(2)
Lew Mansell 1998 -0- -0- -0- -0- -0- -0-
(2)
Garry R. Knull 1998 -0- -0- -0- -0- -0- -0-
</TABLE>
(1) Sustainable Development Group, controlled by Harold Jahn, received
9,500,000 shares of founders stock in 1998.
(2) Enviro-Mining, Inc. controlled equally by Lew Mansell and Harold Jahn
received 2,800,000 shares of founders stock in 1998.
<PAGE>
Compensation of Directors
All directors will be reimbursed for expenses incurred in attending
Board or committee meetings.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
License Agreement. On June 11, 1998, the Company entered into a
license agreement ("Limited Technology License Agreement") with Enviro-
Mining Inc., a shareholder of the Company, regarding the licensing of the
Company by Enviro-Mining, Inc. to use certain patented technology in
connection with the recycling of waste oil into low sulphur diesel.
The license is for a period of thirty (30) years commencing on June
11, 1998, with renewable 10 year terms. The Limited Technology License
Agreement requires the payment of certain minimal annualized payments, and
in the event of default in the payments, the Company could lose its rights
to continue utilizing the technology. Further, the Limited Technology
License Agreement provides that the Company "must commence construction in
the first twelve (12) months of this agreement, a plant of minimum
capacity of 90,000 tons of waste oil input in the Territory." The
agreement, dated June 11, 1998, further states that it shall be just cause
for termination of the Licensee of all license and marketing rights if the
Company has not commenced construction of the first plant within the first
year of the license agreement, and an additional commercial scale plant
every yea thereafter for the next 5 years. On May 11, 1999 the Limited
Technology License Agreement was amended to reflect an extension until
June 11, 2000 for the Company to comply with the commencement of
construction and delayed payment of the License fee of $300,000.
Enviro-Mining, Inc. Harold Jahn, President and CEO of the Company, and Lew
Mansell, Senior Vice President of the Company, are joint owners of Enviro-
Mining, Inc.
Sustainable Development Group Harold Jahn, President and CEO of the
Company, and Lew Mansell, Senior Vice President of the Company, are joint
owners of Sustainable Development Group.
At year end, October 1998, management fees of $18,000 were paid to Harold
Jahn.
ITEM 8. LEGAL PROCEEDINGS
The Company is not presently a party to any litigation, nor to the
knowledge of management is any litigation threatened against the Company,
which would materially affect the Company.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Prior to this filing there has not been a public market for the
Company's Common Stock, and there can be no assurance that a public market
for the Common Stock will develop or be sustained after this filing. The
trading price of the Company's Common Stock could be subject to wide
fluctuations in response to quarterly variations in operating results,
announcement of technological innovations or new products by the Company
<PAGE>
or its competitors, and other events or factors. In addition, in recent
years the stock market has experienced extreme price and volume
fluctuations that have had a substantial effect on the market prices for
many emerging growth Company's, which may be unrelated to the operating
performance of the specific Company's.
The Company's shares of Common Stock are not registered with the U.S.
Securities and Exchange Commission under the Securities Act of 1933, as
amended (hereinafter referred to as the "Act"), and with the exception of
certain shares issued pursuant to Regulation D-504, are "restricted
securities." Rule 144 of the Act provides, in essence, that holders of
restricted securities for a period of one year (unless an affiliate of the
Company) may, every three months, sell to a market maker or in ordinary
brokerage transactions an amount equal to one percent of the Company's then
outstanding securities. Affiliates may be required to hold for two years.
Non-affiliates of the Company who hold restricted securities for a period
of two years may sell their securities without regard to volume limitations
or other restriction. A total of 956,200 shares are unrestricted and the
balance of 12,760,800 shares of Common Stock will be available for resale
under Rule 144 commencing in 1999. Sales of shares of Common Stock under
Rule 144 may have a depressive effect on the market price of the Company's
Common Stock, should a public market develop for such stock. Such sales
might also impede future financing by the Company.
Since its inception in May 1998, the Company has not paid cash
dividends on its Common Stock. It is the present policy of the Company not
to pay cash dividends and to retain future earnings to support the
Company's growth. Any payments of cash dividends in the future will be
dependent upon, among other things, the amount of funds available
therefore, the Company's earnings, financial condition, capital
requirements, and other factors which the Board of Directors deem relevant.
As of December 31, 1998 there were approximately 53 Common
Shareholders of record.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
May 1998, the Company issued 11,500,000 shares of common stock to the
founders of the Company in a transaction deemed to be exempt under 4(2) of
the Securities Act of 1933. No underwriters fees or commissions were paid
in the transaction.
June 1998, the Company issued 1,200,000 shares of common stock at $.25 per
share to Enviro-Mining, Inc. in a transaction deemed to be exempt under
4(2) of the Securities Act of 1933. No underwriters fees or commissions
were paid in the transaction.
September 1998, the Company issued 706,596 shares of common stock at $.25
per share pursuant to a private placement for a total of $176,649. No
underwriters fees or commissions were paid in the transaction.
June - October 1998, the Company issued 93,404 shares of common stock at
$.25 per share in exchange for services rendered. No underwriters fees or
commissions were paid in the transaction.
October 1998, the Company issued 200,000 shares of common stock at $1.00
per share pursuant to a private placement deemed exempt pursuant to
Regulation D 504 under the Securities Act of 1933, for a total of $200,000.
The Regulation D 504 exemption was relied upon as the total dollars raised
<PAGE>
during the preceding 12 months did not exceed $1 million. No underwriters
fees or commissions were paid in the transaction.
ITEM 11. DESCRIPTION OF SECURITIES
Common Stock
The Company's Articles of Incorporation authorizes the issuance of
50,000,000 shares of common stock, $0.001 par value per share, of which
13,720,000 shares were outstanding as of the date of this filing. Holders
of shares of common stock are entitled to one vote for each share on all
matters to be voted on by the stockholders and have no cumulative voting
rights. Holders of shares of common stock are entitled to share ratably in
dividends, if any, as may be declared, from time to time by the Board of
Directors in its discretion, from funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, the
holders of shares of common stock are entitled to share pro rata all
assets remaining after payment in full of all liabilities. Holders of
common stock have no preemptive rights to purchase the Company's common
stock. There are no conversion rights or redemption or sinking fund
provisions with respect to the common stock. All of the outstanding shares
of common stock are validly issued, fully paid and non-assessable.
Preferred Stock
The Company's Articles of Incorporation authorizes the issuance of
10,000,000 shares of preferred stock, $0.001 par value per share, of which
no shares were outstanding as of the date of this filing. The Preferred
Stock may be issued from time to time by the Board of Directors as shares
of one or more classes or series. Subject to the provisions of the
Company's Certificate of Incorporation and limitations imposed by law, the
Board of Directors is expressly authorized to adopt resolutions to issue
the shares, to fix the number of shares and to change the number of shares
constituting any series, and to provide for or change the voting powers,
designations, preferences and relative, participating, optional or other
special rights, qualifications, limitations or restrictions thereof,
including dividend rights (including whether dividends are cumulative),
dividend rates, terms of redemption (including sinking fund provisions),
redemption prices, conversion rights and liquidation preferences of the
shares constituting any class or series of the Preferred Stock, in each
case without any further action or vote by the stockholders.
One of the effects of undesignated Preferred Stock may be to enable
the Board of Directors to render more difficult or to discourage an attempt
to obtain control of the Company by means of a tender offer, proxy contest,
merger or otherwise, and thereby to protect the continuity of the Company's
management. The issuance of shares of Preferred Stock pursuant to the Board
of Director's authority described above may adversely affect the rights of
holders of Common Stock. For example, Preferred stock issued by the Company
may rank prior to the Common Stock as to dividend rights, liquidation
preference or both, may have full or limited voting rights and may be
convertible into shares of Common Stock. Accordingly, the issuance of
shares of Preferred Stock may discourage bids for the Common Stock at a
premium or may otherwise adversely affect the market price of the Common
Stock.
The Company has no plans for the issuance of Preferred Stock as of
this date.
<PAGE>
Dividend Policy
The Company has never declared or paid cash dividends on its Common
Stock. The Company currently anticipates that it will retain all future
earnings for use in the operation and expansion of its business and does
not anticipate paying any cash dividends in the foreseeable future.
Transfer Agent
The transfer agent for the common stock is Pacific Stock Transfer,
5844 South Pecos Road, Suite D, Las Vegas, Nevada 89120.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation for the Company do not contain provisions for
indemnification of the officers and directors; however, Section 78.751 of
the Nevada General Corporation Laws provides as follows:
78.751 Indemnification of officers, directors, employees and agents;
advance of expenses.
1. A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorney's fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the action, suit
or proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding,
he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually
and reasonably incurred by him in connection with the defense or settlement
of the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or
matter as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
<PAGE>
the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or suit
was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such expenses as the
court deems proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections 1 and 2, or in
defense of any claim, issue or matter therein, he must be indemnified by
the corporation against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by
a court or advanced pursuant to subsection 5, must be made by the
corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper
in the circumstances. The determination must be made:
(a)By the stockholders:
(b)By the board of directors by majority vote of a quorum consisting o
directors who were not parties to act, suit or proceeding;
(c)If a majority vote of a quorum consisting of directors who were not
parties to the act, suit or proceeding so orders, by independent legal
counsel in a written opinion; or
(d)If a quorum consisting of directors who were not parties to the act,
suit or proceeding cannot to obtained, by independent legal counsel in a
written opinion; or
5. The articles of incorporation, the bylaws or an agreement made by
the corporation may provide that the expenses of officers and directors
incurred in defending a civil or criminal, suit or proceeding must be paid
by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he
is not entitled to be indemnified by corporation. The provisions of this
subsection do not affect any rights to advancement of expenses to which
corporate personnel other than the directors or officers may be entitled
under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
articles of incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his office, except
that indemnification, unless ordered by a court pursuant to subsection 2 or
for the advancement of expenses made pursuant to subsection 5, may not be
made to or on behalf of any director or officer if a final adjudication
establishes that his act or omissions involved intentional misconduct,
fraud or a knowing violation of the law and was material to the cause of
action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
<PAGE>
ITEM 13. FINANCIAL STATEMENTS
The 1998 Audited Financial Statement of the Company, prepared by the
Accounting Firm of Grant Thornton, required by Regulation S-X commence on
page F-1 hereof in response to Item 13 of this Registration Statement on
Form 10SB and are incorporated herein by this reference.
Audited Financial Statements of Sustainable Development International, Inc.
Independent Auditors' Report F-1
Statement of Loss and Deficit for the period ended October 31, 1998 F-2
Balance Sheet as of October 31, 1998 F-3
Statements of Changes in Financial Position Period Ended
October 31, 1998 F-4
Notes to Financial Statements F-5-F-7
<PAGE>
Chartered Accountants
Canadian Member Firm of
Grant Thornton International
Auditors' Report
To the Shareholders of
Sustainable Development International Inc.
We have audited the balance sheet of Sustainable Development
International Inc. as at October 31, 1998 and the statement of
loss and deficit and changes in financial position for the period
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 generally accepted auditing
standards. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are
free of material misstatements. 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.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the company as at
October 31, 1998 and the results of its operations and changes in
its financial position for the period then ended in accordance
with generally accepted accounting principles.
Edmonton, Canada
November 6, 1998 Chartered Accountants
<PAGE>
<TABLE>
Sustainable Development International Inc.
Statement of Loss and Deficit
(Expressed in United States Dollars)
Period Ended October 31, 1998 (157 days)
<S> <C>
Expenses
Advertising $ 150
Amortization 4,167
Consulting fees 23,401
Management fees (Note 5) 18,000
Professional fees 4,988
Service Charges 455
Travel 950
--------------
(52,111)
--------------
Net loss and deficit, end of period $ (52,111)
=============
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
<TABLE>
Sustainable Development International Inc.
Balance Sheet
(Expressed in United States Dollars)
October 31, 1998
<S> <C>
Assets
Current
Cash $ 330,053
Licensing agreement (Note 2) 295,833
-----------
$ 625,886
===========
</TABLE>
<TABLE>
<S> <C>
Liabilities
Current
Payables and accruals $ 13,989
-----------
Shareholder's Equity
Capital stock (Note 4) 664,008
Deficit (52,111)
-----------
611,897
-----------
$ 625,886
===========
</TABLE>
Commitment (Note 3)
See accompanying notes to the financial statements.
<PAGE>
<TABLE>
Sustainable Development International Inc.
Statement of Changes in Financial Position
(Expressed in United States Dollars)
Period Ended October 31, 1998 (157 days)
<S> <C>
Operating
Net loss $ (52,111)
Amortization 4,167
Services settled with shares 23,351
Change in non-cash operating
working capital:
Payables and accruals 13,989
-------------
(10,604)
Financing
Issuance of capital stock 640,657
Investing
Purchase of licensing agreement (300,000)
--------------
Net increase in cash and balance, end of period $ 330,053
==============
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
Sustainable Development International Inc.
Notes to the Financial Statements
(Expressed in United States Dollars)
October 31, 1998
1. Commencement of operations
Sustainable Development International, Inc., a Nevada corporation, is a
development stage company formed on May 27, 1998 to encourage sustainable
development by commercializing innovative technologies in environmental
industries.
The company's goal is to acquire technology rights and licenses from patent
holders for proven technologies, then secure a market, and finally raise
the necessary capital to build, own, and operate facilities throughout the
world.
2. Significant accounting policies
Basis of presentation
The company's accounting and reporting policies conform to generally
accepted accounting principles and industry practice in the United States.
The amounts are reported in these financial statements are in United States
dollars.
Use of estimates
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the amounts of revenues and expenses for the
reported period. Actual results could differ from those estimates.
Licensing agreement
Licensing agreements are recorded at cost. Licensing agreements are
assessed for future recoverability or impairment on an annual basis by
estimating future net undiscounted cash flows and residual values or by
estimating replacement or appraised values. If the net carrying amount of
the licensing agreement exceeds the estimated net recoverable amount, the
agreement is written down with a charge against income.
Amortization of licensing agreements is being recorded in the financial
statements on a straight-line basis over the life of the agreement, which
is 30 years.
<TABLE>
3. Licensing agreement 1998
<S> <C>
Licensing agreement $ 300,000
==========
</TABLE>
On June 11, 1998 Sustainable Development International Inc. entered into a
Limited Technology License Agreement with Enviro-Mining Inc., an Alberta,
Canada Corporation. The Agreement commits Sustainable Development
International Inc. to pay an amount equal to or less than $300,000 to
Enviro-Mining Inc. as a production royalty.
The Agreement could be terminated if Sustainable Development International
Inc. does not commence construction within the first twelve months of the
agreement, at a minimum plant capacity of 90,000 Tonnes of waste oil input.
<PAGE>
Sustainable Development International Inc.
Notes to the Financial Statements
(Expressed in United States Dollars)
October 31, 1998
4. Capital stock
Authorized:
50,000,000 Common voting shares, $.001 par
value
10,000,000 Preferred shares
<TABLE>
<S> <C>
Issued:
13,700,000 Common voting shares $ 13,700
Additional paid in capital 650,308
----------
$ 664,008
==========
</TABLE>
<TABLE>
During the period, the company had the following
share transactions:
<S> <C> <C>
Shares $
Shares issued to founding shareholders, May 1998. 11,500,000 $ 8
Common shares issued for cash consideration of
$0.25 per share by private placement,
September 1998. 706,596 176,649
Common shares issued for transfer of Licensing
Agreement at $0.25 per share, October1998. 1,200,000 300,000
Common shares issued for services at $0.25
per share, June 1998 to October 1998. 93,404 23,351
Common share issued for cash consideration of
$1.00 per share by private placement,
October 1998. 200,000 200,000
---------- --------
13,700,000 700,008
Expenses on issuance of share capital. - (36,000)
----------- ---------
13,700,000 $ 664,008
=========== ==========
</TABLE>
<PAGE>
Sustainable Development International Inc.
Notes to the Financial Statements
(Expressed in United States Dollars)
October 31, 1998
5. Related party transactions
a) During the year, Enviro Mining Inc., a shareholder of the company, sold
to the company a Licensing Agreement for $300,000.
b) During the year, management fees were paid to the director of the
company totaling $18,000.
6. 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. The effects of the year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect an entity's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the company,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
<PAGE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has not had any changes in or disagreements with Accountants
since inception.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
Exhibit Description
Number
<S> <C>
(3)(i)* Articles of Incorporation
(a) Articles of Incorporation, as amended for Sustainable
Development International, Inc., a Nevada corporation
(3)(ii)* Bylaws
(a) Bylaws, as amended for Sustainable Development
International, Inc., a Nevada corporation
(4)* Instruments defining the rights of security holders:
(4)(i)* (a) Articles of Incorporation for Sustainable Development
International, Inc., a Nevada Corporation
(b) Bylaws of Sustainable Development International, Inc., a
Nevada Corporation
(c) Stock Certificate specimen
(d) Stock Option Plan
(10)(i)* Material Contracts
(a) Limited Technology License Agreement
(b) Power Purchase Agreement -German State Electrical
Utility
(c) Addendum to Limited Technology License Agreement
(d) Employment Agreement - Jahn, Harold
(24)* Consents of expert
(a) Grant Thornton - Auditors
(27)* Financial Data Schedule
</TABLE>
*Filed herewith.
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
June 3, 1999 SUSTAINABLE DEVELOPMENT
INTERNATIONAL, INC.
(Registrant)
By: /S/ Harold Jahn
----------------------------
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Harold Jahn Chairman, CEO, President June 3, 1999
- --------------------
Harold Jahn
/s/ Lew Mansell Senior Vice President, Director June 3, 1999
- -------------------
Lew Mansell
/s/ Garry R. Knull Treasurer, CFO June 3, 1999
- --------------------
Garry R. Knull
ARTICLES OF INCORPORATION
OF
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC.
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, being at least eighteen (18) years of age and
acting as the incorporator of the Corporation hereby being formed under and
pursuant to the laws of the State of Nevada, does hereby certify that:
Article I - NAME
The exact name of this corporation is:
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC.
Article II - REGISTERED OFFICE AND RESIDENT AGENT
The registered office and place of business in the State of
Nevada of this corporation shall be located at 1850 E. Flamingo Rd., Suite
111, Las Vegas, Nevada. The resident agent of the corporation is DONALD J.
STOECKLEIN, whose address is 1850 E. Flamingo Rd., Suite 111, Las Vegas,
Nevada 89119.
Article III - DURATION
The Corporation shall have perpetual existence.
Article IV - PURPOSES
The purpose, object and nature of the business for which this
corporation is organized are:
(a) To engage in any lawful activity, (b) To carry on such
business as may be necessary, convenient, or desirable to accomplish
the above purposes, and to do all other things incidental thereto
which are not forbidden by law or by these Articles of Incorporation.
<PAGE>
Article V - POWERS
This Corporation is formed pursuant to Chapter 78 of the Nevada
Revised Statutes. The powers of the Corporation shall be those powers
granted by 78.060 and 78.070 of the Nevada Revised Statutes under which
this corporation is formed. In addition, the corporation shall have the
following specific powers:
(a) To elect or appoint officers and agents of the corporation
and to fix their compensation; (b) To act as an agent for any
individual, association, partnership, corporation or other legal
entity; (c) To receive, acquire, hold, exercise rights arising out of
the ownership or possession thereof, sell, or otherwise dispose of,
shares or other interests in, or obligations of, individuals,
association, partnerships, corporations, or governments; (d) To
receive, acquire, hold, pledge, transfer, or otherwise dispose of
shares of the corporation, but such shares may only be purchased,
directly or indirectly, out of earned surplus; (e) To make gifts or
contributions for the public welfare or for charitable, scientific or
educational purposes.
Article VI - CAPITAL STOCK
Section 1. Authorized Shares. The total number of shares which
this corporation is authorized to issue is 50,000,00 shares of Common
Stock of $.001 par value and 10,000,000 shares of Preferred Stock of
$.001 par value.
Section 2. Voting Rights of Stockholders. Each holder of the
Common Stock shall be entitled to one vote for each share of stock
standing in his name on the books of the corporation.
<PAGE>
Section 3. Consideration for Shares. The Common Stock shall be
issued for such consideration, as shall be fixed from time to time by
the Board of Directors. In the absence of fraud, the judgment of the
Directors as to the value of any property or services received in full
or partial payment for shares shall be conclusive. When shares are
issued upon payment of the consideration fixed by the Board of
Directors, such shares shall be taken to be fully paid stock and shall
be non-assessable. The Articles shall not be amended in this
particular.
Section 4. Stock Rights and Options. The corporation shall have
the power to create and issue rights, warrants, or options entitling
the holders thereof to purchase from the corporation any shares of its
capital stock of any class or classes, upon such terms and conditions
and at such times and prices as the Board of Directors may provide,
which terms and conditions shall be incorporated in an instrument or
instruments evidencing such rights. In the absence of fraud, the
judgment of the Directors as to the adequacy of consideration for the
issuance of such rights or options and the sufficiency thereof shall
be conclusive.
Article VII - MANAGEMENT
For the management of the business, and for the conduct of the affairs
of the corporation, and for the future definition, limitation, and
regulation of the powers of the corporation and its directors and
stockholders, it is further provided:
Section 1. Size of Board. The initial number of the Board of
Directors shall be one (1). Thereafter, the number of directors shall
be as specified in the Bylaws of the corporation, and such number may
<PAGE>
from time to time be increased or decreased in such manner as
prescribed by the Bylaws. Directors need not be stockholders.
Section 2. Powers of Board. In furtherance and not in
limitation of the powers conferred by the laws of the State of Nevada,
the Board of Directors is expressly authorized and empowered:
(a) To make, alter, amend, and repeal the Bylaws subject to the
power of the stockholders to alter or repeal the Bylaws made by the
Board of Directors;
(b) Subject to the applicable provisions of the Bylaws then in
effect, to determine, from time to time, whether and to what extent,
and at what times and places, and under what conditions and
regulations, the accounts and books of the corporation, or any of
them, shall be open to stockholder inspection. No stockholder shall
have any right to inspect any of the accounts, books or documents of
the corporation, except as permitted by law, unless and until
authorized to do so by resolution of the Board of Directors or of the
stockholders of the Corporation;
(c) To authorize and issue, without stockholder consent,
obligations of the Corporation, secured and unsecured, under such
terms and conditions as the Board, in its sole discretion, may
determine, and to pledge or mortgage, as security therefore, any real
or personal property of the corporation, including after-acquired
property;
(d) To determine whether any and, if so, what part of the earned
surplus of the corporation shall be paid in dividends to the
stockholders, and to direct and determine other use and disposition of
any such earned surplus;
(e) To fix, from time to time, the amount of the profits of the
corporation to be reserved as working capital or for any other lawful
purpose;
<PAGE>
(f) To establish bonus, profit-sharing, stock option, or other
types of incentive compensation plans for the employees, including
officers and directors, of the corporation, and to fix the amount of
profits to be shared or distributed, and to determine the persons to
participate in any such plans and the amount of their respective
participations.
(g) To designate, by resolution or resolutions passed by a
majority of the whole Board, one or more committees, each consisting
of two or more directors, which, to the extent permitted by law and
authorized by the resolution or the Bylaws, shall have and may
exercise the powers of the Board;
(h) To provide for the reasonable compensation of its own
members by Bylaw, and to fix the terms and conditions upon which such
compensation will be paid;
(i) In addition to the powers and authority hereinbefore, or by
statute, expressly conferred upon it, the Board of Directors may
exercise all such powers and do all such acts and things as may be
exercised or done by the corporation, subject, nevertheless, to the
provisions of the laws of the State of Nevada, of these Articles of
Incorporation, and of the Bylaws of the corporation.
Section 3. Interested Directors. No contract or transaction
between this corporation and any of its directors, or between this
corporation and any other corporation, firm, association, or other
legal entity shall be invalidated by reason of the fact that the
director of the corporation has a direct or indirect interest,
pecuniary or otherwise, in such corporation, firm, association, or
legal entity, or because the interested director was present at the
meeting of the Board of Directors which acted upon or in reference to
such contract or transaction, or because he participated in such
action, provided that: (1) the interest of each such director shall
<PAGE>
have been disclosed to or known by the Board and a disinterested
majority of the Board shall have, nonetheless, ratified and approved
such contract or transaction (such interested director or directors
may be counted in determining whether a quorum is present for the
meeting at which such ratification or approval is given); or (2) the
conditions of N.R.S. 78.140 are met.
Section 4. Name and Address. The name and post office address
of the first Board of Directors which shall consist of one (1) person
who shall hold office until his successors are duly elected and
qualified, are as follows:
NAME ADDRESS
HAROLD JAHN 1850 E. Flamingo Road,
Suite 111
Las Vegas, Nevada 89119
Article VIII - PLACE OF MEETING; CORPORATE BOOKS
Subject to the laws of the State of Nevada, the stockholders and the
directors shall have power to hold their meetings, and the directors shall
have power to have an office or offices and to maintain the books of the
Corporation outside the State of Nevada, at such place or places as may
from time to time be designated in the Bylaws or by appropriate resolution.
Article IX - AMENDMENT OF ARTICLES
The provisions of these Articles of Incorporation may be amended,
altered or repealed from time to time to the extent and in the manner
prescribed by the laws of the State of Nevada, and additional provisions
authorized by such laws as are then in force may be added. All rights
herein conferred on the directors, officers and stockholders are granted
subject to this reservation.
<PAGE>
Article X - INCORPORATOR
The name and address of the incorporator signing these Articles of
Incorporation are as follows:
NAME POST OFFICE ADDRESS
HAROLD JAHN 1850 E. Flamingo Road,
Suite 111
Las Vegas, Nevada 89119
Article XI - LIMITED LIABILITY OF OFFICERS AND DIRECTORS
Except as hereinafter provided, the officers and directors of the
corporation shall not be personally liable to the corporation or its
stockholders for damages for breach of fiduciary duty as a director or
officer. This limitation on personal liability shall not apply to acts or
omissions which involve intentional misconduct, fraud, knowing violation of
law, or unlawful distributions prohibited by Nevada Revised Statutes
Section 78.300.
IN WITNESS WHEREOF, the undersigned incorporator has executed
these Articles of Incorporation this 27th day of May, 1998.
/s/ Harold Jahn
--------------------------
HAROLD JAHN
STATE OF NEVADA )
) ss:
COUNTY OF CLARK )
On May 27, 1998, personally appeared before me, a Notary Public,
HAROLD JAHN, who acknowledged to me that he executed the foregoing Articles
of Incorporation.
/s/ Debra K. Amigone
---------------------------
NOTARY PUBLIC
BYLAWS
OF
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC.,
a Nevada corporation
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICES. The principal office shall be
in the City of Las Vegas, County of Clark, State of Nevada.
Section 2. OTHER OFFICES. The board of directors may at any
time establish branch or subordinate offices at any place or places where
the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of stockholders shall
be held at any place within or without the State of Nevada designated by
the board of directors. In the absence of any such designation,
stockholders' meetings shall be held at the principal executive office of
the corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of
stockholders shall be held at a date and time designated by the board of
directors. (At such meetings, directors shall be elected and any other
proper business may be transacted by a plurality vote of stockholders.)
Section 3. SPECIAL MEETINGS. A special meeting of the
stockholders, for any purpose or purposes whatsoever, unless prescribed by
statute or by the articles of incorporation, may be called at any time by
the president and shall be called by the president or secretary at the
request in writing of a majority of the board of directors, or at the
request in writing of stockholders holding shares in the aggregate entitled
to cast not less than a majority of the votes at any such meeting.
The request shall be in writing, specifying the time of such
meeting, the place where it is to be held and the general nature of the
business proposed to be transacted, and shall be delivered personally or
sent by registered mail or by telegraphic or other facsimile transmission
to the chairman of the board, the president, any vice president or the
secretary of the corporation. The officer receiving such request forthwith
shall cause notice to be given to the stockholders entitled to vote, in
accordance with the provisions of Sections 4 and 5 of this Article II, that
a meeting will be held at the time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty
(60) days after the receipt of the request. If the notice is not given
within twenty (20) days after receipt of the request, the person or persons
requesting the meeting may give the notice. Nothing contained in this
paragraph of this Section 3 shall be construed as limiting, fixing or
affecting the time when a meeting of stockholders called by action of the
board of directors may be held.
Section 4. NOTICE OF STOCKHOLDERS' MEETINGS. All notices of
meetings of stockholders shall be sent or otherwise given in accordance
<PAGE>
with Section 5 of this Article II not less than ten (10) nor more than
sixty (60) days before the date of the meeting being noticed. The notice
shall specify the place, date and hour of the meeting and (i) in the case
of a special meeting the general nature of the business to be transacted,
or (ii) in the case of the annual meeting those matters which the board of
directors, at the time of giving the notice, intends to present for action
by the stockholders. The notice of any meeting at which directors are to
be elected shall include the name of any nominee or nominees which, at the
time of the notice, management intends to present for election.
If action is proposed to be taken at any meeting for approval of
(i) contracts or transactions in which a director has a direct or indirect
financial interest, (ii) an amendment to the articles of incorporation,
(iii) a reorganization of the corporation, (iv) dissolution of the
corporation, or (v) a distribution to preferred stockholders, the notice
shall also state the general nature of such proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
Notice of any meeting of stockholders shall be given either personally or
by first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the stockholder at the address of such stockholder
appearing on the books of the corporation or given by the stockholder to
the corporation for the purpose of notice. If no such address appears on
the corporation's books or is given, notice shall be deemed to have been
given if sent by mail or telegram to the corporation's principal executive
office, or if published at least once in a newspaper of general circulation
in the county where this office is located. Personal delivery of any such
notice to any officer of a corporation or association or to any member of a
partnership shall constitute delivery of such notice to such corporation,
association or partnership. Notice shall be deemed to have been given at
the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication. In the event of the
transfer of stock after delivery or mailing of the notice of and prior to
the holding of the meeting, it shall not be necessary to deliver or mail
notice of the meeting to the transferee.
<PAGE>
If any notice addressed to a stockholder at the address of such
stockholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the
stockholder at such address, all future notices or reports shall be deemed
to have been duly given without further mailing if the same shall be
available to the stockholder upon written demand of the stockholder at the
principal executive office of the corporation for a period of one year from
the date of the giving of such notice.
An affidavit of the mailing or other means of giving any notice
of any stockholders' meeting shall be executed by the secretary, assistant
secretary or any transfer agent of the corporation giving such notice, and
shall be filed and maintained in the minute book of the corporation.
Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 6. QUORUM. The presence in person or by proxy of the
holders of a majority of the shares entitled to vote at any meeting of
stockholders shall constitute a quorum for the transaction of business,
except as otherwise provided by statute or the articles of incorporation.
The stockholders present at a duly called or held meeting at which a quorum
is present may continue to do business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum, if any
action taken (other than adjournment) is approved by at least a majority of
the shares required to constitute a quorum.
Section 7. ADJOURNED MEETING AND NOTICE THEREOF. Any
stockholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of
the shares represented at such meeting, either in person or by proxy, but
in the absence of a quorum, no other business may be transacted at such
meeting.
When any meeting of stockholders, either annual or special, is
adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at a meeting
at which the adjournment is taken. At any adjourned meeting the
corporation may transact any business which might have been transacted at
the original meeting.
Section 8. VOTING. Unless a record date set for voting
purposes be fixed as provided in Section 1 of Article VII of these bylaws,
only persons in whose names shares entitled to vote stand on the stock
records of the corporation at the close of business on the business day
next preceding the day on which notice is given (or, if notice is waived,
at the close of business on the business day next preceding the day on
which the meeting is held) shall be entitled to vote at such meeting. Any
stockholder entitled to vote on any matter other than elections of
directors or officers, may vote part of the shares in favor of the proposal
<PAGE>
and refrain from voting the remaining shares or vote them against the
proposal, but, if the stockholder fails to specify the number of shares
such stockholder is voting affirmatively, it will be conclusively presumed
that the stockholder's approving vote is with respect to all shares such
stockholder is entitled to vote. Such vote may be by voice vote or by
ballot; provided, however, that all elections for directors must be by
ballot upon demand by a stockholder at any election and before the voting
begins.
When a quorum is present or represented at any meeting, the vote
of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before
such meeting, unless the question is one upon which by express provision of
the statutes or of the articles of incorporation a different vote is
required in which case such express provision shall govern and control the
decision of such question. Every stockholder of record of the corporation
shall be entitled at each meeting of stockholders to one vote for each
share of stock standing in his name on the books of the corporation.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT
STOCKHOLDERS. The transactions at any meeting of stockholders, either
annual or special, however called and noticed, and wherever held, shall be
as valid as though had at a meeting duly held after regular call and
notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting, each person entitled to vote, not present in
person or by proxy, signs a written waiver of notice or a consent to a
holding of the meeting, or an approval of the minutes thereof. The waiver
of notice or consent need not specify either the business to be transacted
or the purpose of any regular or special meeting of stockholders, except
that if action is taken or proposed to be taken for approval of any of
those matters specified in the second paragraph of Section 4 of this
Article II, the waiver of notice or consent shall state the general nature
of such proposal. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Attendance of a person at a meeting shall also constitute a
waiver of notice of such meeting, except when the person objects, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened, and except that attendance at a
meeting is not a waiver of any right to object to the consideration of
matters not included in the notice if such objection is expressly made at
the meeting.
Section 10. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
MEETING. Any action which may be taken at any annual or special meeting of
stockholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the
holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted. All
<PAGE>
such consents shall be filed with the secretary of the corporation and
shall be maintained in the corporate records. Any stockholder giving a
written consent, or the stockholder's proxy holders, or a transferee of the
shares of a personal representative of the stockholder of their respective
proxy holders, may revoke the consent by a writing received by the
secretary of the corporation prior to the time that written consents of the
number of shares required to authorize the proposed action have been filed
with the secretary.
Section 11. PROXIES. Every person entitled to vote for
directors or on any other matter shall have the right to do so either in
person or by one or more agents authorized by a written proxy signed by the
person and filed with the secretary of the corporation. A proxy shall be
deemed signed if the stockholder's name is placed on the proxy (whether by
manual signature, typewriting, telegraphic transmission or otherwise) by
the stockholder or the stockholder's attorney in fact. A validly executed
proxy which does not state that it is irrevocable shall continue in full
force and effect unless revoked by the person executing it, prior to the
vote pursuant thereto, by a writing delivered to the corporation stating
that the proxy is revoked or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by the person executing the
proxy; provided, however, that no such proxy shall be valid after the
expiration of six (6) months from the date of such proxy, unless coupled
with an interest, or unless the person executing it specifies therein the
length of time for which it is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution. Subject to the
above and the provisions of Section 78.355 of the Nevada General
Corporation Law, any proxy duly executed is not revoked and continues in
full force and effect until an instrument revoking it or a duly executed
proxy bearing a later date is filed with the secretary of the corporation.
Section 12. INSPECTORS OF ELECTION. Before any meeting of
stockholders, the board of directors may appoint any persons other than
nominees for office to act as inspectors of election at the meeting or its
adjournment. If no inspectors of election are appointed, the chairman of
the meeting may, and on the request of any stockholder or his proxy shall,
appoint inspectors of election at the meeting. The number of inspectors
shall be either one (1) or three (3). If inspectors are appointed at a
meeting on the request of one or more stockholders or proxies, the holders
of a majority of shares or their proxies present at the meeting shall
determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to
act, the vacancy may be filled by appointment by the board of directors
before the meeting, or by the chairman at the meeting.
The duties of these inspectors shall be as follows:
(a) Determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence
of a quorum, and the authenticity, validity, and effect of proxies;
<PAGE>
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in any
way arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine the election result; and
(f) Do any other acts that may be proper to conduct the
election or vote with fairness to all stockholders.
ARTICLE III
DIRECTORS
Section 1. POWERS. Subject to the provisions of the Nevada
General Corporation Law and any limitations in the articles of
incorporation and these bylaws relating to action required to be approved
by the stockholders or by the outstanding shares, the business and affairs
of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the board of directors.
Without prejudice to such general powers, but subject to the same
limitations, it is hereby expressly declared that the directors shall have
the power and authority to:
(a) Select and remove all officers, agents, and employees
of the corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the articles of incorporation or these bylaws,
fix their compensation, and require from them security for faithful
service.
(b) Change the principal executive office or the principal
business office from one location to another; cause the corporation to be
qualified to do business in any other state, territory, dependency, or
foreign country and conduct business within or without the State; designate
any place within or without the State for the holding of any stockholders'
meeting, or meetings, including annual meetings; adopt, make and use a
corporate seal, and prescribe the forms of certificates of stock, and alter
the form of such seal and of such certificates from time to time as in
their judgment they may deem best, provided that such forms shall at all
times comply with the provisions of law.
(c) Authorize the issuance of shares of stock of the
corporation from time to time, upon such terms as may be lawful, in
consideration of money paid, labor done or services actually rendered,
debts or securities cancelled, tangible or intangible property actually
received.
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(d) Borrow money and incur indebtedness for the purpose of
the corporation, and cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations, or other evidences of debt and
securities therefor.
Section 2. NUMBER OF DIRECTORS. The authorized number of
directors shall be no fewer than one (1) nor more than seven (7). The
exact number of authorized directors shall be set by resolution of the
board of directors, within the limits specified above. The maximum or
minimum number of directors cannot be changed, nor can a fixed number be
substituted for the maximum and minimum numbers, except by a duly adopted
amendment to this bylaw duly approved by a majority of the outstanding
shares entitled to vote.
Section 3. QUALIFICATION, ELECTION AND TERM OF OFFICE OF
DIRECTORS. Directors shall be elected at each annual meeting of the
stockholders to hold office until the next annual meeting, but if any such
annual meeting is not held or the directors are not elected at any annual
meeting, the directors may be elected at any special meeting of
stockholders held for that purpose, or at the next annual meeting of
stockholders held thereafter. Each director, including a director elected
to fill a vacancy, shall hold office until the expiration of the term for
which elected and until a successor has been elected and qualified or until
his earlier resignation or removal or his office has been declared vacant
in the manner provided in these bylaws. Directors need not be
stockholders.
Section 4. RESIGNATION AND REMOVAL OF DIRECTORS. Any
director may resign effective upon giving written notice to the chairman of
the board, the president, the secretary or the board of directors of the
corporation, unless the notice specifies a later time for the effectiveness
of such resignation, in which case such resignation shall be effective at
the time specified. Unless such resignation specifies otherwise, its
acceptance by the corporation shall not be necessary to make it effective.
The board of directors may declare vacant the office of a director who has
been declared of unsound mind by an order of a court or convicted of a
felony. Any or all of the directors may be removed without cause of such
removal is approved by the affirmative vote of a majority of the
outstanding shares entitled to vote. No reduction of the authorized number
of directors shall have the effect of removing any director before his term
of office expires.
Section 5. VACANCIES. Vacancies in the board of directors,
may be filled by a majority of the remaining directors, though less than a
quorum, or by a sole remaining director. Each director so elected shall
hold office until the next annual meeting of the stockholders and until a
successor has been elected and qualified.
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A vacancy in the board of directors exists as to any authorized
position of directors which is not then filled by a duly elected director,
whether caused by death, resignation, removal, increase in the authorized
number of directors or otherwise.
The stockholders may elect a director or directors at any time to
fill any vacancy or vacancies not filled by the directors, but any such
election by written consent shall require the consent of a majority of the
outstanding shares entitled to vote. If the resignation of a director is
effective at a future time, the board of directors may elect a successor to
take office when the resignation becomes effective.
If after the filling of any vacancy by the directors, the
directors then in office who have been elected by the stockholders shall
constitute less than a majority of the directors then in office, any holder
or holders of an aggregate of five percent or more of the total number of
shares at the time outstanding having the right to vote for such directors
may call a special meeting of the stockholders to elect the entire board.
The term of office of any director not elected by the stockholders shall
terminate upon the election of a successor.
Section 6. PLACE OF MEETINGS. Regular meetings of the board
of directors shall be held at any place within or without the State of
Nevada that has been designated from time to time by resolution of the
board. In the absence of such designation, regular meetings shall be held
at the principal executive office of the corporation. Special meetings of
the board shall be held at any place within or without the State of Nevada
that has been designated in the notice of the meeting or, if not stated in
the notice or there is not notice, at the principal executive office of the
corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in such meeting can hear one another, and all such directors
shall be deemed to be present in person at such meeting.
Section 7. ANNUAL MEETINGS. Immediately following each
annual meeting of stockholders, the board of directors shall hold a regular
meeting for the purpose of transaction of other business. Notice of this
meeting shall not be required.
Section 8. OTHER REGULAR MEETINGS. Other regular meetings of
the board of directors shall be held without call at such time as shall
from time to time be fixed by the board of directors. Such regular
meetings may be held without notice, provided the notice of any change in
the time of any such meetings shall be given to all of the directors.
Notice of a change in the determination of the time shall be given to each
director in the same manner as notice for special meetings of the board of
directors.
Section 9. SPECIAL MEETINGS. Special meetings of the board
of directors for any purpose or purposes may be called at any time by the
chairman of the board or the president or any vice president or the
secretary or any two directors.
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Notice of the time and place of special meetings shall be
delivered personally or by telephone to each director or sent by
first-class mail or telegram, charges prepaid, addressed to each director
at his or her address as it is shown upon the records of the corporation.
In case such notice is mailed, it shall be deposited in the United States
mail at least four (4) days prior to the time of the holding of the
meeting. In case such notice is delivered personally, or by telephone or
telegram, it shall be delivered personally or by telephone or to the
telegraph company at least forty-eight (48) hours prior to the time of the
holding of the meeting. Any oral notice given personally or by telephone
may be communicated to either the director or to a person at the office of
the director who the person giving the notice has reason to believe will
promptly communicate it to the director. The notice need not specify the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive office of the corporation.
Section 10. QUORUM. A majority of the authorized number of
directors shall constitute a quorum for the transaction of business, except
to adjourn as hereinafter provided. Every act or decision done or made by
a majority of the directors present at a meeting duly held at which a
quorum is present shall be regarded as the act of the board of directors,
subject to the provisions of Section 78.140 of the Nevada General
Corporation Law (approval of contracts or transactions in which a director
has a direct or indirect material financial interest), Section 78.125
(appointment of committees), and Section 78.751 (indemnification of
directors). A meeting at which a quorum is initially present may continue
to transact business notwithstanding the withdrawal of directors, if any
action taken is approved by at least a majority of the required quorum for
such meeting.
Section 11. WAIVER OF NOTICE. The transactions of any meeting
of the board of directors, however called and noticed or wherever held,
shall be as valid as though had at a meeting duly held after regular call
and notice if a quorum be present and if, either before or after the
meeting, each of the directors not present signs a written waiver of
notice, a consent to holding the meeting or an approval of the minutes
thereof. The waiver of notice of consent need not specify the purpose of
the meeting. All such waivers, consents and approvals shall be filed with
the corporate records or made a part of the minutes of the meeting. Notice
of a meeting shall also be deemed given to any director who attends the
meeting without protesting, prior thereto or at its commencement, the lack
of notice to such director.
Section 12. ADJOURNMENT. A majority of the directors present,
whether or not constituting a quorum, may adjourn any meeting to another
time and place.
Section 13. NOTICE OF ADJOURNMENT. Notice of the time and
place of holding an adjourned meeting need not be given, unless the meeting
is adjourned for more than twenty-four (24) hours, in which case notice of
such time and place shall be given prior to the time of the adjourned
meeting, in the manner specified in Section 8 of this Article III, to the
directors who were not present at the time of the adjournment.
<PAGE>
Section 14. ACTION WITHOUT MEETING. Any action required or
permitted to be taken by the board of directors may be taken without a
meeting, if all members of the board shall individually or collectively
consent in writing to such action. Such action by written consent shall
have the same force and effect as a unanimous vote of the board of
directors. Such written consent or consents shall be filed with the
minutes of the proceedings of the board.
Section 15. FEES AND COMPENSATION OF DIRECTORS. Directors and
members of committees may receive such compensation, if any, for their
services, and such reimbursement of expenses, as may be fixed or determined
by resolution of the board of directors. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any
other capacity as an officer, agent, employee, or otherwise, and receiving
compensation for such services. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF DIRECTORS. The board of directors
may, by resolution adopted by a majority of the authorized number of
directors, designate one or more committees, each consisting of one or more
directors, to serve at the pleasure of the board. The board may designate
one or more directors as alternate members of any committees, who may
replace any absent member at any meeting of the committee. Any such
committee, to the extent provided in the resolution of the board, shall
have all the authority of the board, except with regard to:
(a) the approval of any action which, under the Nevada
General Corporation Law, also requires stockholders' approval or approval
of the outstanding shares;
(b) the filing of vacancies on the board of directors or in
any committees;
(c) the fixing of compensation of the directors for serving
on the board or on any committee;
(d) the amendment or repeal of bylaws or the adoption of
new bylaws;
(e) the amendment or repeal of any resolution of the board
of directors which by its express terms is not so amendable or repealable;
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(f) a distribution to the stockholders of the corporation,
except at a rate or in a periodic amount or within a price range determined
by the board of directors; or
(g) the appointment of any other committees of the board of
directors or the members thereof.
Section 2. MEETINGS AND ACTION BY COMMITTEES. Meetings and
action of committees shall be governed by, and held and taken in accordance
with, the provisions of Article III, Sections 6 (place of meetings), 8
(regular meetings), 9 (special meetings and notice), 10 (quorum), 11
(waiver of notice), 12 (adjournment), 13 (notice of adjournment) and 14
(action without meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the board
of directors and its members, except that the time or regular meetings of
committees may be determined by resolutions of the board of directors and
notice of special meetings of committees shall also be given to all
alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of
any committee not inconsistent with the provisions of these bylaws. The
committees shall keep regular minutes of their proceedings and report the
same to the board when required.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the corporation shall
be a president, a secretary and a treasurer. The corporation may also
have, at the discretion of the board of directors, a chairman of the board,
one or more vice presidents, one or more assistant secretaries, one or more
assistant treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article V. Any two or
more offices may be held by the same person.
Section 2. ELECTION OF OFFICERS. The officers of the
corporation, except such officers as may be appointed in accordance with
the provisions of Section 3 or Section 5 of this Article V, shall be chosen
by the board of directors, and each shall serve at the pleasure of the
board, subject to the rights, if any, of an officer under any contract of
employment. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, a vice president, a
secretary and a treasurer, none of whom need be a member of the board. The
salaries of all officers and agents of the corporation shall be fixed by
the board of directors.
<PAGE>
Section 3. SUBORDINATE OFFICERS, ETC. The board of directors
may appoint, and may empower the president to appoint, such other officers
as the business of the corporation may require, each of whom shall hold
office for such period, have such authority and perform such duties as are
provided in the bylaws or as the board of directors may from time to time
determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. The officers
of the corporation shall hold office until their successors are chosen and
qualify. Subject to the rights, if any, of an officer under any contract
of employment, any officer may be removed, either with or without cause, by
the board of directors, at any regular or special meeting thereof, or,
except in case of an officer chosen by the board of directors, by any
officer upon whom such power or removal may be conferred by the board of
directors.
Any officer may resign at any time by giving written notice to
the corporation. Any such resignation shall take effect at the date of the
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective. Any such resignation is without
prejudice to the rights, if any, of the corporation under any contract to
which the officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office
because of death, resignation, removal, disqualification or any other cause
shall be filled in the manner prescribed in these bylaws for regular
appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board,
if such an officer be elected, shall, if present, preside at all meetings
of the board of directors and exercise and perform such other powers and
duties as may be from time to time assigned to him by the board of
directors or prescribed by the bylaws. If there is no president, the
chairman of the board shall in addition be the chief executive officer of
the corporation and shall have the powers and duties prescribed in
Section 7 of this Article V.
Section 7. PRESIDENT. Subject to such supervisory powers, if
any, as may be given by the board of directors to the chairman of the
board, if there be such an officer, the president shall be the chief
executive officer of the corporation and shall, subject to the control of
the board of directors, have general supervision, direction and control of
the business and the officers of the corporation. He shall preside at all
meetings of the stockholders and, in the absence of the chairman of the
board, of if there be none, at all meetings of the board of directors. He
shall have the general powers and duties of management usually vested in
the office of president of a corporation, and shall have such other powers
and duties as may be prescribed by the board of directors or the bylaws.
He shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to
some other officer or agent of the corporation.
<PAGE>
Section 8. VICE PRESIDENTS. In the absence or disability of
the president, the vice presidents, if any, in order of their rank as fixed
by the board of directors or, if not ranked, a vice president designated by
the board of directors, shall perform all the duties of the president, and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the president. The vice presidents shall have such
other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors or the bylaws,
the president or the chairman of the board.
Section 9. SECRETARY. The secretary shall attend all
meetings of the board of directors and all meetings of the stockholders and
shall record, keep or cause to be kept, at the principal executive office
or such other place as the board of directors may order, a book of minutes
of all meetings of directors, committees of directors and stockholders,
with the time and place of holding, whether regular or special, and, if
special, how authorized, the notice thereof given, the names of those
present at directors' and committee meetings, the number of shares present
or represented at stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent or
registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all
stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates issued for the same, and the
number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given, notice of all
meetings of stockholders and of the board of directors required by the
bylaws or by law to be given, and he shall keep the seal of the corporation
in safe custody, as may be prescribed by the board of directors or by the
bylaws.
Section 10. TREASURER. The treasurer shall keep and maintain,
or cause to be kept and maintained, adequate and correct books and records
of accounts of the properties and business transactions of the corporation,
including accounts of its assets, liabilities, receipts, disbursements,
gains, losses, capital, retained earnings and shares. The books of account
shall at all reasonable times be open to inspection by any director.
The treasurer shall deposit all moneys and other valuables in the
name and to the credit of the corporation with such depositories as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to
the president and directors, whenever they request it, an account of all of
his transactions as treasurer and of the financial condition of the
corporation, and shall have other powers and perform such other duties as
may be prescribed by the board of directors or the bylaws.
<PAGE>
If required by the board of directors, the treasurer shall give
the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful
performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
Section 1. ACTIONS OTHER THAN BY THE CORPORATION. The
corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with the action, suit or
proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, has no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding,
he had reasonable cause to believe that his conduct was unlawful.
Section 2. ACTIONS BY THE CORPORATION. The corporation may
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses, including
amounts paid in settlement and attorneys' fees, actually and reasonably
incurred by him in connection with the defense or settlement of the action
or suit if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to which
<PAGE>
such a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to the
extent that the court in which the action or suit was brought or other
court of competent jurisdiction determines upon application that in view of
all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
Section 3. SUCCESSFUL DEFENSE. To the extent that a
director, officer, employee or agent of the corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding
referred to in Sections 1 and 2, or in defense of any claim, issue or
matter therein, he must be indemnified by the corporation against expenses,
including attorneys' fees, actually and reasonably incurred by him in
connection with the defense.
Section 4. REQUIRED APPROVAL. Any indemnification under
Sections 1 and 2, unless ordered by a court or advanced pursuant to Section
5, must be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances. The determination must
be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or
proceeding;
(c) If a majority vote of a quorum consisting of directors
who were not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not
parties to the act, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion.
Section 5. ADVANCE OF EXPENSES. The articles of
incorporation, the bylaws or an agreement made by the corporation may
provide that the expenses of officers and directors incurred in defending a
civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of
the action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to
be indemnified by the corporation. The provisions of this section do not
affect any rights to advancement of expenses to which corporate personnel
other than directors or officers may be entitled under any contract or
otherwise by law.
<PAGE>
Section 6. OTHER RIGHTS. The indemnification and advancement
of expenses authorized in or ordered by a court pursuant to this
Article VI:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under
the articles of incorporation or any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, for either an action in his
official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
Section 2 or for the advancement of expenses made pursuant to Section 5,
may not be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
Section 7. INSURANCE. The corporation may purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
for any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of this Article VI.
Section 8. RELIANCE ON PROVISIONS. Each person who shall act
as an authorized representative of the corporation shall be deemed to be
doing so in reliance upon the rights of indemnification provided by this
Article.
Section 9. SEVERABILITY. If any of the provisions of this
Article are held to be invalid or unenforceable, this Article shall be
construed as if it did not contain such invalid or unenforceable provision
and the remaining provisions of this Article shall remain in full force and
effect.
Section 10. RETROACTIVE EFFECT. To the extent permitted by
applicable law, the rights and powers granted pursuant to this Article VI
shall apply to acts and actions occurring or in progress prior to its
adoption by the board of directors.
<PAGE>
ARTICLE VII
RECORDS AND BOOKS
Section 1. MAINTENANCE OF SHARE REGISTER. The corporation
shall keep at its principal executive office, or at the office of its
transfer agent or registrar, if either be appointed and as determined by
resolution of the board of directors, a record of its stockholders, giving
the names and addresses of all stockholders and the number and class of
shares held by each stockholder.
Section 2. MAINTENANCE OF BYLAWS. The corporation shall keep
at its principal executive office, or if its principal executive office is
not in this State at its principal business office in this State, the
original or a copy of the bylaws as amended to date, which shall be open to
inspection by the stockholders at all reasonable times during office hours.
If the principal executive office of the corporation is outside this state
and the corporation has no principal business office in this state, the
secretary shall, upon the written request of any stockholder, furnish to
such stockholder a copy of the bylaws as amended to date.
Section 3. MAINTENANCE OF OTHER CORPORATE RECORDS. The
accounting books and records and minutes of proceedings of the stockholders
and the board of directors and any committee or committees of the board of
directors shall be kept at such place or places designated by the board of
directors, or, in the absence of such designation, at the principal
executive office of the corporation. The minutes shall be kept in written
form and the accounting books and records shall be kept either in written
form or in any other form capable of being converted into written form.
Every director shall have the absolute right at any reasonable
time to inspect and copy all books, records and documents of every kind and
to inspect the physical properties of this corporation and any subsidiary
of this corporation. Such inspection by a director may be made in person
or by agent or attorney and the right of inspection includes the right to
copy and make extracts. The foregoing rights of inspection shall extend to
the records of each subsidiary of the corporation.
Section 4. ANNUAL REPORT TO STOCKHOLDERS. Nothing herein
shall be interpreted as prohibiting the board of directors from issuing
annual or other periodic reports to the stockholders of the corporation as
they deem appropriate.
Section 5. FINANCIAL STATEMENTS. A copy of any annual
financial statement and any income statement of the corporation for each
quarterly period of each fiscal year, and any accompanying balance sheet of
the corporation as of the end of each such period, that has been prepared
by the corporation shall be kept on file in the principal executive office
of the corporation for twelve (12) months.
<PAGE>
Section 6. ANNUAL LIST OF DIRECTORS, OFFICERS AND RESIDENT
AGENT. The corporation shall, on or before June 25th of each year, file
with the Secretary of State of the State of Nevada, on the prescribed form,
a list of its officers and directors and a designation of its resident
agent in Nevada.
ARTICLE VIII
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE. For purposes of determining the
stockholders entitled to notice of any meeting or to vote or entitled to
receive payment of any dividend or other distribution or allotment of any
rights or entitled to exercise any rights in respect of any other lawful
action, the board of directors may fix, in advance, a record date, which
shall not be more than sixty (60) days nor less than ten (10) days prior to
the date of any such meeting nor more than sixty (60) days prior to any
other action, and in such case only stockholders of record on the date so
fixed are entitled to notice and to vote or to receive the dividend,
distribution or allotment of rights or to exercise the rights, as the case
may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date fixed as aforesaid, except as otherwise
provided in the Nevada General Corporation Law.
If the board of directors does not so fix a record date:
(a) 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 business day next
preceding the day on which the meeting is held.
(b) The record date for determining stockholders entitled
to give consent to corporate action in writing without a meeting, when no
prior action by the board has been taken, shall be the day on which the
first written consent is given.
(c) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the
board adopts the resolution relating thereto, or the sixtieth (60th) day
prior to the date of such other action, whichever is later.
Section 2. CLOSING OF TRANSFER BOOKS. The directors may
prescribe a period not exceeding sixty (60) days prior to any meeting of
the stockholders during which no transfer of stock on the books of the
corporation may be made, or may fix a date not more than sixty (60) days
prior to the holding of any such meeting as the day as of which
stockholders entitled to notice of and to vote at such meeting shall be
determined; and only stockholders of record on such day shall be entitled
to notice or to vote at such meeting.
<PAGE>
Section 3. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a person registered on
its books as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or 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 Nevada.
Section 4. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS. All
checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the
corporation, shall be signed or endorsed by such person or persons and in
such manner as, from time to time, shall be determined by resolution of the
board of directors.
Section 5. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
The board of directors, except as in the bylaws otherwise provided, may
authorize any officer or officers, agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances; and, unless so authorized or ratified by the board of directors
or within the agency power or authority to bind the corporation by any
contract or engagement or to pledge its credit or to render it liable for
any purpose or to any amount.
Section 6. STOCK CERTIFICATES. A certificate or certificates
for shares of the capital stock of the corporation shall be issued to each
stockholder when any such shares are fully paid, and the board of directors
may authorize the issuance of certificates or shares as partly paid
provided that such certificates shall state the amount of the consideration
to be paid therefor and the amount paid thereon. All certificates shall be
signed in the name of the corporation by the president or vice president
and by the treasurer or an assistant treasurer or the secretary or any
assistant secretary, certifying the number of shares and the class or
series of shares owned by the stockholder. When the corporation is
authorized to issue shares of more than one class or more than one series
of any class, there shall be set forth upon the face or back of the
certificate, or the certificate shall have a statement that the corporation
will furnish to any stockholders upon request and without charge, a full or
summary statement of the designations, preferences and relatives,
participating, optional or other special rights of the various classes of
stock or series thereof and the qualifications, limitations or restrictions
of such rights, and, if the corporation shall be authorized to issue only
special stock, such certificate must set forth in full or summarize the
rights of the holders of such stock. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon
<PAGE>
a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were an officer,
transfer agent or registrar at the date of issue.
No new certificate for shares shall be issued in place of any
certificate theretofore issued unless the latter is surrendered and
canceled at the same time; provided, however, that a new certificate may be
issued without the surrender and cancellation of the old certificate if the
certificate thereto fore issued is alleged to have been lost, stolen or
destroyed. In case of any such allegedly lost, stolen or destroyed
certificate, the corporation may require the owner thereof or the legal
representative of such owner to give the corporation a bond (or other
adequate security) sufficient to indemnify it against any claim that may be
made against it (including any expense or liability) on account of the
alleged loss, theft or destruction of any such certificate or the issuance
of such new certificate.
Section 7. DIVIDENDS. Dividends upon the capital stock of
the corporation, subject to the provisions of the articles of
incorporation, if any, may be declared by the board of directors at any
regular or special meeting pursuant to law. Dividends may be paid in cash,
in property, or in shares of the capital stock, subject to the provisions
of the articles of incorporation.
Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as
a reserve or reserves to meet contingencies, or for equalizing dividends,
or for repairing or maintaining any property of the corporation, or for
such other purpose as the directors shall think conducive to the interest
of the corporation, and the directors may modify or abolish any such
reserves in the manner in which it was created.
Section 8. FISCAL YEAR. The fiscal year of the corporation
shall be fixed by resolution of the board of directors.
Section 9. SEAL. The corporate seal shall have inscribed
thereon the name of the corporation, the year of its incorporation and the
words "Corporate Seal, Nevada."
Section 10. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
The chairman of the board, the president, or any vice president, or any
other person authorized by resolution of the board of directors by any of
the foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations,
foreign or domestic, standing in the name of the corporation. The
authority herein granted to said officers to vote or represent on behalf of
<PAGE>
the corporation any and all shares held by the corporation in any other
corporation or corporations may be exercised by any such officer in person
or by any person authorized to do so by proxy duly executed by said
officer.
Section 11. CONSTRUCTION AND DEFINITIONS. Unless the context
requires otherwise, the general provisions, rules of construction, and
definitions in the Nevada General Corporation Law shall govern the
construction of the bylaws. Without limiting the generality of the
foregoing, the singular number includes the plural, the plural number
includes the singular, and the term "person" includes both a corporation
and a natural person.
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY STOCKHOLDERS. New bylaws may be
adopted or these bylaws may be amended or repealed by the affirmative vote
of a majority of the outstanding shares entitled to vote, or by the written
assent of stockholders entitled to vote such shares, except as otherwise
provided by law or by the articles of incorporation.
Section 2. AMENDMENT BY DIRECTORS. Subject to the rights of
the stockholders as provided in Section 1 of this Article, bylaws may be
adopted, amended or repealed by the board of directors.
<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting secretary of
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC., a Nevada corporation; and
2. That the foregoing Amended and Restated Bylaws, comprising
twenty (20) pages, constitute the Bylaws of said corporation as duly
adopted and approved by the board of directors of said corporation by a
Unanimous Written Consent dated as of June 25, 1998 and duly adopted and
approved by the stockholders of said corporation at a special meeting held
on June 25, 1998.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of said corporation this 25th day of June, 1998.
/s/ Harold Jahn
------------------------------
Harold Jahn, Secretary
Sustainable Development
International, Inc.
INCORPORATED UNDER THE LAWS OF THIS STATE OF NEVADA
50,000,000 SHARES COMMON STOCK AUTHORIZED, $.001 PAR VALUE
THIS
CERTIFIES CUSIP 889323 10 5
THAT SEE REVERSE FOR
CERTAIN DEFINITIONS
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC.
transferable on the books of the corporation in person or by duly
authorized attorney upon surrender of this certificate properly endorsed.
This certificate and the shares represented hereby are subject to the laws
of this State of Nevada, and to the Certificate of Incorporation and Bylaws
of the Corporation, as now hereafter amended. This certificate is not
valid unless countersigned by the Transfer Agent. WITNESS the facsimile
seal of the Corporation and the signature of its duly authorized officers.
DATE
Sustainable Development International, Inc.
Corporate Seal
Nevada
PRESIDENT/
SECRETARY
1998 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Sustainable Development
International, Inc. 1998 Stock Option Plan (the "Plan") is to strengthen
Sustainable Development International, Inc., a Nevada corporation
("Corporation"), by providing to employees, officers, directors,
consultants and independent contractors of the Corporation or any of its
subsidiaries (including dealers, distributors, and other business entities
or persons providing services on behalf of the Corporation or any of its
subsidiaries) added incentive for high levels of performance and unusual
efforts to increase the earnings of the Corporation. The Plan seeks to
accomplish this purpose by enabling specified persons to purchase shares of
the common stock of the Corporation, $.001 par value, thereby increasing
their proprietary interest in the Corporation's success and encouraging
them to remain in the employ or service of the Corporation.
2. CERTAIN DEFINITIONS. As used in this Plan, the following words
and phrases shall have the respective meanings set forth below, unless the
context clearly indicates a contrary meaning:
2.1 "Board of Directors": The Board of Directors of the
Corporation.
2.2 "Committee": The Committee which shall administer the Plan
shall consist of the entire Board of Directors.
2.3 "Fair Market Value Per Share": The fair market value per
share of the Shares as determined by the Committee in good faith. The
Committee is authorized to make its determination as to the fair market
value per share of the Shares on the following basis: (i) if the Shares
are traded only otherwise than on a securities exchange and are not quoted
on the National Association of Securities Dealers' Automated Quotation
System ("NASDAQ"), but are quoted on the bulletin board or in the "pink
<PAGE>
sheets" published by the National Daily Quotation Bureau, the greater of
(a) the average of the mean between the average daily bid and average daily
asked prices of the Shares during the thirty (30) day period preceding the
date of grant of an Option, as quoted on the bulletin board or in the "pink
sheets" published by the National Daily Quotation Bureau, or (b) the mean
between the average daily bid and average daily asked prices of the Shares
on the date of grant, as published on the bulletin board or in such "pink
sheets;" (ii) if the Shares are traded only otherwise than on a securities
exchange and are quoted on NASDAQ, the greater of (a) the average of the
mean between the closing bid and closing asked prices of the Shares during
the thirty (30) day period preceding the date of grant of an Option, as
reported by the Wall Street Journal and (b) the mean between the closing
bid and closing asked prices of the Shares on the date of grant of an
Option, as reported by the Wall Street Journal; (iii) if the Shares are
admitted to trading on a securities exchange, the greater of (a) the
average of the daily closing prices of the Shares during the ten (10)
trading days preceding the date of grant of an Option, as quoted in the
Wall Street Journal, or (b) the daily closing price of the Shares on the
date of grant of an Option, as quoted in the Wall Street Journal; or (iv)
if the Shares are traded only otherwise than as described in (i), (ii) or
(iii) above, or if the Shares are not publicly traded, the value determined
by the Committee in good faith based upon the fair market value as
determined by completely independent and well qualified experts.
2.4 "Option": A stock option granted under the Plan.
2.5 "Incentive Stock Option": An Option intended to qualify for
treatment as an incentive stock option under Code Sections 421 and 422A,
and designated as an Incentive Stock Option.
2.6 "Nonqualified Option": An Option not qualifying as an
Incentive Stock Option.
<PAGE>
2.7 "Optionee": The holder of an Option.
2.8 "Option Agreement": The document setting forth the terms
and conditions of each Option.
2.9 "Shares": The shares of common stock $.001 par value of the
Corporation.
2.10 "Code": The Internal Revenue Code of 1986, as amended.
2.11 "Subsidiary": Any corporation of which fifty percent (50%)
or more of total combined voting power of all classes of stock of such
corporation is owned by the Corporation or another Subsidiary (as so
defined).
3. ADMINISTRATION OF PLAN.
3.1 In General. This Plan shall be administered by the
Committee. Any action of the Committee with respect to administration of
the Plan shall be taken pursuant to (i) a majority vote at a meeting of the
Committee (to be documented by minutes), or (ii) the unanimous written
consent of its members.
3.2 Authority. Subject to the express provisions of this Plan, the
Committee shall have the authority to: (i) construe and interpret the
Plan, decide all questions and settle all controversies and disputes which
may arise in connection with the Plan and to define the terms used therein;
(ii) prescribe, amend and rescind rules and regulations relating to
administration of the Plan; (iii) determine the purchase price of the
Shares covered by each Option and the method of payment of such price,
individuals to whom, and the time or times at which, Options shall be
granted and exercisable and the number of Shares covered by each Option;
(iv) determine the terms and provisions of the respective Option Agreements
<PAGE>
(which need not be identical); (v) determine the duration and purposes of
leaves of absence which may be granted to participants without constituting
a termination of their employment for purposes of the Plan; and (vi) make
all other determinations necessary or advisable to the administration of
the Plan. Determinations of the Committee on matters referred to in this
Section 3 shall be conclusive and binding on all parties howsoever
concerned. With respect to Incentive Stock Options, the Committee shall
administer the Plan in compliance with the provisions of Code Section 422A
as the same may hereafter be amended from time to time. No member of the
Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any Option.
4. ELIGIBILITY AND PARTICIPATION.
4.1 In General. Only officers, employees and directors who are
also employees of the Corporation or any Subsidiary shall be eligible to
receive grants of Incentive Stock Options. Officers, employees and
directors (whether or not they are also employees) of the Corporation or
any Subsidiary, as well as consultants, independent contractors or other
service providers of the Corporation or any Subsidiary shall be eligible to
receive grants of Nonqualified Options. Within the foregoing limits, the
Committee, from time to time, shall determine and designate persons to whom
Options may be granted. All such designations shall be made in the
absolute discretion of the Committee and shall not require the approval of
the stockholders. In determining (i) the number of Shares to be covered by
each Option, (ii) the purchase price for such Shares and the method of
payment of such price (subject to the other sections hereof), (iii) the
individuals of the eligible class to whom Options shall be granted,
(iv) the terms and provisions of the respective Option Agreements, and
(v) the times at which such Options shall be granted, the Committee shall
take into account such factors as it shall deem relevant in connection with
accomplishing the purpose of the Plan as set forth in Section 1. An
<PAGE>
individual who has been granted an Option may be granted an additional
Option or Options if the Committee shall so determine. No Option shall be
granted under the Plan after December 15, 2008, but Options granted before
such date may be exercisable after such date.
4.2 Certain Limitations. In no event shall Incentive Stock
Options be granted to an Optionee such that the sum of (i) aggregate fair
market value (determined at the time the Incentive Stock Options are
granted) of the Shares subject to all Options granted under the Plan which
are exercisable for the first time during the same calendar year, plus (ii)
the aggregate fair market value (determined at the time the options are
granted) of all stock subject to all other incentive stock options granted
to such Optionee by the Corporation, its parent and Subsidiaries which are
exercisable for the first time during such calendar year, exceeds One
Hundred Thousand Dollars ($100,000). For purposes of the immediately
preceding sentence, fair market value shall be determined as of the date of
grant based on the Fair Market Value Per Share as determined pursuant to
Section 2.3.
5. AVAILABLE SHARES AND ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
5.1 Shares. Subject to adjustment as provided in Section 5.2
below, the total number of Shares to be subject to Options granted pursuant
to this Plan shall not exceed One Million (1,000,000) Shares. Shares
subject to the Plan may be either authorized but unissued shares or shares
that were once issued and subsequently reacquired by the Corporation; the
Committee shall be empowered to take any appropriate action required to
make Shares available for Options granted under this Plan. If any Option
is surrendered before exercise or lapses without exercise in full or for
any other reason ceases to be exercisable, the Shares reserved therefore
shall continue to be available under the Plan.
<PAGE>
5.2 Adjustments. As used herein, the term "Adjustment Event"
means an event pursuant to which the outstanding Shares of the Corporation
are increased, decreased or changed into, or exchanged for a different
number or kind of shares or securities, without receipt of consideration by
the Corporation, through reorganization, merger, recapitalization,
reclassification, stock split, reverse stock split, stock dividend, stock
consolidation or otherwise. Upon the occurrence of an Adjustment Event,
(i) appropriate and proportionate adjustments shall be made to the number
and kind of shares and exercise price for the shares subject to the Options
which may thereafter be granted under this Plan, (ii) appropriate and
proportionate adjustments shall be made to the number and kind of and
exercise price for the shares subject to the then outstanding Options
granted under this Plan, and (iii) appropriate amendments to the Option
Agreements shall be executed by the Corporation and the Optionees if the
Committee determines that such an amendment is necessary or desirable to
reflect such adjustments. If determined by the Committee to be
appropriate, in the event of an Adjustment Event which involves the
substitution of securities of a corporation other than the Corporation, the
Committee shall make arrangements for the assumptions by such other
corporation of any Options then or thereafter outstanding under the Plan.
Notwithstanding the foregoing, such adjustment in an outstanding Option
shall be made without change in the total exercise price applicable to the
unexercised portion of the Option, but with an appropriate adjustment to
the number of shares, kind of shares and exercise price for each share
subject to the Option. The determination by the Committee as to what
adjustments, amendments or arrangements shall be made pursuant to this
Section 5.2, and the extent thereof, shall be final and conclusive. No
fractional Shares shall be issued under the Plan on account of any such
adjustment or arrangement.
<PAGE>
6. TERMS AND CONDITIONS OF OPTIONS.
6.1 Intended Treatment as Incentive Stock Options. Incentive
Stock Options granted pursuant to this Plan are intended to be "incentive
stock options" to which Code Sections 421 and 422A apply, and the Plan
shall be construed and administered to implement that intent. If all or
any part of an Incentive Stock Option shall not be an "incentive stock
option" subject to Sections 421 or 422A of the Code, such Option shall
nevertheless be valid and carried into effect. All Options granted under
this Plan shall be subject to the terms and conditions set forth in this
Section 6 (except as provided in Section 5.2) and to such other terms and
conditions as the Committee shall determine to be appropriate to accomplish
the purpose of the Plan as set forth in Section 1.
6.2 Amount and Payment of Exercise Price.
6.2.1 Exercise Price. The exercise price per Share for
each Share which the Optionee is entitled to purchase under a Nonqualified
Option shall be determined by the Committee but shall not be less than
eighty-five percent (85%) of the Fair Market Value Per Share on the date of
the grant of the Nonqualified Option. The exercise price per Share for
each Share which the Optionee is entitled to purchase under an Incentive
Stock Option shall be determined by the Committee but shall not be less
than the Fair Market Value Per Share on the date of the grant of the
Incentive Stock Option; provided, however, that the exercise price shall
not be less than one hundred ten percent (110%) of the Fair Market Value
Per Share on the date of the grant of the Incentive Stock Option in the
case of an individual then owning (within the meaning of Code Section
425(d)) more than ten percent (10%) of the total combined voting power of
all classes of stock of the Corporation or of its parent or Subsidiaries.
<PAGE>
6.2.2 Payment of Exercise Price. The consideration to
be paid for the Shares to be issued upon exercise of an Option, including
the method of payment, shall be determined by the Committee and may consist
of promissory notes, shares of the common stock of the Corporation or such
other consideration and method of payment for the Shares as may be
permitted under applicable state and federal laws.
6.3 Exercise of Options.
6.3.1 Each Option granted under this Plan shall be
exercisable at such times and under such conditions as may be determined by
the Committee at the time of the grant of the Option and as shall be
permissible under the terms of the Plan; provided, however, in no event
shall an Option be exercisable after the expiration of ten (10) years from
the date it is granted, and in the case of an Optionee owning (within the
meaning of Code Section 425(d)), at the time an Incentive Stock Option is
granted, more than ten percent (10%) of the total combined voting power of
all classes of stock of the Corporation or of its parent or Subsidiaries,
such Incentive Stock Option shall not be exercisable later than five (5)
years after the date of grant.
6.3.2 An Optionee may purchase less than the total
number of Shares for which the Option is exercisable, provided that a
partial exercise of an Option may not be for less than One Hundred (100)
Shares and shall not include any fractional shares.
6.4 Nontransferability of Options. All Options granted under
this Plan shall be nontransferable, either voluntarily or by operation of
law, otherwise than by will or the laws of descent and distribution, and
shall be exercisable during the Optionee's lifetime only by such Optionee.
6.5 Effect of Termination of Employment or Other Relationship.
Except as otherwise determined by the Committee in connection with the
grant of Nonqualified Options, the effect of termination of an Optionee's
employment or other relationship with the Corporation on such Optionee's
rights to acquire Shares pursuant to the Plan shall be as follows:
<PAGE>
6.5.1 Termination for Other than Disability or Cause.
If an Optionee ceases to be employed by, or ceases to have a relationship
with, the Corporation for any reason other than for disability or cause,
such Optionee's Options shall expire not later than three (3) months
thereafter. During such three (3) month period and prior to the expiration
of the Option by its terms, the Optionee may exercise any Option granted to
him, but only to the extent such Options were exercisable on the date of
termination of his employment or relationship and except as so exercised,
such Options shall expire at the end of such three (3) month period unless
such Options by their terms expire before such date. The decision as to
whether a termination for a reason other than disability, cause or death
has occurred shall be made by the Committee, whose decision shall be final
and conclusive, except that employment shall not be considered terminated
in the case of sick leave or other bona fide leave of absence approved by
the Corporation.
6.5.2 Disability. If an Optionee ceases to be employed
by, or ceases to have a relationship with, the Corporation by reason of
disability (within the meaning of Code Section 22(e)(3)), such Optionee's
Options shall expire not later than one (1) year thereafter. During such
one (1) year period and prior to the expiration of the Option by its terms,
the Optionee may exercise any Option granted to him, but only to the extent
such Options were exercisable on the date the Optionee ceased to be
employed by, or ceased to have a relationship with, the Corporation by
reason of disability and except as so exercised, such Options shall expire
at the end of such one (1) year period unless such Options by their terms
expire before such date. The decision as to whether a termination by
reason of disability has occurred shall be made by the Committee, whose
decision shall be final and conclusive.
<PAGE>
6.5.3 Termination for Cause. If an Optionee's
employment by, or relationship with, the Corporation is terminated for
cause, such Optionee's Option shall expire immediately; provided, however,
the Committee may, in its sole discretion, within thirty (30) days of such
termination, waive the expiration of the Option by giving written notice of
such waiver to the Optionee at such Optionee's last known address. In the
event of such waiver, the Optionee may exercise the Option only to such
extent, for such time, and upon such terms and conditions as if such
Optionee had ceased to be employed by, or ceased to have a relationship
with, the Corporation upon the date of such termination for a reason other
than disability, cause, or death. Termination for cause shall include
termination for malfeasance or gross misfeasance in the performance of
duties or conviction of illegal activity in connection therewith or any
conduct detrimental to the interests of the Corporation. The determination
of the Committee with respect to whether a termination for cause has
occurred shall be final and conclusive.
6.6 Withholding of Taxes. As a condition to the exercise, in
whole or in part, of any Options the Board of Directors may in its sole
discretion require the Optionee to pay, in addition to the purchase price
of the Shares covered by the Option an amount equal to any Federal, state
or local taxes that may be required to be withheld in connection with the
exercise of such Option.
6.7 No Rights to Continued Employment or Relationship.
Nothing contained in this Plan or in any Option Agreement shall obligate
the Corporation to employ or have another relationship with any Optionee
for any period or interfere in any way with the right of the Corporation to
reduce such Optionee's compensation or to terminate the employment of or
relationship with any Optionee at any time.
6.8 Time of Granting Options. The time an Option is granted,
sometimes referred to herein as the date of grant, shall be the day the
Corporation executes the Option Agreement; provided, however, that if
appropriate resolutions of the Committee indicate that an Option is to be
granted as of and on some prior or future date, the time such Option is
granted shall be such prior or future date.
<PAGE>
6.9 Privileges of Stock Ownership. No Optionee shall be
entitled to the privileges of stock ownership as to any Shares not actually
issued and delivered to such Optionee. No Shares shall be purchased upon
the exercise of any Option unless and until, in the opinion of the
Corporation's counsel, any then applicable requirements of any laws or
governmental or regulatory agencies having jurisdiction and of any
exchanges upon which the stock of the Corporation may be listed shall have
been fully complied with.
6.10 Securities Laws Compliance. The Corporation will diligently
endeavor to comply with all applicable securities laws before any Options
are granted under the Plan and before any Shares are issued pursuant to
Options. Without limiting the generality of the foregoing, the Corporation
may require from the Optionee such investment representation or such
agreement, if any, as counsel for the Corporation may consider necessary or
advisable in order to comply with the Securities Act of 1933 as then in
effect, and may require that the Optionee agree that any sale of the
Shares will be made only in such manner as is permitted by the Committee.
The Committee in its discretion may cause the Shares underlying the Options
to be registered under the Securities Act of 1933, as amended, by the
filing of a Form S-8 Registration Statement covering the Options and Shares
underlying such Options. Optionee shall take any action reasonably
requested by the Corporation in connection with registration or
qualification of the Shares under federal or state securities laws.
6.11 Option Agreement. Each Incentive Stock Option and
Nonqualified Option granted under this Plan shall be evidenced by the
appropriate written Stock Option Agreement ("Option Agreement") executed by
the Corporation and the Optionee in a form substantially the same as the
appropriate form of Option Agreement attached as Exhibit I or II hereto
<PAGE>
(and made a part hereof by this reference) and shall contain each of the
provisions and agreements specifically required to be contained therein
pursuant to this Section 6, and such other terms and conditions as are
deemed desirable by the Committee and are not inconsistent with the purpose
of the Plan as set forth in Section 1.
7. PLAN AMENDMENT AND TERMINATION.
7.1 Authority of Committee. The Committee may at any time
discontinue granting Options under the Plan or otherwise suspend, amend or
terminate the Plan and may, with the consent of an Optionee, make such
modification of the terms and conditions of such Optionee's Option as it
shall deem advisable; provided that, except as permitted under the
provisions of Section 5.2, the Committee shall have no authority to make
any amendment or modification to this Plan or any outstanding Option
thereunder which would: (i) increase the maximum number of shares which
may be purchased pursuant to Options granted under the Plan, either in the
aggregate or by an Optionee (except pursuant to Section 5.2); (ii) change
the designation of the class of the employees eligible to receive Incentive
Stock Options; (iii) extend the term of the Plan or the maximum Option
period thereunder; (iv) decrease the minimum Incentive Stock Option price
or permit reductions of the price at which shares may be purchased for
Incentive Stock Options granted under the Plan; or (v) cause Incentive
Stock Options issued under the Plan to fail to meet the requirements of
incentive stock options under Code Section 422A. An amendment or
modification made pursuant to the provisions of this Section 7 shall be
deemed adopted as of the date of the action of the Committee effecting such
amendment or modification and shall be effective immediately, unless
otherwise provided therein, subject to approval thereof (1) within twelve
(12) months before or after the effective date by stockholders of the
Corporation holding not less than a majority vote of the voting power of
the Corporation voting in person or by proxy at a duly held stockholders
meeting when required to maintain or satisfy the requirements of Code
Section 422A with respect to Incentive Stock Options, and (2) by any
appropriate governmental agency. No Option may be granted during any
suspension or after termination of the Plan.
<PAGE>
7.2 Ten (10) Year Maximum Term. Unless previously terminated by
the Committee, this Plan shall terminate on December 15, 2008, and no
Options shall be granted under the Plan thereafter.
7.3 Effect on Outstanding Options. Amendment, suspension or
termination of this Plan shall not, without the consent of the Optionee,
alter or impair any rights or obligations under any Option theretofore
granted.
8. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of
December 15, 1998, the date the Plan was adopted by the Board of Directors,
subject to the approval of the Plan by the affirmative vote of a majority
of the issued and outstanding Shares of common stock of the Corporation
represented and voting at a duly held meeting at which a quorum is present
within twelve (12) months thereafter. The Committee shall be authorized
and empowered to make grants of Options pursuant to this Plan prior to such
approval of this Plan by the stockholders; provided, however, in such event
the Option grants shall be made subject to the approval of both this Plan
and such Option grants by the stockholders in accordance with the
provisions of this Section 8.
9. MISCELLANEOUS PROVISIONS.
9.1 Exculpation and Indemnification. The Corporation shall
indemnify and hold harmless the Committee from and against any and all
liabilities, costs and expenses incurred by such persons as a result of any
act, or omission to act, in connection with the performance of such
persons' duties, responsibilities and obligations under the Plan, other
than such liabilities, costs and expenses as may result from the gross
negligence, bad faith, willful conduct and/or criminal acts of such
persons.
<PAGE>
9.2 Governing Law. The Plan shall be governed and construed in
accordance with the laws of the State of Nevada and the Code.
9.3 Compliance with Applicable Laws. The inability of the
Corporation to obtain from any regulatory body having jurisdiction
authority deemed by the Corporation's counsel to be necessary to the lawful
issuance and sale of any Shares upon the exercise of an Option shall
relieve the Corporation of any liability in respect of the non-issuance or
sale of such Shares as to which such requisite authority shall not have
been obtained.
As approved by the Board of Directors of
Sustainable Development International,
Inc. on December 15, 1998.
By: /s/Harold Jahn
--------------------------------
Harold Jahn, President
<PAGE>
EXHIBIT I
[FORM OF]
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT ("Agreement") is entered into as
of_____________________________,________, by and between Sustainable
Development International, Inc., a Nevada corporation ("Corporation"), and
_______________ ("Optionee").
R E C I T A L S
A. On December 15, 1998, the Board of Directors of the Corporation
adopted, subject to the approval of the Corporation's shareholders, the
Sustainable Development International, Inc. 1998 Stock Option Plan (the
"Plan").
B. Pursuant to the Plan, on ________________, the Board of Directors
of the Corporation acting as the Plan Committee ("Committee") authorized
granting to Optionee options to purchase shares of the common stock, $.001
par value, of the Corporation ("Shares") for the term and subject to the
terms and conditions hereinafter set forth.
A G R E E M E N T
It is hereby agreed as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the
context otherwise clearly requires, terms with initial capital letters used
herein shall have the meanings assigned to such terms in the Plan.
<PAGE>
2. GRANT OF OPTIONS. The Corporation hereby grants to Optionee,
options ("Options") to purchase all or any part of Shares, upon and
subject to the terms and conditions of the Plan, which is incorporated in
full herein by this reference, and upon the other terms and conditions set
forth herein.
3. OPTION PERIOD. The Options shall be exercisable at any time
during the period commencing on the following dates (subject to the
provisions of Section 18) and expiring on the date five (5) years from the
date of grant, unless earlier terminated pursuant to Section 7:
[terms of option vesting to be set forth here]
4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee
by giving written notice to the Corporation of the election to purchase and
of the number of Shares Optionee elects to purchase, such notice to be
accompanied by such other executed instruments or documents as may be
required by the Committee pursuant to this Agreement, and unless otherwise
directed by the Committee, Optionee shall at the time of such exercise
tender the purchase price of the Shares he has elected to purchase. An
Optionee may purchase less than the total number of Shares for which the
Option is exercisable, provided that a partial exercise of an Option may
not be for less than One Hundred (100) Shares. If Optionee shall not
purchase all of the Shares which he is entitled to purchase under the
Options, his right to purchase the remaining unpurchased Shares shall
continue until expiration of the Options. The Options shall be exercisable
with respect of whole Shares only, and fractional Share interests shall be
disregarded.
5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each
Share which Optionee is entitled to purchase under the Options shall be
per Share.
<PAGE>
6. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
exercise of the Options, Optionee shall tender in cash or by certified or
bank cashier's check payable to the Corporation, the purchase price for all
Shares then being purchased. Provided, however, the Board of Directors
may, in its sole discretion, permit payment by the Corporation of the
purchase price in whole or in part with Shares. If the Optionee is so
permitted, and the Optionee elects to make payment with Shares, the
Optionee shall deliver to the Corporation certificates representing the
number of Shares in payment for new Shares, duly endorsed for transfer to
the Corporation, together with any written representations relating to
title, liens and encumbrances, securities laws, rules and regulatory
compliance, or other matters, reasonably requested by the Board of
Directors. The value of Shares so tendered shall be their Fair Market
Value Per Share on the date of the Optionee's notice of exercise.
7. EFFECT OF TERMINATION OF EMPLOYMENT. If an Optionee's employment
or other relationship with the Corporation (or a Subsidiary) terminates,
the effect of the termination on the Optionee's rights to acquire Shares
shall be as follows:
7.1 Termination for Other than Disability or Cause. If an
Optionee ceases to be employed by, or ceases to have a relationship with,
the Corporation or a Subsidiary for any reason other than for disability or
cause, such Optionee's Options shall expire not later than three (3) months
thereafter. During such three (3) month period and prior to the expiration
of the Option by its terms, the Optionee may exercise any Option granted to
him, but only to the extent such Options were exercisable on the date of
termination of his employment or relationship and except as so exercised,
such Options shall expire at the end of such three (3) month period unless
such Options by their terms expire before such date. The decision as to
whether a termination for a reason other than disability, cause or death
has occurred shall be made by the Committee, whose decision shall be final
and conclusive, except that employment shall not be considered terminated
in the case of sick leave or other bona fide leave of absence approved by
the Corporation.
<PAGE>
7.2 Disability. If an Optionee ceases to be employed by, or
ceases to have a relationship with, the Corporation or a Subsidiary by
reason of disability (within the meaning of Code Section 22(e)(3)), such
Optionee's Options shall expire not later than one (1) year thereafter.
During such one (1) year period and prior to the expiration of the Option
by its terms, the Optionee may exercise any Option granted to him, but only
to the extent such Options were exercisable on the date the Optionee ceased
to be employed by, or ceased to have a relationship with, the Corporation
or Subsidiary by reason of disability. The decision as to whether a
termination by reason of disability has occurred shall be made by the
Committee, whose decision shall be final and conclusive.
7.3 Termination for Cause. If an Optionee's employment by, or
relationship with, the Corporation or a Subsidiary is terminated for cause,
such Optionee's Option shall expire immediately; provided, however, the
Committee may, in its sole discretion, within thirty (30) days of such
termination, waive the expiration of the Option by giving written notice of
such waiver to the Optionee at such Optionee's last known address. In the
event of such waiver, the Optionee may exercise the Option only to such
extent, for such time, and upon such terms and conditions as if such
Optionee had ceased to be employed by, or ceased to have a relationship
with, the Corporation or a Subsidiary upon the date of such termination for
a reason other than disability, cause or death. Termination for cause
shall include termination for malfeasance or gross misfeasance in the
performance of duties or conviction of illegal activity in connection
therewith or any conduct detrimental to the interests of the Corporation or
a Subsidiary. The determination of the Committee with respect to whether
a termination for cause has occurred shall be final and conclusive.
<PAGE>
8. NONTRANSFERABILITY OF OPTIONS. The Options shall not be
transferable, either voluntarily or by operation of law, otherwise than by
will or the laws of descent and distribution and shall be exercisable
during the Optionee's lifetime only by Optionee.
9. ADDITIONAL RESTRICTIONS REGARDING DISPOSITIONS OF SHARES. The
Shares acquired pursuant to the exercise of Options shall be subject to the
restrictions set forth in Exhibit "A" attached hereto and incorporated
herein as if fully set forth.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the
term "Adjustment Event" means an event pursuant to which the outstanding
Shares of the Corporation are increased, decreased or changed into, or
exchanged for a different number or kind of shares or securities, without
receipt of consideration by the Corporation, through reorganization,
merger, recapitalization, reclassification, stock split, reverse stock
split, stock dividend, stock consolidation or otherwise. Upon the
occurrence of an Adjustment Event, (i) appropriate and proportionate
adjustments shall be made to the number and kind and exercise price for the
shares subject to the Options, and (ii) appropriate amendments to this
Agreement shall be executed by the Corporation and Optionee if the
Committee determines that such an amendment is necessary or desirable to
reflect such adjustments. If determined by the Committee to be
appropriate, in the event of an Adjustment Event which involves the
substitution of securities of a corporation other than the Corporation, the
Committee shall make arrangements for the assumptions by such other
corporation of the Options. Notwithstanding the foregoing, any such
adjustment to the Options shall be made without change in the total
exercise price applicable to the unexercised portion of the Options, but
with an appropriate adjustment to the number of shares, kind of shares and
exercise price for each share subject to the Options. The determination by
the Committee as to what adjustments, amendments or arrangements shall be
made pursuant to this Section 10, and the extent thereof, shall be final
and conclusive. No fractional Shares shall be issued on account of any
such adjustment or arrangement.
<PAGE>
11. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing
contained in this Agreement shall obligate the Corporation to employ or
have another relationship with Optionee for any period or interfere in any
way with the right of the Corporation to reduce Optionee's compensation or
to terminate the employment of or relationship with Optionee at any time.
12. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
granted, sometimes referred to herein as the "date of grant," shall be
___________________________.
13. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to
the privileges of stock ownership as to any Shares not actually issued and
delivered to Optionee. No Shares shall be purchased upon the exercise of
any Options unless and until, in the opinion of the Corporation's counsel,
any then applicable requirements of any laws, or governmental or regulatory
agencies having jurisdiction, and of any exchanges upon which the stock of
the Corporation may be listed shall have been fully complied with.
14. SECURITIES LAWS COMPLIANCE. The Corporation will diligently
endeavor to comply with all applicable securities laws before any stock is
issued pursuant to the Options. Without limiting the generality of the
foregoing, the Corporation may require from the Optionee such investment
representation or such agreement, if any, as counsel for the Corporation
may consider necessary in order to comply with the Securities Act of 1933
as then in effect, and may require that the Optionee agree that any sale of
the Shares will be made only in such manner as is permitted by the
Committee. The Committee may in its discretion cause the Shares underlying
the Options to be registered under the Securities Act of 1933 as amended by
filing a Form S-8 Registration Statement covering the Options and the
<PAGE>
Shares underlying the Options. Optionee shall take any action reasonably
requested by the Corporation in connection with registration or
qualification of the Shares under federal or state securities laws.
15. INTENDED TREATMENT AS INCENTIVE STOCK OPTIONS. The Options
granted herein are intended to be "incentive stock options" to which
Sections 421 and 422A of the Internal Revenue Code of 1986, as amended from
time to time ("Code") apply, and shall be construed to implement that
intent. If all or any part of the Options shall not be subject to
Sections 421 and 422A of the Code, the Options shall nevertheless be valid
and carried into effect.
16. PLAN CONTROLS. The Options shall be subject to and governed by
the provisions of the Plan. All determinations and interpretations of the
Plan made by the Committee shall be final and conclusive.
17. SHARES SUBJECT TO LEGEND. If deemed necessary by the
Corporation's counsel, all certificates issued to represent Shares
purchased upon exercise of the Options shall bear such appropriate legend
conditions as counsel for the Corporation shall require.
18. CONDITIONS TO OPTIONS.
18.1 Compliance with Applicable Laws. THE CORPORATION'S
OBLIGATION TO ISSUE SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE OPTIONS
IS EXPRESSLY CONDITIONED UPON THE COMPLETION BY THE CORPORATION OF ANY
REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES UNDER ANY STATE AND/OR
FEDERAL LAW OR RULINGS OR REGULATIONS OF ANY GOVERNMENTAL REGULATORY BODY,
OR THE MAKING OF SUCH INVESTMENT REPRESENTATIONS OR OTHER REPRESENTATIONS
AND UNDERTAKINGS BY THE OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE
<PAGE>
OPTION IN ORDER TO COMPLY WITH THE REQUIREMENTS OF ANY EXEMPTION FROM ANY
SUCH REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES WHICH THE COMMITTEE
SHALL, IN ITS SOLE DISCRETION, DEEM NECESSARY OR ADVISABLE. SUCH REQUIRED
REPRESENTATIONS AND UNDERTAKINGS MAY INCLUDE REPRESENTATIONS AND AGREEMENTS
THAT THE OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION (i) IS NOT
PURCHASING SUCH SHARES FOR DISTRIBUTION AND (ii) AGREES TO HAVE PLACED UPON
THE FACE AND REVERSE OF ANY CERTIFICATES A LEGEND SETTING FORTH ANY
REPRESENTATIONS AND UNDERTAKINGS WHICH HAVE BEEN GIVEN TO THE COMMITTEE OR
A REFERENCE THERETO.
18.2 SHAREHOLDER APPROVAL OF PLAN. IF THE OPTIONS GRANTED HEREBY
ARE GRANTED PRIOR TO APPROVAL OF THE PLAN BY THE SHAREHOLDERS OF THE
CORPORATION PURSUANT TO SECTION 8 OF THE PLAN, THE GRANT OF THE OPTIONS
MADE HEREBY IS EXPRESSLY CONDITIONED UPON AND SUCH OPTIONS SHALL NOT BE
EXERCISABLE UNTIL THE APPROVAL OF THE PLAN BY THE SHAREHOLDERS OF THE
CORPORATION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 8 OF THE PLAN.
18.3 Maximum Exercise Period. Notwithstanding any provision of
this Agreement to the contrary, the Options shall expire no later than ten
years from the date hereof or five years if, as of the date hereof, the
Optionee owns or is considered to own by reason of Code Section 425(d) more
than 10% of the total combined voting power of all classes of stock of the
Corporation or any Subsidiary or parent corporation of the Corporation.
<PAGE>
19. MISCELLANEOUS.
19.1 Binding Effect. This Agreement shall bind and inure to the
benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
19.2 Further Acts. Each party agrees to perform any further acts
and execute and deliver any documents which may be necessary to carry out
the provisions of this Agreement.
19.3 Amendment. This Agreement may be amended at any time by the
written agreement of the Corporation and the Optionee.
19.4 Syntax. Throughout this Agreement, whenever the context so
requires, the singular shall include the plural, and the masculine gender
shall include the feminine and neuter genders. The headings and captions
of the various Sections hereof are for convenience only and they shall not
limit, expand or otherwise affect the construction or interpretation of
this Agreement.
19.5 Choice of Law. The parties hereby agree that this Agreement
has been executed and delivered in the State of Nevada and shall be
construed, enforced and governed by the laws thereof. This Agreement is in
all respects intended by each party hereto to be deemed and construed to
have been jointly prepared by the parties and the parties hereby expressly
agree that any uncertainty or ambiguity existing herein shall not be
interpreted against either of them.
19.6 Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be
construed to have any effect on, the remaining provisions of this
Agreement.
<PAGE>
19.7 Notices. All notices and demands between the parties hereto
shall be in writing and shall be served either by registered or certified
mail, and such notices or demands shall be deemed given and made
forty-eight (48) hours after the deposit thereof in the United States mail,
postage prepaid, addressed to the party to whom such notice or demand is to
be given or made, and the issuance of the registered receipt therefor. If
served by telegraph, such notice or demand shall be deemed given and made
at the time the telegraph agency shall confirm to the sender, delivery
thereof to the addressee. All notices and demands to Optionee or the
Corporation may be given to them at the following addresses:
If to Optionee: _________________________
_________________________
_________________________
If to Corporation: Sustainable Development International, Inc.
_________________________
_________________________
Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.
19.8 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter
hereof, this Agreement supersedes all prior and contemporaneous agreements
and understandings of the parties, and there are no warranties,
representations or other agreements between the parties in connection with
the subject matter hereof except as set forth or referred to herein. No
supplement, modification or waiver or termination of this Agreement shall
be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall constitute a waiver
of any other provision hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
<PAGE>
19.9 Attorneys' Fees. In the event that any party to this
Agreement institutes any action or proceeding, including, but not limited
to, litigation or arbitration, to preserve, to protect or to enforce any
right or benefit created by or granted under this Agreement, the prevailing
party in each respective such action or proceeding shall be entitled, in
addition to any and all other relief granted by a court or other tribunal
or body, as may be appropriate, to an award in such action or proceeding of
that sum of money which represents the attorneys' fees reasonably incurred
by the prevailing party therein in filing or otherwise instituting and in
prosecuting or otherwise pursuing or defending such action or proceeding,
and, additionally, the attorneys' fees reasonably incurred by such
prevailing party in negotiating any and all matters underlying such action
or proceeding and in preparation for instituting or defending such action
or proceeding.
IN WITNESS WHEREOF, the parties have entered into this Agreement as
of the date first set forth above.
"CORPORATION"
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC.
a Nevada corporation
By:
--------------------------------
Harold Jahn, President
"OPTIONEE"
----------------------------------
<PAGE>
EXHIBIT II
[FORM OF]
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement") is entered
into as of , by and between Sustainable
Development International, Inc., a Nevada corporation ("Corporation"), and
____________________ ("Optionee").
R E C I T A L S
A. On December 15, 1998, the Board of Directors of the Corporation
adopted, subject to the approval of the Corporation's shareholders, the
Sustainable Development International, Inc. 1998 Stock Option Plan (the
"Plan").
B. Pursuant to the Plan, on , the Board of
Directors of the Corporation acting as the Plan Committee ("Committee")
authorized granting to Optionee options to purchase shares of the common
stock, $.001 par value, of the Corporation ("Shares") for the term and
subject to the terms and conditions hereinafter set forth.
A G R E E M E N T
It is hereby agreed as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the
context otherwise clearly requires, terms with initial capital letters used
herein shall have the meanings assigned to such terms in the Plan.
<PAGE>
2. GRANT OF OPTIONS. The Corporation hereby grants to Optionee,
options ("Options") to purchase all or any part of __________ Shares, upon
and subject to the terms and conditions of the Plan, which is incorporated
in full herein by this reference, and upon the other terms and conditions
set forth herein.
3. OPTION PERIOD. The Options shall be exercisable at any time
during the period commencing on the following dates (subject to the
provisions of Section 18) and expiring on the date five (5) years from the
date of grant, unless earlier terminated pursuant to Section 7:
[Terms of vesting to be set forth here]
4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee
by giving written notice to the Corporation of the election to purchase and
of the number of Shares Optionee elects to purchase, such notice to be
accompanied by such other executed instruments or documents as may be
required by the Committee pursuant to this Agreement, and unless otherwise
directed by the Committee, Optionee shall at the time of such exercise
tender the purchase price of the Shares he has elected to purchase. An
Optionee may purchase less than the total number of Shares for which the
Option is exercisable, provided that a partial exercise of an Option may
not be for less than One Hundred (100) Shares. If Optionee shall not
purchase all of the Shares which he is entitled to purchase under the
Options, his right to purchase the remaining unpurchased Shares shall
continue until expiration of the Options. The Options shall be exercisable
with respect of whole Shares only, and fractional Share interests shall be
disregarded.
5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each
Share which Optionee is entitled to purchase under the Options shall be $
per Share.
<PAGE>
6. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
exercise of the Options, Optionee shall tender in cash or by certified or
bank cashier's check payable to the Corporation, the purchase price for all
Shares then being purchased. Provided, however, the Board of Directors
may, in its sole discretion, permit payment by the Corporation of the
purchase price in whole or in part with Shares. If the Optionee is so
permitted, and the Optionee elects to make payment with Shares, the
Optionee shall deliver to the Corporation certificates representing the
number of Shares in payment for new Shares, duly endorsed for transfer to
the Corporation, together with any written representations relating to
title, liens and encumbrances, securities laws, rules and regulatory
compliance, or other matters, reasonably requested by the Board of
Directors. The value of Shares so tendered shall be their Fair Market
Value Per Share on the date of the Optionee's notice of exercise.
7. EFFECT OF TERMINATION OF RELATIONSHIP OR DEATH. If Optionee's
relationship with the Corporation as a director terminates (whether
voluntarily or involuntarily because he is not re-elected by the
shareholders), or if optionee dies, all options which have previously
vested shall expire six (6) months thereafter. All unvested options shall
laps and automatically expire. During such six (6) month period (or such
shorter period prior to the expiration of the Option by its own terms),
such Options may be exercised by the Optionee, his executor or
administrator or the person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, as the case may
be, but only to the extent such Options were exercisable on the date
Optionee ceased to have a relationship with the Corporation as a director
or died.
<PAGE>
8. NONTRANSFERABILITY OF OPTIONS. The Options shall not be
transferable, either voluntarily or by operation of law, otherwise than by
will or the laws of descent and distribution and shall be exercisable
during the Optionee's lifetime only by Optionee.
9. ADDITIONAL RESTRICTIONS REGARDING DISPOSITIONS OF SHARES. The
Shares acquired pursuant to the exercise of Options shall be subject to the
restrictions set forth in Exhibit "A" attached hereto and incorporated
herein as if fully set forth.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the
term "Adjustment Event" means an event pursuant to which the outstanding
Shares of the Corporation are increased, decreased or changed into, or
exchanged for a different number or kind of shares or securities, without
receipt of consideration by the Corporation, through reorganization,
merger, recapitalization, reclassification, stock split, reverse stock
split, stock dividend, stock consolidation or otherwise. Upon the
occurrence of an Adjustment Event, (i) appropriate and proportionate
adjustments shall be made to the number and kind and exercise price for the
shares subject to the Options, and (ii) appropriate amendments to this
Agreement shall be executed by the Corporation and Optionee if the
Committee determines that such an amendment is necessary or desirable to
reflect such adjustments. If determined by the Committee to be
appropriate, in the event of an Adjustment Event which involves the
substitution of securities of a corporation other than the Corporation, the
Committee shall make arrangements for the assumptions by such other
corporation of the Options. Notwithstanding the foregoing, any such
adjustment to the Options shall be made without change in the total
exercise price applicable to the unexercised portion of the Options, but
with an appropriate adjustment to the number of shares, kind of shares and
exercise price for each share subject to the Options. The determination by
the Committee as to what adjustments, amendments or arrangements shall be
made pursuant to this Section 10, and the extent thereof, shall be final
<PAGE>
and conclusive. No fractional Shares shall be issued on account of any
such adjustment or arrangement.
11. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing
contained in this Agreement shall obligate the Corporation to employ or
have another relationship with Optionee for any period or interfere in any
way with the right of the Corporation to reduce Optionee's compensation or
to terminate the employment of or relationship with Optionee at any time.
12. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
granted, sometimes referred to herein as the "date of grant," shall be
.
13. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to
the privileges of stock ownership as to any Shares not actually issued and
delivered to Optionee. No Shares shall be purchased upon the exercise of
any Options unless and until, in the opinion of the Corporation's counsel,
any then applicable requirements of any laws, or governmental or regulatory
agencies having jurisdiction, and of any exchanges upon which the stock of
the Corporation may be listed shall have been fully complied with.
14. SECURITIES LAWS COMPLIANCE. The Corporation will diligently
endeavor to comply with all applicable securities laws before any stock is
issued pursuant to the Options. Without limiting the generality of the
foregoing, the Corporation may require from the Optionee such investment
representation or such agreement, if any, as counsel for the Corporation
may consider necessary in order to comply with the Securities Act of 1933
as then in effect, and may require that the Optionee agree that any sale of
the Shares will be made only in such manner as is permitted by the
Committee. The Committee may in its discretion cause the Shares underlying
the Options to be registered under the Securities Act of 1933 as amended by
<PAGE>
filing a Form S-8 Registration Statement covering the Options and the
Shares underlying the Options. Optionee shall take any action reasonably
requested by the Corporation in connection with registration or
qualification of the Shares under federal or state securities laws.
15. INTENDED TREATMENT AS NON-QUALIFIED STOCK OPTIONS. The Options
granted herein are intended to be non-qualified stock options described in
U.S. Treasury Regulation ("Treas. Reg.") 1.83-7 to which Sections 421 and
422A of the Internal Revenue Code of 1986, as amended from time to time
("Code") do not apply, and shall be construed to implement that intent. If
all or any part of the Options shall not be described in Treas. Reg.
1.83-7 or be subject to Sections 421 and 422A of the Code, the Options
shall nevertheless be valid and carried into effect.
16. PLAN CONTROLS. The Options shall be subject to and governed by
the provisions of the Plan. All determinations and interpretations of the
Plan made by the Committee shall be final and conclusive.
17. SHARES SUBJECT TO LEGEND. If deemed necessary by the
Corporation's counsel, all certificates issued to represent Shares
purchased upon exercise of the Options shall bear such appropriate legend
conditions as counsel for the Corporation shall require.
18. CONDITIONS TO OPTIONS.
18.1 Compliance with Applicable Laws. THE CORPORATION'S
OBLIGATION TO ISSUE SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE OPTIONS
IS EXPRESSLY CONDITIONED UPON THE COMPLETION BY THE CORPORATION OF ANY
REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES UNDER ANY STATE AND/OR
FEDERAL LAW OR RULINGS OR REGULATIONS OF ANY GOVERNMENTAL REGULATORY BODY,
OR THE MAKING OF SUCH INVESTMENT REPRESENTATIONS OR OTHER REPRESENTATIONS
<PAGE>
AND UNDERTAKINGS BY THE OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE
OPTION IN ORDER TO COMPLY WITH THE REQUIREMENTS OF ANY EXEMPTION FROM ANY
SUCH REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES WHICH THE COMMITTEE
SHALL, IN ITS SOLE DISCRETION, DEEM NECESSARY OR ADVISABLE. SUCH REQUIRED
REPRESENTATIONS AND UNDERTAKINGS MAY INCLUDE REPRESENTATIONS AND AGREEMENTS
THAT THE OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION (i) IS NOT
PURCHASING SUCH SHARES FOR DISTRIBUTION AND (ii) AGREES TO HAVE PLACED UPON
THE FACE AND REVERSE OF ANY CERTIFICATES A LEGEND SETTING FORTH ANY
REPRESENTATIONS AND UNDERTAKINGS WHICH HAVE BEEN GIVEN TO THE COMMITTEE OR
A REFERENCE THERETO.
18.2 SHAREHOLDER APPROVAL OF PLAN. IF THE OPTIONS GRANTED HEREBY
ARE GRANTED PRIOR TO APPROVAL OF THE PLAN BY THE SHAREHOLDERS OF THE
CORPORATION PURSUANT TO SECTION 8 OF THE PLAN, THE GRANT OF THE OPTIONS
MADE HEREBY IS EXPRESSLY CONDITIONED UPON AND SUCH OPTIONS SHALL NOT BE
EXERCISABLE UNTIL THE APPROVAL OF THE PLAN BY THE SHAREHOLDERS OF THE
CORPORATION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 8 OF THE PLAN.
19. MISCELLANEOUS.
19.1 Binding Effect. This Agreement shall bind and inure to the
benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
<PAGE>
19.2 Further Acts. Each party agrees to perform any further acts
and execute and deliver any documents which may be necessary to carry out
the provisions of this Agreement.
19.3 Amendment. This Agreement may be amended at any time by the
written agreement of the Corporation and the Optionee.
19.4 Syntax. Throughout this Agreement, whenever the context so
requires, the singular shall include the plural, and the masculine gender
shall include the feminine and neuter genders. The headings and captions
of the various Sections hereof are for convenience only and they shall not
limit, expand or otherwise affect the construction or interpretation of
this Agreement.
19.5 Choice of Law. The parties hereby agree that this Agreement
has been executed and delivered in the State of Nevada and shall be
construed, enforced and governed by the laws thereof. This Agreement is in
all respects intended by each party hereto to be deemed and construed to
have been jointly prepared by the parties and the parties hereby expressly
agree that any uncertainty or ambiguity existing herein shall not be
interpreted against either of them.
19.6 Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be
construed to have any effect on, the remaining provisions of this
Agreement.
19.7 Notices. All notices and demands between the parties hereto
shall be in writing and shall be served either by registered or certified
mail, and such notices or demands shall be deemed given and made
forty-eight (48) hours after the deposit thereof in the United States mail,
postage prepaid, addressed to the party to whom such notice or demand is to
be given or made, and the issuance of the registered receipt therefor. If
served by telegraph, such notice or demand shall be deemed given and made
<PAGE>
at the time the telegraph agency shall confirm to the sender, delivery
thereof to the addressee. All notices and demands to Optionee or the
Corporation may be given to them at the following addresses:
If to Optionee: _________________________
_________________________
_________________________
If to Corporation: Sustainable Development International, Inc.
Suite 208, 10240 124th Street
Edmonton, Alberta Canada T5N 3W6
Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.
19.8 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter
hereof, this Agreement supersedes all prior and contemporaneous agreements
and understandings of the parties, and there are no warranties,
representations or other agreements between the parties in connection with
the subject matter hereof except as set forth or referred to herein. No
supplement, modification or waiver or termination of this Agreement shall
be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall constitute a waiver
of any other provision hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
19.9 Attorneys' Fees. In the event that any party to this
Agreement institutes any action or proceeding, including, but not limited
to, litigation or arbitration, to preserve, to protect or to enforce any
right or benefit created by or granted under this Agreement, the prevailing
party in each respective such action or proceeding shall be entitled, in
addition to any and all other relief granted by a court or other tribunal
or body, as may be appropriate, to an award in such action or proceeding of
<PAGE>
that sum of money which represents the attorneys' fees reasonably incurred
by the prevailing party therein in filing or otherwise instituting and in
prosecuting or otherwise pursuing or defending such action or proceeding,
and, additionally, the attorneys' fees reasonably incurred by such
prevailing party in negotiating any and all matters underlying such action
or proceeding and in preparation for instituting or defending such action
or proceeding.
IN WITNESS WHEREOF, the parties have entered into this Agreement as
of the date first set forth above.
"CORPORATION"
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC.
a Nevada corporation
By:
--------------------------------
Harold Jahn, President
"OPTIONEE"
---------------------------------
LIMITED TECHNOLOGY LICENSE AGREEMENT
THIS AGREEMENT is made and entered into this 11th day of June 1998, by and
between Sustainable Development International Inc., a Nevada, USA
Corporation, hereinafter referred to as "Licensee", and ENVIRO-MINING INC.,
an Alberta, Canada Corporation, hereinafter referred to as "Licensor".
WHEREAS, the Licensor expended time, effort, and money to develop and
obtain knowledge in the field of science related to an oil rerefining
technology for the production of a high grade low sulphur #2 diesel and
associated products from waste lubrication oil referred to as "The EMI
Process" technology and has established successfully a reputation, demand,
and goodwill for such technology; and
WHEREAS the Licensee desires to obtain the benefits of the technology
established by the licensor and the right to do business under the trade
name "The EMI Process" as hereinafter provided.
IT IS THEREFORE AGREED between the parties as follows conditional upon
due diligence and acceptance of the viability of the technology by SDII. on
or before June 11, 1998:
1. License. The Licensee shall have the exclusive right to engage under
the terms hereof in the business of producing, merchandising,
marketing, distribution, promotion and selling products manufactured
by the EMI Process throughout the Territory as defined in Section 5.
2. Term of License. The term of this license shall commence on June 11,
1998, and o for thirty (30) years with an option to renew for ten (10)
year periods at the end f the first thirty (30) year period. Should the
Licensee refuse to renew at the end of the 30 year period then the
Licensee must not use the technology and return it to the Licensor.
Should the Licensor refuse to renew at the end of the first 30 year
period the Licensor must engage in good faith negotiations to amend this
license agreement, or to sell SDII for fair market value to the Licensee.
3. Funds to be paid.
A. Funds must be paid to Enviro-Mining Inc. under the following
terms. US $300,000 for the EMI Process.
B. The Licensee must commence construction in the first twelve (12)
months of this agreement, a plant of minimum capacity of 90,000
Tonnes of waste oil input in the Territory.
<PAGE>
C. It shall be just cause for termination of the Licensee of all
license and marketing rights, etc., if SDII has not commenced
construction of the first plant within the first year of this
license agreement, and an additional commercial scale plant every
year thereafter for the next 5 years.
4. Recurring funds to be paid by the Licensee to the Licensor.
A. There is an annual recurring fee to be paid as a production
royalty. the amount of this fee is negotiable to any amount
equal to or less than US $300,000.
B. Each additional plant will be subject to a license fee on a
negotiated basis at the time an application for a new license is
received.
5. Territory. The Territory within which the license and marketing
rights, etc., applies is for the Federal Republic of Germany.
6. Confidentiality. Both parties acknowledge the confidential nature of
information and procedures which shall be made available to the
Licensee by Licensor and either shall disclose to anyone other than an
authorized employee any information or procedures of the other party,
Any confidential literature or documents given to the other party will
be returned at the expiration or termination of this license. This
Agreement shall be deemed to be a confidential communication of the
parties.
7. Technology Disclosure. Full disclosure of all engineering and
process designs will be made available to the Licensee throughout the
term of the agreement.
8. Reporting Requirements.
a. The Licensee shall submit to the Licensor, on forms approved or
provided by the Licensor, such financial or operating information
as required by the Licensor to establish the gross revenue and
operating efficiencies for the plant. The Licensee, by these
presents, consents to the use of such information by the Licensor
as the licensor shall, in its sole discretion, determine. The
Licensee consents to the use of their information by the licensor
for design, publications, and research. All use of the
information for marketing and promotional use will be controlled
by the Licensee.
b. Bi - annual reports to inform the Licensor of the activities and
marketing programs of the Licensee must be submitted for review
and consultation. This will serve to apprise both parties of
improvements to the technology and of contacts interested in the
technology. Failure to provide this written communication will
be cause for termination.
<PAGE>
9. Personnel. The Licensee will hire only those people who have related
experience and qualifications to operate a facility of this design and
complexity. The Licensor will have the right to review any potential
applicant and should these individuals are not acceptable to the
Licensor a position will not be offered.
10. Purchase Option. EMI has the option, with ninety (90) days written
notice from the Licensee to purchase any and all shares, warrants,
options and equity in the operating entity which owns the plant, for
fair market value during the term of the agreement.
11. Licensee Undertakings.
a. The licensee shall not, during the term of this agreement communicate
or divulge to, or use for the benefit of, any other person, partnership,
association, or corporation, any information or knowledge concerning the
methods of manufacture, promotion, sale, or distribution used or employed
by the Licensor in and about its business which may be communicated to the
Licensee or which the Licensee may acquire by virtue of this operation
under the terms of this agreement; nor will the Licensee do any willful
prejudicial or injurious act to the business or goodwill of the Licensor.
b. During the term of this agreement, or upon its termination for any
cause, the Licensee will not , directly or indirectly, enter the employment
of, or render services to, any other person, partnership, association, or
corporation engaged in the same or substantially similar business covered
by this agreement in any area which can be reasonably termed competitive to
the Licensor or any of its licensees; and during such term the licensee
will not, within such territory, engage in such business on his own
account, or hold out any interest therein, directly or indirectly, as an
individual, partner, shareholder, director, consultant, independent
contractor, officer, clerk, principal, agent, employee, trustee, or in any
relation or capacity whatsoever.
c. Upon the termination of this agreement for any cause, the Licensee
will immediately discontinue the use of all trade names, trademarks, signs,
structures, and forms of advertising indicative of the Licensor or the
business or products thereof, and will make or cause to be made such
changes in signs, buildings, and structures as the Licensor shall
reasonably direct so as to distinguish effectively the same from its former
appearance and from any other of Licensor's places of business. If the
Licensee shall upon request fail or omit to make such changes or cause them
to be made, then the licensor shall have the right to enter upon the
premises upon which such business is being conducted without being deemed
guilty of trespass or any other tort, and shall have the right to make such
charges or cause them to be made at the expense of the Licensee, which
<PAGE>
expense the Licensee shall pay on demand. The Licensee shall also on
request of the Licensor, and upon the payment of the reasonable market
value thereof, turn over and deliver to the Licensor, its representatives,
agents or assignees, all matters and things bearing the trademark or trade
name of the Licensor and any technology developed while this license was
exercised.
12. Independence of restrictive covenants. The covenants contained above
shall be construed as independent of any other provision of this
agreement and independent of each other unless otherwise stated, and
the existence of any claim or cause of action of the Licensee against
the Licensor, whether predicated on this agreement or otherwise, shall
not constitute a defense to the enforcement by the Licensor of such
covenants.
13. Reciprocity of restrictive covenants. All restrictions applicable to
the Licensee hereinabove, shall also bind and be applicable to the
Licensor.
14. Termination.
a. If the Licensee shall neglect or fail to perform or observe any of the
Licensee's covenants for a period of two (2) months, or if any assignment
shall be made of the business for the benefit of creditors, or if a
receiver, guardian, conservator, trustee in bankruptcy, or similar officer
shall be appointed to take charge of all or part of the Licensee's
property, or if the Licensee is adjudicated a bankrupt, then unless such
condition or conditions are remedied to the satisfaction of the Licensor
within fourteen (14) days after written notice thereof has been given to
the Licensee, the license hereunder shall cease.
b. In the event of any failure by the Licensee to pay any amounts owed to
the Licensor, the Licensor's expenses in collecting same, together with a
delinquency charge of one (0.01) cent per month of each dollar or fraction
thereof in arrears more than sixty (60) consecutive days from the date
first due, and reasonable attorney's fees, shall be paid by the Licensee.
c. All agreements, fees, and projects currently in progress or completed
previously shall continue as agreed for the duration of the original
agreement in the event the Licensee no longer holds a license.
15. Licensor Undertaking. The Licensor shall provide all necessary
engineering, feasibilities, and other undertakings requested by the
Licensee within a reasonably acceptable timeframe and quality at the
expense of the Licensee.
16. Complete agreement; waivers. This agreement contains the entire
agreement of the parties, and no representations, inducements, promises, or
agreements, oral or otherwise, between the parties not embodied herein
shall be of any force or effect. No failure of the parties to exercise any
right given to them hereunder, or to insist upon strict compliance by the
<PAGE>
other party with any obligations hereunder, and no customs or practice of
the parties at variance with the terms hereof shall constitute a waiver of
the other party's rights to demand exact compliance with the terms hereof.
Waiver by the parties of any particular default by the other party shall
not affect or impair the other's rights in respect to any subsequent
default of the same or of a different nature, nor shall any delay or
omission of the other to exercise any rights arising from such default
affect or impair the other's rights as to such default or any subsequent
default.
17. Separability of provisions. If any covenant or other provision of
this agreement is invalid, illegal, or incapable of being enforced, by
reason of any rule of law, administrative order, judicial decision or
public policy, all other conditions and provisions of this agreement shall,
nevertheless, remain in full force and effect, and no covenant or provision
shall be deemed dependent upon any other covenant or provision unless so
expressed herein.
18. Assignability. This agreement shall inure to the benefit of the
heirs, successors and assigns of the Licensor and Licensee. The Licensor
and Licensee shall have the right to assign their rights under this
agreement to any person, firm, association, or corporation; except that any
assignment by the Licensee must be approved in writing by the Licensor.
Such approval will not be unreasonably withheld. Such assignment shall not
be binding upon the parties unless the transferee has agreed in writing to
assume all of the parties obligations to the terms of this agreement.
19. Governing Law. This agreement, and the transactions contemplated
hereby, shall be governed by, construed and enforced in accordance with the
laws of the Province of Alberta, Canada. The parties herein waive trial by
jury and agree to submit to the personal jurisdiction and venue of a court
of subject matter jurisdiction located in the City of Edmonton, Province of
Alberta, Canada. In the event that litigation results from or arises out
of this Agreement or the performance thereof, the parties agree to
reimburse the prevailing party's reasonable attorney's fees, court costs,
and all other expenses, whether or not taxable by the court as costs, in
addition to any other relief to which the prevailing party may be entitled.
In such event, no action shall be entertained by said court or any court of
competent jurisdiction if filed more than one year subsequent to the date
the cause(s) of action actually accrued regardless of whether damages were
otherwise as of said time calculable.
20. Contractual Procedures. Unless specifically disallowed by law,
should litigation arise hereunder, service of process thereof may be
obtained through certified mail, return receipt requested; the parties
hereto waiving any and all rights they may have to object to the method by
which service was perfected.
<PAGE>
21. Arbitration. Any controversy or claim arising out of or relating to
this document/contract or the breach thereof, and which is not settled
between the signatories themselves, shall be settled by arbitration in
accordance with the rules of the arbitration committee of the
international chamber of commerce in Paris (France) with hearings to
take place in Paris (France) or other mutually agreed location and
judgment upon award rendered by the arbitration(s) may be entered in
any court having jurisdiction thereof including the award to the
aggrieved signatory or signatories, such awarding related to the total
remuneration received as a result of business conducted with the
parties covered by this agreement plus any and all court costs,
attorney fees, and any other costs or charges reasonably necessary to
adjudicate the controversy in addition to any and all damages deemed
fair by the arbitrator(s).
22. Extraordinary remedies. To the extent recognizable at law, the
parties hereto, in the event of breach and in addition to any and all other
remedies available thereto, may obtain injunctive relief, regardless of
whether the injured party can demonstrate that no adequate remedy exists at
law. Moreover, breach or threatened breach by the Licensor of Licensee's
rights to Licensee's exclusive Territory may be enjoined without further
notice to Licensor, so long as Licensee is given the opportunity to appear
and contest within thirty (30) days thereof. Any and all parties related
to or affiliated with such breach or threatened breach shall be similarly
enjoined.
<PAGE>
IN WITNESS WHEREOF the parties have executed this Agreement.
Signed, sealed and delivered
in the presence of :
"LICENSOR"
____________________________ /S/Lew Mansell
-------------------------------
Witness LEW MANSELL
VICE PRESIDENT
ENVIRO-MINING INC.
CITY OF EDMONTON,
ALBERTA, CANADA DATE June 11, 1998
"LICENSEE"
____________________________ /s/Harold Jahn
----------------------------------
Witness HAROLD JAHN
PRESIDENT
SUSTAINABLE DEVELOPMENT
INTERNATIONAL INCORPORATED
CITY OF LAS VEGAS,
NEVADA, USA DATE June 11, 1998
C O N T R A C T
of
Input of Electricity
into the Net of
TEAG Thueringer Energie AG
between
Umweltservice Europa GmbH
Sustainable Development International Inc.
124 Street Number 10240 Suite 208
Edmonton T5N 3W6
Alberta Canada
- -following "Operating Company of Electricity Plant"-
and
TEAG Thueringer Energie AG
Schwerborner Strasse 30
Postfach 450
99009 Erfurt
Deutschland
- -following named as "TEAG"-
<PAGE>
1. Content of Contract
This contract defines the Sale and Revenue of electricity.
1.1 Delivery of Electricity from the Operating Company of the
Electricity Plant to TEAG
The Operating Company of the Electricity Plant offers the surplus of
Electricity that is produced and not used in the Electricity Plant in
36460 Merkers to TEAG at the conditions of this contract. Their own use
includes all energy needed in the industrial plants of the Operating
Company of the Electricity Plant.
The connecting plant of the TEAG terminates at transmission connection
point of the switchgear to be confirmed after viewing and finalizing of
the technical concept.
The ending point of the connecting plant is the point of Transfer.
The Set up/Expansion/Change and Operation of the electrical Plants
behind the Transfer point (side of the Operating Company), with the
exception of the Meter Equipment site, lies with the Operating Company of
the Electricity Plant.
Each Contract Partner is financially responsible for the upkeep of
their own plants.
Additional to the costs of building the connecting plant and the
necessary methods in the already completed Net of the TEAG, does the
owner of the Operating Company of the Electricity Plant pay a
connecting fee usually based on the conditions in the connecting agreement.
The Operating Company of the Electricity Plant delivers Alternating
current of 110 000 Volt and 50 Hertz up to a maximum of 106 000 kW
(Delivery ability) at a cost of 0,97 inductive in the 110 kV-Net at the
Transfer point to the TEAG.
Changes of Delivery ability or of the Energy carrier, require
Agreements, particularly about the adaptation of the connecting plant
as well as the responsibility of costs.
1.1.2 The TEAG includes the available electricity from the
Operating Company of the Electricity Plant in its Net, that is
mentioned in the framework of this Contract.
1.1.3 The Operating Company of the Electricity Plant consists at
the time of the conclusion of this Contract of:
Number of Aggregates - with each ...kW (Discussed Capacity) still has
to be defined
Changes of the above Electricity Plant can only happen in agreement
with the TEAG. The Operating Company of the Electricity Plant commits to
coordinate these changes in a reasonable timeframe - typically one year
before the realization of the changes- with the TEAG and to come to an
agreement.
<PAGE>
1.1.4 Delivery of Electricity to a third party by the Electricity
Plant is by this contract not allowed. The Delivery to a third party
has to be separately coordinated before the Delivery starts with the
TEAG, so that the technical consequences of meter and net can be checked
and necessary parts can be installed. The industrial plants of the
Electricity Plant is not subject to this part of the contract.
1.2 Purchase of Electricity of the Electricity Plant from the TEAG
The Purchase of Electricity of the Electricity Plant from the TEAG is
to be agreed on separately of this contract.
2. The set up and operation of the Electricity Plant
2.1 Set up, Maintenance and Operation of the Plants of Production,
Metering and Distribution of Electricity as well as the connection to the
Net of the TEAG follows the Guidelines and Regulations of the Verband
Deutscher Elektrotechniker (VDE) (the Association of German Electrical
technicians) and the particular VDEW-Regulations to the Parallel
operation "Technical Regulations Parallel operation of Plants that produce
Electricity for their own use with the Middle voltage of the Electricity-
Supply-Organization (EVU)". Additional to this have the regulations of
the TEAG to be followed upon the conclusion of this contract.
2.2 The Contract Partners commit to keep up and maintain their Plants
to prevent disruptions from happening.
2.3 The Operating Company of the Electricity Plant controls the
Operation up until the point of Transfer according to point 1.1.1 of this
contract as well as the functional efficiency of the Meter equipment and
communicates any technical faults immediately according to the
Regulation to the next TEAG-Office (see extra Page to Input contract -
Appendix 4).
3. Disturbances and Regulate Downtime, Financial Responsibility
3.1 The Contract partners commit to fix or repair any Disruptions,
Maintenance Procedures or similar activities on the Plants, which would
require an interuption or limitation of the Electricity Delivery in the
fastest time possible. TEAG has to be notified four months before the
beginning of the Calendar year about all downtime of the Electricity Plant
as a consequence of Revisions as well as start and duration.
3.2 The Operating Company of the Electricity Plant has the obligation
- - upon request of the TEAG, to disconnect the Electricity Plant from
the Net in case of technical reasons. The TEAG has the right to
disconnect the Electricity Plant immediately from the Net in case of
Danger or Disturbance.
3.3 The Net of Electricity Supply of the TEAG has a build in Short-
Disruption- Protection. The Operating Company of the Electricity Plant
is responsible to protect his own Plants from any damages that may
happen because of this device.
<PAGE>
3.4 For Damages that the Contract Partners cause each other, created
through the Interruption or irregular Supply of Electricity, will the
financial responsibility after closer Clarification of the Point 4
"Conditions of the Supply of Electricity for Special-Contract- Customers
from the TEAG Net" (Appendix 2) the reason as well as the amount be
defined.
In all other cases is the financial responsibility of the Contract
partners within the legal Regulations in the accordance, that the
financial responsibility is limited to the replacement of the direct
Damage. The financial responsibility for indirect Damages and their
Consequences, especially for loss of profit, loss of Production,
Earnings and Use, is out of the question.
4. Meter Equipment
4.1 The Electricity delivered from the Electricity Plant to the TEAG
is on the side of the 110 000 Volt measured through:
1 Meter Cabinet for one Measurement-Distance with 1 registering
Measurement (will be defined at a later time)
1 High voltage-Voltage changer
1 High voltage-Electricity changer
4.2 For the Meter equipment that TEAG provides has the Operating
Company of the Electricity Plant to pay a monthly amount according to
the Meter-Price-Sheet an amount of 1,5 Percent of the particular Re-
Buy-Price. As well, the Operating Company of the Electricity Plant a Use-
Amount for the Online-Data-Distance-Transmission, see Meter-Price-Sheet.
The Meter-Price will be calculated using TEAG's existing billing
system. The TEAG has the right to adjust the Meter-Prices.
5. Payment
The TEAG pays for the Electricity, based on the agreed Input-Capacity
(Point 1 in this contract) and according to point 4.1 of this contract.
The payment for the Input of Electricity is a summary of the whole
year of the Price (see in Price-Sheet) for the delivered
Electricity.
The input of Electricity is subject according to the various High-
Charge and Low-Charge prices as indicated on the Price-Sheet.
High-Charge (HT) applies between Monday and Friday from 6.00 A.M. and
22.00 h (P.M.) and on Saturdays from 6.00 A.M. and 13.00 h (P.M.). For
all other times, including statutory holidays in Thueringen (Germany)
apply the Low-Charge (NT) Prices.
The TEAG has the right to change the Time-Charges. The TEAG will
communicate this to the Operating Company of the Electricity Plant in an
appropriate timeframe.
In the High-Charge times as mentioned above, the Electricity Plant
commits to supply between 96 and 106 MW to the TEAG. If this input-
capacity in the High-Charge times is not fulfilled, if the supply is lower
than 96 MW, when possible and available, will the payment be according to
the Low-Charge Price-Schedule. If the supply capacity is 20% under the 96
MW mark, will the payment be according to the Minimum-Schedule on the
Price-Sheet.
<PAGE>
In case of no input from the Electricity Plant in High-Charge Times
and the TEAG must purchase the required Electricity from other sources
to unfavorable conditions, the Electricity Plant pays the difference to
the Price according to the High-Charge Times to the TEAG.
6. Adjustment to changes of the electricity-economical conditions of the
TEAG
If there are any changes electricity-economically for the TEAG within
the timeframe of this contract or Price-Sheet changes happen, the TEAG
has the right to do an adjustment to the contract as well as to the
Price-Schedule. The changes will be announced in writing 3 months in
advance. As well the conditions in point 5 of this contract are to be
followed.
According to Input-Capacity, Input-Conditions and Competition-
Situation as well as changes in Economical Situations, the TEAG has the
right to adjust the prices on a yearly basis on the 30th of Payment
7. Billing and Payment
7.1 The billing year of the TEAG begins on the 1st of October and
ends on the 30th of September. The TEAG has the right to change the
billing year.
7.2 For the reading of the Meter equipment and billing of the
Electricity-Input are following guidelines:
The reading of the Meter equipment will be done at the end of each
month by the TEAG. According to the Meters, the TEAG will be issued a
credit. The credit will be accepted up to 25 days after the last
month's calculation period.
The TEAG is willing to agree on a different timeframe of reading the
Meter equipment and Billing period, if so desired by the Operating
Company of the Electricity Plant.
7.3 Should the Operating Company of the Electricity Plant decide to
discontinue their supply to the TEAG, the company commits to communicate
this immediately to the TEAG.
8. Start and Duration of Contract, Clause of exiting the Contract
Agreement
8.1 The Contract starts with the legal Signatures of both Contract
Partners, however not before the start of operation of the Connection-
Plant or the start of operation of the Electricity Plant. The duration is
at first eight years till the end of the business year 31st of December
2007. After that time, each extension of the Contract is 12 months, if the
Contract is not canceled in writing three months prior to yearend.
The agreements of Supply, Purchase and Payment of Electricity according to
point 1.1 and 6 will take place at the point of starting the operation of
the Connection Plant as well as the Meter Equipment.
8.2 Should the TEAG receive an offer of a third party that would, after
proving its viability, supply Electricity to a lower price and fulfill all
other conditions, with a price difference of 3% during the time of
Contract, the TEAG will, based on this offer, ask for new price
negotiations with the Operating Company of the Electricity Plant. If the
Operating Company of the Electricity Plant doesn't fulfill the new
conditions, after adjusting the Contract, has the TEAG the right to
discontinue this contract with a three months notice.
<PAGE>
8.3 Should the price adjustment according to the Competition situation as
well as the changes at the time of the introduction of the Electricity
price-Index according to point 5 as well as changes according to
Appendix 1, point 3 not be recognized and not confirmed from the
Electricity Plant and an adjustment of the contract does not take place,
has the TEAG the right to discontinue this contract with a three months
notice.
8.4 Should the Operating Company of the Electricity Plant close the Plant
permanently, the contract will be ceased at the end of the month. The
permanent closing of the Plant will be communicated - usually one year and
three months before actual close down - to the TEAG.
8.5 If defects in the Electricity Plant are not taken care of by the
Operating Company, even though the TEAG has asked for the correction, has
the TEAG the right to resign from this Contract immediately.
8.6 In the case of cancellation of this contract, there will be no
possibility of working with the Parallel operation of the
Electricity Plant and the TEAG Net.
9. Place of legal Jurisdiction
9.1 The Place of Jurisdiction and Performance is the headquarters of TEAG,
except in cases whereby an outside Court of Law has jurisdictional
precedent. At the time of the conclusion of this Contract it is Erfurt
(Germany)
9.2 Verbal Agreements have no validity; changes and additions of this
contract must be done in written form.
10. Other Regulations
The observance of the VDEW-Regulations to the Parallel operation "Technical
Regulations Parallel operation of Plants that produce Electricity for their
own use with the Middle voltage of the Electricity-Supply-Organization
(EVU)" and Appendix 1 as well as point 3 mentioned Regulation in times of
disruptions, the scheduled downtimes including financial responsibility
represent an important part of this contract, as long as the Contract
doesn't define anything else for specific cases.
11. General Clause
11.1 If individual Regulations of this Contract are ineffective or become
ineffective, will all other Agreements still be in effect. The Contract
Partners commit to update these agreements to benefit of both parties as
their situations change or improve. For common errors in the Contract are
to be handled the same as above.
11.2 In case of Disagreement that is related to this Contract, the
appropriate Court of Laws will represent the executive power in
situations, where there cannot be an amicable agreement between the two
parties in a regular court of law.
<PAGE>
11.3 To ensure the appropriate Fulfillment of this Contract, the TEAG saves
the ongoing data for electricity supply tariff base.
11.4 This Contract has two Copies, each Contract partner has one copy.
11.5 If arrangements of this Contract for its Effectiveness according to
the laws of Competition-Restriction have to be registered with the
Cartel-Registry, the registration will be done by TEAG. Any resulting
costs shall be borne by both parties equally.
.........................................., the........................
Erfurt, December 2, 1998
Operating Company of the Electricity Plant TEAG Thueringer
Energie AG
Umweltservice Europa GmbH
Sustainable Development International Inc.
Appendix -
Index for the Contract of Input of Electricity
between
TEAG Thueringer Energie AG
and
Umweltservice Europa GmbH (Sustainable Development International Inc.)
Appendix 1 - Payment regulation and Price-Sheet
Appendix 2 - Supply Conditions
Conditions for the Supply of Electricity of Special-
Contract-Clients form the TEAG Net
Appendix 3 - VDEW-Regulations to Parallel operation
"Technical Regulations Parallel operation of Plants that produce
Electricity for their own use with the Middle voltage of the Electricity-
Supply-Organization (EVU)"
Appendix 4 - Extra Page: Announcements of Disruptions/Regulation
Appendix 5 - Price-Sheet
<PAGE>
Price-Sheet
for Input of Electricity from Power stations
on the basis of rational Energy-Usage
Payment Schedule (Updated: October 10, 1998)
High-Charge times (HT) Supply Commitment
<TABLE>
<S> <C> <C>
January - March Monday - Friday 6.00 - 22.00 h
8.0 Pf/kWh
April - June Monday - Friday 6.00 - 7.00 h
5.5 Pf/kWh
7.00 - 19.00 h 8.0 Pf/kWh
19.00 - 22.00 h 5.5 Pf/kWh
July - September Monday - Friday 6.00 - 7.00 h
5.5 Pf/kWh
7.00 - 16.00 h 8.0 Pf/kWh
16.00 - 22.00 h 5.5 Pf/kWh
October - December Monday - Friday 6.00 - 22.00 h
8.0 Pf/kWh
Year round Saturdays 6.00 - 13.00 h
4.2 Pf/kWh
Low-Charge times (NT) 4.2 Pf/kWh
Minimum Payment 3.0 Pf/kWh
3. Sales Tax -
The listed prices are net prices; upon written confirmation of the
calculation for the right of Sales Tax is presented, these prices will bear
the Sales Tax (Goods- and Service Tax) in an amount to be the existing tax
laws of Germany. Upon the issuance of the invoice of the sales tax to the
Operating Company of the Electricity Plant, they shall be realized.
</TABLE>
ENVIRO-MINING INC
Suite 208, 10240 124 Street Phone 780-488-9191
Edmington, Alberta CANADA Fax 780-488-9100
T5N 3W6 E Mail [email protected]
May 11, 1999
Sustainable Development International Inc.
Suite 111, 1850 E Flamingo Road
Las Vegas, Nevada
USA 89119
ATT: Mr. Harold Jahn RE: Limited Technology
Licence Agreement
President from Enviro-Mining Inc June 11, 1998
Dear Mr. Jahn,
With respect to the term of the agreement we negotiated with SDI for the
above license certain terms were to be met within one year of the signing
date June 11, 1998. Specifically,
Clause 3. A required payment of $300,000 for the license.
Clause 3. B required commencement of construction within one year from the
signing date.
Clause 3. C permitted termination if construction had not commenced within
the year.
In consideration of the demonstrated effort you have shown and the time and
expense you have undertaken to move this project development forward, we
are providing an extension of the original agreement to June 11, 2000.
Also, we have delayed payment for the license and no penalties will be
applied to this extension or to the delayed payment for the license.
We continue to request current updates on your progress for our comfort in
this undertaking. Your success with this project will be an encouragement
to all concerned.
Kindest regards,
/s/Lew Mansell
Enviro- Mining Inc.
Lew Mansell
Vice President
lm/
EMPLOYMENT AGREEMENT
This Employment Agreement is effective as of June 30, 1998, by and
between Sustainable Development International, Inc., a Nevada corporation
of 10240 - 124th Street, Suite 208, Edmonton, Alberta, Canada ("Employer"),
and Harold Jahn, ("Executive").
Recitals
WHEREAS, Employer is involved in technologies in the environmental
energy from waste and alternative power system industries.
WHEREAS, Employer desires assurance of the association and services of
Executive in order to retain his experience, skills, abilities, background,
and knowledge, and is therefore willing to engage his services on the terms
and conditions set forth below.
WHEREAS, Executive desires to commence working with Employer and is
willing to do so on those terms and conditions.
NOW THEREFORE, in consideration of the above recitals and the mutual
promises and conditions in this Agreement, and other good and valuable
considerations, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. EMPLOYMENT. Employer shall employ Executive as its President and
Chief Executive Officer.
2. EXECUTIVE'S DUTIES.
2.1. Duties at Employer: Executive shall represent the Employer
as the Chief Executive Officer of the Company. Executive shall possess the
power and authority to hire and fire all employees of Employer, unless
otherwise directed by Employer to the contrary. Executive shall manage and
conduct the business of Employer subject to expenditure policies set by
Employer through Employer's directors. Executive's duties shall include,
but not be limited to the following:
2.1.1 Directing the use and control of finances within the
limits approved by the Board;
2.1.2 Appointing and dismissing all employees of Employer;
2.1.3 Implementing long-term strategies and policies
established by the Board by defining and implementing short, medium, and
long-term objectives;
<PAGE>
2.1.4 Communicating the intentions and results of
management to Employer's Directors.
2.1.5 Borrowing or obtaining credit in any amount or
executing any guaranty, upon Board Approval;
2.1.6 Expending funds for capital equipment in excess of
budgeted expenditures for any calendar month;
2.1.7 Selling or transferring capital assets not exceeding
$5,000 in market value in any single transaction or exceeding $25,000 in
market value in any one fiscal year, without Board Approval;
2.1.8 Approving a budget and any amendments thereto;
2.1.9 Determining and approving long-term policies and
strategies.
3. DEVOTION OF TIME. During the period of his employment hereunder,
and except for illness, reasonable vacation periods and reasonable leaves
of absence. Executive shall devote all of his business time, interest
attention, and effort to the faithful performance of his duties hereunder.
However, Executive may serve, on the boards of directors of, and hold any
other offices or positions in companies or organizations which, in the
judgment of Employer's Board of Directors (the "Board" as expressed in a
written Board Resolution), will not present any conflict of interest with
Employer or adversely affect the performance of Executive's duties pursuant
to this Agreement.
4. NON COMPETITION DURING TERM OF EMPLOYMENT. During the employment
term, Executive shall not, directly or indirectly, whether as a partner,
employee, creditor, shareholder, or otherwise, promote, participate, or
engage in any activity or other business directly competitive with
Employer's business, except with express permission of the Board. In
addition, Executive, while employed, shall not take any action without
Employer's prior written consent to establish, form, or become employed by
a competing business on termination of employment by Employer. Executive's
failure to comply with the provisions of the preceding sentence shall give
Employer the right (in addition to all other remedies Employer may have) to
terminate any benefits or compensation to which Executive may be otherwise
entitled following termination of this Agreement.
5. VARIATION OF DUTIES. During the term hereof, Executive shall not
vary the terms of his employment with Employer, without the specific
written authorization from Employer.
6. TERM OF AGREEMENT. Subject to earlier termination as provided in
this Agreement, Executive shall be employed for a term beginning June 30,
1998, and ending December 31, 2000.
<PAGE>
7. LOCATION OF EMPLOYMENT. Unless the parties agree otherwise in
writing, during the employment term Executive shall perform the services he
is required to perform under this Agreement at Employer's offices to be
located in Edmonton, Alberta, Canada; provided, however, that Employer may
from time to time require Executive to travel temporarily to other
locations on Employer's business.
8. COMPENSATION. Employer shall pay compensation to Executive in the
following amounts and on the following terms:
8.1 Initial Payment. As consideration and inducement for
Executive to become employed by Employer, Employer shall pay Executive
$18,000 through October 31, 1998.
8.2 Salary. For all services rendered by Executive in any
capacity during the term of this Agreement, Employer shall pay Executive
annual compensation commencing after the Initial Payment on February 1,
1999 at $3,000 per month, in equal, bi-monthly installments payable on the
1st and 15th day of each month, or in such other manner as is the general
practice of Employer:
9. BENEFITS. During the employment term, Executive shall be entitled to
receive all other benefits of employment generally available to Employer's
other executive and managerial employees when and as he becomes eligible
for them, including group health and life insurance benefits and an annual
vacation.
9.1 Vacation. Executive shall be entitled to a paid annual vacation of
three (3) weeks during the first year of employment, and four (4) weeks
during any subsequent years; provided however, that vacation time may not
be accumulated and must be taken by the end of the year in which it has
accrued.
9.2 Sick Leave. Executive shall be entitled, without any adjustment in
his compensation, to thirty (30) days sick leave in each fiscal year of
employment hereunder if he is unable to perform his duties by reason of
illness or accident. Sick leave may not be carried over from one fiscal
year to the next.
9.3 Medical and Disability Coverage. Executive shall have the right to
all medical coverage and long term disability coverage on the same terms
and conditions as provided to other employees of Employer holding
management positions. It is agreed and understood that Employer shall
obtain reasonable medical, dental, disability, life, and liability
insurance for the benefit of Executive and other members of management as
soon hereafter as is practical, and it shall use its best efforts to
maintain such policies at all time during the employment term. In the event
that any such policy is not maintained by Employer, Employer shall pay
Executive an additional $500.00 per month to enable Executive to secure one
or more of such policies on his own.
<PAGE>
9.4 Plans. Executive shall be entitled to participate in any and all
plans, arrangements, or distributions by Employer pertaining to or in
connection with any pension, bonus, profit sharing, stock options, and/or
similar benefits for its employees and/or executives, as determined by the
Board of Directors of committees thereof pursuant to the governing
instruments which establish and/or determine eligibility and other rights
of the participants and beneficiaries under such plans or other benefit
programs.
9.5 Automobiles. If, during the employment term, Employer shall
furnish to other employees and managerial personnel of Employer and
automobile owned by Employer, or lease by Employer, then Employer shall
also provide an automobile to Executive. The terms and conditions of
Executive's use of such automobile and the extent to which Employer shall
defray the costs of its operation shall be the same as those pertaining to
automobiles furnished other executive and managerial personnel of Employer.
10. EXPENSE REIMBURSEMENT. During the employment term, Employer shall
reimburse Executive for reasonable out-of-pocket expenses incurred in
connection with Employer's business, including travel expenses, food, and
lodging when away from home, subject to such policies as Employer may from
time to time reasonably establish for its employees.
11. INTELLECTUAL PROPERTY. All processes, inventions, patents, copyrights,
trademarks, and other intangible rights that may be conceived or developed
by Executive, either alone or with others, during the term of Executive's
employment, whether or not conceived or developed during Executive's
working hours, and with respect to which the equipment, supplies,
facilities, or trade secret information of Employer was used, or that
relate at the time of conception or reduction to practice of the invention
to the business of the Employer or to Employer's actual or demonstrably
anticipated research and development, or that result from any work
performed by Executive for Employer, shall be the sole property of
Employer. Executive shall disclose to Employer all inventions conceived
during the term of employment, whether or not the property of Employer
under the terms of the preceding sentence, provided that such disclosure
shall be received by Employer in confidence. Executive shall execute all
documents, including patent applications and assignments, required by
Employer to establish Employer's rights under this Section.
12. INDEMNIFICATION OF EXECUTIVE. Employer shall, to the maximum extent
permitted by law, indemnify and hold Executive harmless against expenses,
including reasonable attorney's fees judgements, fines, settlement, and
other amounts actually and reasonably incurred in connection with any
proceeding arising by reason of Executive's employment by Employer.
Employer shall advance to Executive any expense incurred in defending such
proceeding to the maximum extent permitted by law.
13. LIABILITY INSURANCE. Employer shall purchase and maintain indemnity
insurance, including Directors and Officers errors and omissions insurance,
if available, on behalf of Executive in an amount of reasonably necessary
to protect Executive against any liability asserted against or incurred by
Executive arising out of his employment by Employer.
<PAGE>
14. TERMINATION BY EMPLOYER. Employer may terminate this Agreement at any
time, if termination is "For Cause", as hereinafter defined. "For Cause"
shall mean Employer's termination of Executive due to an adjudication of
Executive's fraud, theft, dishonesty to Employer regarding Executive's
duties or material breach of this Agreement, if Executive fails to cure
such breach within ten (10) days after written notice is given by the Board
of Directors to Executive and Executive fails with ten (10) days of such
notification to commence such cure and thereafter diligently prosecute such
cure to completion.
15. TERMINATION BY EXECUTIVE. Executive may terminate this Agreement by
giving Employer thirty (30) days prior written notice of resignation.
16. EXECUTIVE DISABILITY INSURANCE. Employer has advised Executive that it
currently maintains or is seeking disability insurance for its employees,
including Executive. During the term of this Agreement, Employer shall
maintain disability insurance covering Executive on terms and conditions no
less favorable than the terms and conditions in effect at the date of this
Agreement or contained in the initial policy acquired by Employer for its
management and other executives.
17. DISABILITY PAYMENTS. If and to the extent that Executive receives
payments in respect of such disability insurance during the period in which
Employer is obligated to make payments under this Agreement, Employer shall
be relieved of the obligation to make such payments to Executive to the
extent of the amounts so received by Executive, but except as so qualified,
Employer's obligations to make such payments shall continue in full.
18. DEATH OF EXECUTIVE. If Executive dies during the initial term or during
any renewal term of this Agreement, this Agreement shall be terminated on
the last day of the calendar month of his death. Employer shall then pay to
Executive's estate any salary accrued but unpaid as of the last day of the
calendar month in which Executive dies. Employer shall have no further
financial obligations to Executive or his estate hereunder.
19. AGREEMENT ON BUSINESS COMBINATION OR DISSOLUTION. This Agreement shall
not be terminated by Employer's voluntary or involuntary dissolution or by
any merger in which Employer is not the surviving or resulting corporation,
or on any transfer of all or substantially all of Employer's assets. In the
event any such merger or transfer of assets, the provisions of this
Agreement shall be binding on and inure to the benefit of the surviving
business entity or the business entity to which such assets shall be
transferred.
20. TRADE SECRETS AND CONFIDENTIAL INFORMATION:
20.1 Nondisclosure. Without the prior written consent of Employer,
Executive shall not, at any time, either during or after the term of this
Agreement, directly or indirectly, divulge or disclose to any person, firm,
association, or corporation, or use for Executive's own benefit, gain, or
otherwise, any customer lists, plans, products, data, results of tests and
data, or any other trade secrets or confidential materials or like
information (collectively referred to as the "Confidential Information") of
Employer and/or its Affiliates, as hereinafter defined, it being the intent
of Employer, with which intent Executive hereby agrees, to restrict
Executive from disseminating or using any like information that is
unpublished or not readily available to the general public.
<PAGE>
20.1.1 Definition of Affiliate. For purposes of this Agreement, the
term "Affiliate" shall mean any entity, individual, firm, or corporation,
directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with Employer.
20.2 Return of Property. Upon the termination of this Agreement,
Executive shall deliver to Employer all lists, books, records, data, and
other information (including all copies thereof in whatever form or media)
of every kind relating to or connected with Employer or its Affiliates and
their activities, business and customers.
20.3 Notice of Compelled Disclosure. If, at any time, Executive
becomes legally compelled (by deposition, interrogatory, request for
documents, subpoena, civil investigative demand, or similar process or
otherwise) to disclose any of the Confidential Information, Executive shall
provide Employer with prompt, prior written notice of such requirement so
that Employer may seek a protective order or other appropriate remedy
and/or waive compliance with the terms of this Agreement. In the event that
such protective order or other remedy is not obtained, that Employer waives
compliance with the provisions hereof, Executive agrees to furnish only
that portion of the Confidential Information which Executive is advised by
written opinion of counsel is legally required and exercise Executive's
best efforts to obtain assurance that confidential treatment will be
accorded such Confidential Information. In any event, Executive shall not
oppose action by Employer to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Confidential Information.
20.4 Assurance of Compliance. Executive agrees to represent to
Employer, in writing, at any time that Employer so request, that Executive
has complied with the provisions of this section, or any other section of
this Agreement.
21. NON-COMPETITION. For a period of three (3) months after the
termination of this Agreement, Executive expressly covenants and agrees
that Executive will not and will not attempt to, without the prior written
consent of the Board of Directors, directly or indirectly, (except as to
those entities set forth in Paragraph 4, above):
21.1 Own, manage, operate, finance, join, control, or participate in
the ownership, management, operation, financing, or control of, or be
associated as an officer, director, employee, agent, partner, principal,
representative, consultant, or otherwise with, or use or permit his name to
be used in connection with, any line of business or enterprise that
competes with Employer or its Affiliates (as defined herein) in any
business of Employer or its Affiliates, existing or proposed, wherever
located, provided that Executive shall not be prohibited from owning,
directly or indirectly, less than one percent (1%) of the outstanding
shares of any Corporation, the shares of which are traded on a National
Securities Exchange or in the over-the-counter markets;
<PAGE>
21.2 Interfere with or disrupt or attempt to interfere with or disrupt
or take any action that could be reasonably expected to interfere with or
disrupt any past or present or prospective relationship, contractual or
otherwise, between Employer and/or any of its Affiliates, and any customer,
insurance company, supplier, sales representative, or agent or employee of
Employer or any such affiliate of Employer.
21.3 Directly or indirectly solicit for employment or attempt to
employ or assist any other entity in employing or soliciting or attempting
to employ or solicit for employment, either on a full-time, part-time, or
consulting basis, any employee, agent, representative, or executive
(whether salaried or otherwise, union or non-union) who within three (3)
years of the time that Executive ceased to perform services hereunder has
been employed by Employer or its Affiliates.
22. VIOLATION OF COVENANTS:
22.1 Injunctive Relief. Executive acknowledges and agrees that the
services to be rendered by Executive hereunder are of a special unique, and
personal character that gives them peculiar value; that the provisions of
this section are, in view of the nature of the business of Employer,
reasonable and necessary to protect the legitimate business interests of
Employer; that violation of any of the covenants or Agreements hereof would
cause irreparable injury to Employer, that the remedy at law for any
violation or threatened violation thereof would be inadequate; and that,
therefore, Employer shall be entitled to temporary and permanent injunctive
or other equitable relief as it may deem appropriate without the necessity
of proving actual damages and to an equitable accounting of all earnings,
profits, and other benefits arising, from any such violation, or attempted
violation, which rights shall be cumulative and in addition to all other
rights or remedies available to Employer.
22.2 Executive and Employer recognize that the laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of certain of the provisions contained in this
section. It is the intention of Executive and Employer that the provisions
of this section shall be enforced to the fullest extent permissible under
the laws and public policies of each jurisdiction in which such enforcement
is sought, but that the invalidation (or modification to conform with such
laws or public policies) of any provision hereof shall not render
unenforceable or impair the remainder of this section. Accordingly, if any
provision of this section shall be determined to be invalid or
unenforceable, either in whole or in part this section shall be deemed to
delete or modify, as necessary, the offending provision and to alter the
balance of this section in order to render it valid and enforceable to the
fullest extent permissible as provided herein.
<PAGE>
23. LIQUIDATED DAMAGES, EMPLOYER'S BREACH. In the event of any material
breach of this Agreement on the part of Employer, Executive at his sole
option, may terminate his employment under this Agreement and, at his sole
option, shall be entitled to receive as liquidated damages the amounts set
forth in the following subsection. The liquidated damages so received by
Executive shall not be limited or reduced by amounts that Executive might
otherwise earn or be able to earn during the period between termination of
his employment under this Agreement and payment of those liquidated
damages. The provisions of this Section 24 shall be in addition to any and
all rights Executive may have in equity or at law to require Employer to
comply with or to prevent the breach of this Agreement.
23.1 The present value on the payment date (as defined in this
section) of the full amount of his basic salary as provided for in this
Agreement for five (5) years following the payment due, discounted to the
payment date at a rate for quarterly periods based on prime interest rate
charged by Bank of America for short term commercial loans on the payment
date. The amount payable to Executive under this subsection shall be due
and payable in full on the date of notification of Employer by Executive of
the exercise of his option to terminate his employment under this Agreement
(the "payment date") and shall accrue interest at the rate of ten percent
(10%) per annum until paid.
24. MISCELLANEOUS:
24.1 Authority to Execute. The parties herein represent that they
have the authority to execute this Agreement.
24.2 Severability. If any term, provision, covenant, or condition of
this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the rest of this Agreement shall remain in full
force and effect.
24.3 Successors. This Agreement shall be binding on and inure to
the benefit of the respective successors, assigns, and personal
representatives of the parties, except to the extent of any contrary
provision in this Agreement.
24.4 Assignment. This Agreement may not be assigned by either party
without the written consent of the other party.
24.5 Singular, Plural and Gender Interpretation. Whenever used
herein, the singular number shall include the plural, and the plural number
shall include the singular. Also, as used herein, the masculine, feminine
or neuter gender shall each include the others whenever the context so
indicates.
24.6 Captions. The subject headings of the paragraphs of this
Agreement are included for purposes of convenience only, and shall not
effect the construction or interpretation of any of its provisions.
<PAGE>
24.7 Entire Agreement. This Agreement contains the entire agreement
of the parties relating to the rights granted and the obligations assumed
in this instrument and supersedes any oral or prior written agreements
between the parties. Any oral representations or modifications concerning
this instrument shall be of no force or effect unless contained in a
subsequent written modification signed by the party to be charged.
24.8 Arbitration. Any controversy or claim arising out of, or
relating to, this Agreement, or the making, performance, or interpretation
thereof, shall be submitted to a panel of three (3) arbitrators. The
arbitration shall comply with and be governed by the provisions of the
American Arbitration Association. The panel of arbitrators shall be
composed of two (2) members chosen by Executive and Employer respectively
and one (1) member chosen by the arbitrators previously selected. The
findings of such arbitrators shall be conclusive and binding on the parties
hereto. The cost of arbitration shall be borne by the losing party or in
such proportions as the arbitrator shall conclusively decide.
24.9 No Waiver. No failure by either Executive or Employer to insist
upon the strict performance by the other of any covenant, agreement, term
or condition of this Agreement or to exercise the right or remedy
consequent upon a breach thereof shall constitute a waiver of any such
breach or of any such covenant, agreement, term or condition. No waiver of
any breach shall affect or alter this Agreement, but each and every
covenant, condition, agreement and term of this Agreement shall continue in
full force and effect with respect to any other then existing or subsequent
breach.
24.10 Time of the Essence. Time is of the essence of this
Agreement, and each provision hereof.
24.11 Counterparts. The parties may execute this Agreement in two
(2) or more counterparts, which shall, in the aggregate, be signed by both
parties, and each counterpart shall be deemed an original instrument as to
each party who has signed by it.
24.12 Attorney's Fees and Costs. In the event that suit be
brought hereon, or an attorney be employed or expenses be incurred to
compel performance the parties agree that the prevailing party therein be
entitled to reasonable attorney's fees.
24.13 Governing Law. The formation, construction, and performance
of this Agreement shall be construed in accordance with the laws of Nevada.
24.14 Notice. Any notice, request, demand or other communication
required or permitted hereunder or required by law shall be in writing and
shall be effective upon delivery of the same in person to the intended
addressee, or upon deposit of the same with an overnight courier service
(such as Federal Express) for delivery to the intended addressee at its
address shown herein, or upon deposit of the same in the United States
mail, postage prepaid, certified or registered mail, return receipt
requested, sent to the intended addressee at its address shown herein. The
address of any party to this Agreement may be changed by written notice of
such other address given in accordance herewith and actually received by
the other parties at least ten (10) days in advance of the date upon which
such change of address shall be effective.
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
EXECUTIVE:
DATE: June 30, 1998 By:/s/ Harold Jahn
-----------------------------
Harold Jahn
EMPLOYER:
Sustainable Development International, Inc.
DATE: June 30, 1998 By: /s/ Lew Mansell
-------------------------------
Lew Mansell
Chartered Accountants
Management Consultants
Canadian Member Firm of
Grant Thornton International
GRANT THORNTON
February 17, 1999
Re: Sustainable Development International Inc.
Consent of Independent Accountants
As independent chartered accountants, we hereby consent to
the use of our report and to all references to our firm
included in, or made a part of, this registration statement.
/s/Grant Thornton
GRANT THORNTON
2400 Scotia Place 1
10060 Jasper Avenue
Edmonton, Alberta
T5J 3R8
Tel: (403) 422-7114
Fax: (403) 426-3208
e-mail: [email protected]
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> OCT-31-1998
<CASH> 330,053
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 330,053
<PP&E> 0
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<TOTAL-ASSETS> 625,886
<CURRENT-LIABILITIES> 13,989
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0
0
<COMMON> 664,008
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<TOTAL-LIABILITY-AND-EQUITY> 625,886
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
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<OTHER-EXPENSES> 52,111
<LOSS-PROVISION> 0
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