U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
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
LUNA TECHNOLOGIES INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 91-1987288
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.
61 B Fawcett Road
Coquitlam, British Columbia, Canada V3K 6V2
(Address of principal executive offices)
(Zip Code)
(604) 526-5890
(Registrant's telephone number, including area code)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on which
to be so Registered Each Class is to be Registered
None
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of Class)
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
The Company was incorporated on March 25, 1999 in Delaware to
develop, manufacture and sell photoluminescent (or PL) products used for
emergency lighting, signs and markings, wayfinding systems and novelty products
with applications in marine, commuter, rail, subway, building and toy markets.
The Company conducts business in Canada through its wholly owned Canadian
subsidiary, Luna Technologies (Canada) Ltd.
There are two types of photoluminescence: fluorescence and
phosphorescence. Fluorescent materials, such as that used in fluorescent lamps,
require a continuous source of energy. Phosphorescent materials also emit light
continuously when they are excited by ultraviolet or visible light. However
unlike fluorescent materials, when the excitation source is extinguished,
phosphorescent materials continue to emit light. It is this light (called
afterglow) that people refer to as "glow-in-the-dark". The afterglow decreases
(or decays) over time after the excitation source has been extinguished.
Although many people associate the word "photoluminescence" with
"glow-in-the-dark" toys and novelties, in the lighting industry,
photoluminescent products such as marker tapes and signs are commonly used to
delineate emergency escape routes and danger areas, and to mark equipment,
pipes, tools and working and accident prevention clothing.
Photoluminescent signs and markers are used in a variety of situations,
including office buildings, industrial sites, passenger ships, offshore drilling
platforms, underground mines, and aircraft. The use of photoluminescent
materials for life safety applications is recommended or mandated in numerous
building codes, fire safety codes, and transportation standards.
Photoluminescent systems are often selected when cost is the primary factor
since they are more affordable than electrical systems and requires minimal
installation time.
Most photoluminescent products are composed of inorganic pigments that can
be incorporated into paint, plastic films, enamels, and flexible and rigid
molded plastics. Typical products include adhesive vinyl tapes, rigid polyvinyl
chloride (PVC) marker strips, and silk-screened plastic signage.
Photoluminescent enamel-coated sheet metal and ceramic products are also
available.
The main pigment presently used in photoluminescent materials is zinc
sulphide, which typically emits a yellow-green light. While zinc sulphide
performs well where ambient light levels are high, such as restaurants and
cafeterias, zinc sulphide does not perform well where ambient light levels are
low, such as in crew areas on board ship or interior corridors. However, the
recent introduction of strontium aluminate as a pigment has provided a much
higher level of performance
<PAGE>
Strontium aluminate is more expensive than zinc sulphide and takes
slightly longer to charge, but can `store' more light, making it much more
suitable for use in locations where ambient light levels are low.
Strontium-aluminate, also offers much brighter and longer-lasting
photoluminescence, and can be formulated (unlike zinc sulphide compounds) to
produce a range of colors. By way of example, a four-inch square strontium
aluminate material held a few inches away from a magazine page can provide
enough light to read at least for the first minute.
Although strontium aluminate PL material is superior to products made with
zinc sulphide, the process required to manufacture strontium aluminate PL is
very complex and manufacturers were unable to cost effectively produce strontium
aluminate PL products in commercial quantities.
Between January 1995 and October 1999, Douglas Sinclair, presently the
chief executive officer of the Company's Canadian subsidiary, developed the
proprietary technology, formulas and processes needed to commercially
manufacture strontium aluminate PL products on a cost-effective basis. The
resulting product, referred to by the Company as Lunaplast, is up to fifteen
times brighter than commercial zinc sulphide products, and is clearly visible
after many hours of total darkness. During this same period of time, Mr.
Sinclair and Kimberly Landry, an officer and director of the Company, developed
an advanced strontium aluminate PL material which is brighter than the Company's
Lunaplast product. Mr. Sinclair and Ms. Landry filed a patent application
pertaining to this invention with the U.S. Patent and Trademark Office in
November 1997. In November 1997 Mr. Sinclair and Ms. Landry assigned the rights
to the patent application and related technology to Luna Technologies Inc.
("LTI"), a corporation formed by Ms. Landry in December 1994, for a nominal
consideration. LTI is affiliated with the Company by virtue of having certain
common officers and directors.
In April 1999 the Company acquired from LTI the rights to the patent
application and related technology which had been assigned to LTI by Mr.
Sinclair and Ms. Landry. In consideration for this assignment, the Company
agreed to pay LTI $90,000, without-interest, on or before June 30, 2000. As of
February 29, 2000 the patent application assigned to the Company was pending
before the U.S. Patent and Trademark Office.
In November 1999, the Company acquired from Mr. Sinclair the proprietary
technology required to manufacture Lunaplast into PVC sheets, vinyl rolls and
paints as well as the trademark rights to these products. In consideration for
the assignment of this technology and the trademarks, the Company agreed to pay
Mr. Sinclair $60,000, without interest, or before November 30, 2000.
Lunaplast is available in flexible vinyl and rigid PVC sheets, and can be
substituted wherever commercial zinc sulphide products are used for life safety
applications.
The Company began producing Lunaplast on a commercial basis in November
1999. During January and February 2000 the Company had sales of $75,767. As of
March 14, 2000 the Company had a backlog, representing firm orders for delivery
of Lunaplast prior to May 30, 2000, of approximately $200,000.
<PAGE>
Manufacturing
Lunaplast is composed of a two-or three-part laminate, consisting of one
base layer of highly reflective white material of PVC or vinyl, one mid-layer of
photoluminescent PVC or vinyl impregnated with the Company's proprietary
strontium aluminate polymer compound, and one top layer of clear PVC or vinyl
with UV-and fire-resistant properties. A two-part laminate is formed when these
last two steps are combined.
The materials incorporated into Lunaplast are available from a variety of
competitive industrial sources. The Company has a long-term contract for the
supply of strontium aluminate from a leading supplier in Japan, although
alternative sources do exist.
All aspects of the Company's manufacturing process are subcontracted to
various third parties which formulate, mix and produce Lunaplast in either PVC
sheets or vinyl plastic rolls. The PVC sheets are 3' X 6' long and weigh
approximately seven pounds. Generally each vinyl roll is 3' X 150', and weighs
approximately 125 to 150 pounds. Once the manufacturing process is complete,
Lunaplast is sold to fabricators which use Lunaplast for making emergency
markers, signs and tapes. All subcontractors involved in manufacturing Lunaplast
have agreed to maintain the confidential nature of the Company's proprietary
manufacturing technology.
The Company does not have any long term agreements with any of the third
parties involved in manufacturing Lunaplast. Due to the complexity in the
manufacturing process, the refusal or inability of any subcontractor to continue
to manufacture Lunaplast will require the Company to seek alternative
manufacturers. Although the Company believes that alternative manufacturers are
available, the loss of any subcontractor presently involved in the manufacture
of Lunaplast could disrupt the Company's ability to manufacture Lunaplast for at
least 2 months.
Management anticipates that the advanced strontium aluminate PL material
which is the subject of the Company's pending patent application will be the
basis for the next generation of the Company's photoluminescent products and
will be vital to the Company's ability to maintain a competitive lead in the
photoluminescent industry. However, and as is the case with Lunaplast, this new
material will be difficult to manufacture in commercial quantities. The Company
is presently working with manufacturers to refine the manufacturing formulas and
products which will be required to produce this new product in a cost-effective
manner. The Company believes that this new product will not be ready for
commercial production until December 2000 at the earliest. There can be no
assurance however that the Company will be successful in developing the
technology needed to manufacture this new product in a cost-effective manner on
a commercial basis.
Sales and Marketing
The primary world markets for photoluminescent lighting (PL) products are
in the marine (shipping and cruise lines), transportation and commuter industry,
and in the commercial, institutional and industrial retrofit and new building
<PAGE>
construction sector, in which the need for photoluminescent emergency lighting
and wayfinding signage systems has risen sharply over the last two decades. A
third primary marker is "glow-in-the-dark" toys and novelties. Sales of PL
lighting products in the United States and Canada were approximately
$100,000,000 in 1999.
The Company believes that the world market for PL lighting is
underdeveloped due largely to the low illumination delivered by zinc sulphide
products. The Company plans to build interest and sales for Lunaplast products
in established markets around the world. The Company's marketing plan includes
advertising in trade magazines, exhibiting at industry tradeshows, direct mail
campaigns, soliciting editorial coverage from naval architecture, building
design, architecture and lighting industry publications and distributing product
samples, videos and brochures to designers and developers. The Company's website
will also be used as a means to distribute product information to interested
parties quickly.
The Company markets its products through its officers and through
independent sales representatives. As of February 29, 2000 the Company had four
independent sales representatives which were marketing Lunaplast.
Competition
No single company dominates the world marketplace. Instead, a number of
small and medium-sized firms lead regional markets in Europe, the U.S. and
elsewhere. Some of the industry leaders include companies such as Permalight AG
of Germany (Europe and North America), Safe T Glow (UK and USA), Datrex (USA)
Jalite (UK), Hanovia (USA) and Existalight (Europe and USA). It is difficult to
determine annual sales volumes and revenues for these firms, as most are
privately held. In addition, their PL lighting products may comprise just one
small aspect of the company's overall annual sales. The Company is also aware of
several suppliers of strontium aluminate PL products. However, the Company is of
the opinion that the strontium aluminate material available from these suppliers
is inferior in terms of luminescence quality and price when compared to
Lunaplast.
Although there are numerous manufacturers and distributors of
photoluminescent products the Company believes it has a significant advantage
over its competitors as a result of its proprietary manufacturing processes for
the production of strontium aluminate-based PL materials in commercial
quantities. The Company plans to maintain its competitive lead by developing
advanced strontium aluminate PL materials. In this regard, during the twelve
months period ending December 31, 2000 the Company plans to spend $145,000 on
research and development
Properties
The Company's offices are located at 61 B Fawcett Road, Coquitlam, British
Columbia, Canada V3K 6V2.
<PAGE>
Employees
As of February 29, 2000 the Company and its Canadian Subsidiary had four
full-time employees including Douglas Sinclair and Kimberly Landry. See Part I,
Item 5 of this Registration Statement. Contingent upon the Company raising
sufficient capital, the Company plans to hire additional employees as may be
required by the level of the Company's operations.
The Company's executive offices are located at 61 B Fawcett Road,
Coquitlam, British Columbia, Canada V3K 6V2. The Company's telephone number is
(604) 526-5890 and its facsimile number is (604) 526-8995.
See Part II, Item 4 of this registration statement for information
concerning sales of the Company's common stock to officers, directors, and
various third parties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATION
During the period ended December 31, 1999 the Company's operations used
$33,690 in cash. During this same period the Company purchased $9,474 of
equipment and repaid $8,119 which was advanced to the Company by LTI. The
Company satisfied its cash requirements during this period with the proceeds
from the sale of its common stock and preferred stock in private offerings.
The Company anticipates that its capital needs during the year ending
December 31, 2000 will be as follows:
$535,000 for corporate expenses, $145,000 for research and development
(including equipment), $90,000 for payment for the technology and patent rights
purchased from LTI, $60,000 for payment for the proprietary technology and
trademarks from Douglas Sinclair, $20,000 for office equipment, office furniture
and leasehold improvements, $13,000 for warehouse equipment, and $12,000 for
trade show equipment.
The Company expects to satisfy its cash needs during the year ending
December 31, 2000 through the private sale of the Company's common and preferred
stock.
The Company does not have any available credit, bank financing or other
external sources of liquidity. Due to operating losses during the Company's
first year of business, the Company's operations have not been a source of
liquidity. In order to obtain capital, the Company may need to sell additional
shares of its common stock or borrow funds from private lenders. In addition, if
during the year ending December 31, 2000, the Company suffers additional losses,
the Company will need to obtain additional capital in order to continue
operations. There can be no assurance that the Company will be successful in
obtaining additional funding.
<PAGE>
ITEM 3. PROPERTIES
See Item 1 of this report.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 15, 2000, the number of and
percentage of outstanding shares of common stock beneficially owned by the
Company's officers and directors and those shareholders owning more than 5% of
the Company's common stock.
Shares of
Name and Address Common Stock Percent of Class
Douglas Sinclair 1,000 (1) --
1653 Plateau Crescent
Coquitlam, British Columbia
Canada V3B 3E3
Robert H. Humber 800,000 17.8%
300 - 4714 Ballard Ave., N.W.
Seattle, WA 98107-4850
Kimberly Landry 1,580,000 (1) 35.1%
1653 Plateau Crescent
Coquitlam, British Columbia
Canada V3B 3E3
William Donovan 435,000 9.7%
37 Saratoga Drive
Dartmouth, Nova Scotia
Canada B2X 5P9
Linda Scott 400,000 8.9%
34955 Devon Crescent
Abbotsford, British Columbia
CanadaV2S 2X5
Brian Sims 323,875 7.2%
#201-1575 West Georgia Street
Vancouver, British Columbia
Canada V6G 1R2
<PAGE>
All Officers and Directors
as a Group (3 persons) 2,381,000 52.9%
(1) Mr. Sinclair may be deemed the beneficial owner of the shares owned by Ms.
Landry. On December 15, 1999 Mr. Sinclair acquired 1,000 shares of the
Company's common stock from Brian Sims.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following sets forth certain information concerning the present
management of the Company:
Name Age Position with Company
Douglas Sinclair 50 Chief Executive Officer of Luna ]
Technologies (Canada), Ltd., a wholly
owned subsidiary of the Company
Robert H. Humber 56 President and a Director
Kimberly Landry 34 Secretary and a Director
Douglas Sinclair has been the Chief Executive Officer of the Company's
Canadian subsidiary since January 1, 2000. Between 1995 and October 1999 Mr.
Sinclair provided consulting services to Luna Technologies Inc. in the areas of
research, development and marketing. Prior to 1995 Mr. Sinclair was an
independent consultant to companies engaged in developing, manufacturing and
marketing photoluminescent products.
Robert Humber has been the President of the Company and a director since
April 1999. Between July 1996 and November 1999 Mr. Humber was the president of
Luna Technologies Inc. Prior to July 1996 Mr. Humber worked with Douglas
Sinclair and Kimberly Landry in developing photoluminescent products. For the
past twenty-three years Mr. Humber has also been an independent investigator and
security consultant providing services to law enforcement agencies and private
industry.
Kimberly Landry has been the Secretay of the Company, as well as a
director since April 1999. Since December 1994 Ms. Landry has also been an
officer and director of Luna Technologies Inc.
Mr. Sinclair is the common law husband of Ms. Landry.
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth in summary form the compensation
received by the Company's executive officers during the fiscal year ended
December 31, 1999.
Annual Compensation Long Term Compensation
------------------------------- --------------------------
Re-
Other stric-
Annual ted
Name and Compen- Stock Options
Principal Fiscal Salary Bonus sation Awards Granted
Position Year (1) (2) (3) (4) (5)
- --------- ------ ------- ------- ------- ------ ---------
Douglas Sinclair, 1999 -- -- -- -- --
Robert H. Humber 1999 -- -- -- -- --
Kimberly Landry 1999 -- -- -- -- --
(1) The dollar value of base salary (cash and non-cash) received.
(2) The dollar value of bonus (cash and non-cash) received.
(3) Any other annual compensation not properly categorized as salary or bonus,
including perquisites and other personal benefits, securities or property.
(4) Amounts reflect the value of the shares of the Company's common stock
issued as compensation for services.
The table below shows the number of shares of the Company's common stock
owned by the officers listed above, and the value of such shares as of December
31, 1999.
Name Shares Value *
Douglas Sinclair 1,000 $1,820
Robert H. Humber 800,000 $1,456,000
Kimberly Landry 1,580,000 $2,875,600
* The Company's common stock is not publicly traded. For purposes of this
table, the value was deemed to be $1.82 per share, which is the effective
price at which the Company's common stock was being sold in a private
offering as of December 31, 1999.
Douglas Sinclair may be deemed the beneficial owner of the shares owned by
Ms. Landry pursuant to his common law relationship with Ms. Landry.
<PAGE>
(5) The shares of Common Stock to be received upon the exercise of all stock
options granted during the fiscal years shown in the table. No stock
options have been granted to date.
The Company's Canadian subsidiary has an employment agreement with Douglas
Sinclair whereby the subsidiary has agreed to pay Mr. Sinclair a salary of
$3,500 per month during the twelve month period ending December 31, 2000.
The Company's Canadian subsidiary has an employment agreement with
Kimberly Landry whereby the subsidiary has agreed to pay Ms. Landry a salary of
$3,150 per month during the twelve month period ending December 31, 2000.
The following shows the amount which the Company and its Canadian
subsidiary expect to pay to its officers during the twelve month period ending
December 31, 2000, and the time which the Company's executive officers and
technical advisor plan to devote to the Company's business. The Company does not
have employment agreements with any of its officers.
Proposed Time to be Devoted
Name Compensation To Company's Business
Douglas Sinclair $42,000 100%
Robert H. Humber $24,000 95%
Kimberly Landry $37,800 100%
The Company's Board of Directors may increase the compensation paid to the
Company's officers depending upon the results of the Company's future
operations.
Long Term Incentive Plans - Awards in Last Fiscal Year
None.
Employee Pension, Profit Sharing or Other Retirement Plans
Except as provided in the Company's employment agreements with its
executive officers, the Company does not have a defined benefit, pension plan,
profit sharing or other retirement plan, although the Company may adopt one or
more of such plans in the future.
<PAGE>
Compensation of Directors
Standard Arrangements. At present the Company does not pay its
directors for attending meetings of the Board of Directors, although the Company
may adopt a director compensation policy in the future. The Company has no
standard arrangement pursuant to which directors of the Company are compensated
for any services provided as a director or for committee participation or
special assignments.
Other Arrangements. During the year ended December 31, 1999, and except
as disclosed elsewhere in this registration statement, no director of the
Company received any form of compensation from the Company.
Stock Option and Bonus Plans
The Company has an Incentive Stock Option Plan, a Non-Qualified Stock
Option Plan and a Stock Bonus Plan. A summary description of each Plan follows.
In some cases these three Plans are collectively referred to as the "Plans".
Incentive Stock Option Plan. The Incentive Stock Option Plan authorizes
the issuance of options to purchase up to 300,000 shares of the Company's Common
Stock, less the number of shares already optioned under both this Plan and the
Non-Qualified Stock Option Plan. The Incentive Stock Option Plan became
effective on March 15, 2000 and will remain in effect until March 15, 2010
unless terminated earlier by action of the Board. Only officers, directors and
key employees of the Company may be granted options pursuant to the Incentive
Stock Option Plan.
In order to qualify for incentive stock option treatment under the
Internal Revenue Code, the following requirements must be complied with:
1. Options granted pursuant to the Plan must be exercised no later
than:
(a) The expiration of thirty (30) days after the date on which an
option holder's employment by the Company is terminated.
(b) The expiration of one year after the date on which an option
holder's employment by the Company is terminated, if such termination is due to
the Employee's disability or death.
2. In the event of an option holder's death while in the employ of the
Company, his legatees or distributees may exercise (prior to the option's
expiration) the option as to any of the shares not previously exercised.
3. The total fair market value of the shares of Common Stock
(determined at the time of the grant of the option) for which any employee may
be granted options which are first exercisable in any calendar year may not
exceed $100,000.
<PAGE>
4. Options may not be exercised until one year following the date of
grant. Options granted to an employee then owning more than 10% of the Common
Stock of the Company may not be exercisable by its terms after five years from
the date of grant.
5. The purchase price per share of Common Stock purchasable under an
option is determined by the Committee but cannot be less than the fair market
value of the Common Stock on the date of the grant of the option (or 110% of the
fair market value in the case of a person owning the Company's stock which
represents more than 10% of the total combined voting power of all classes of
stock).
Non-Qualified Stock Option Plan. The Non-Qualified Stock Option Plan
authorizes the issuance of options to purchase up to 400,000 shares of the
Company's Common Stock less the number of shares already optioned under both
this Plan and the Incentive Stock Option Plan. The Non-Qualified Stock Option
Plan became effective on March 15, 2000 and will remain in effect until March
15, 2010 unless terminated earlier by the Board of Directors. The Company's
employees, directors, officers, consultants and advisors are eligible to be
granted options pursuant to the Plan, provided however that bona fide services
must be rendered by such consultants or advisors and such services must not be
in connection with the offer or sale of securities in a capital-raising
transaction. The option exercise price is determined by the Committee but cannot
be less than the market price of the Company's Common Stock on the date the
option is granted.
Options granted pursuant to the Plan not previously exercised terminate
upon the date specified when the option was granted.
Stock Bonus Plan. Up to 300,000 shares of Common Stock may be granted
under the Stock Bonus Plan. Such shares may consist, in whole or in part, of
authorized but unissued shares, or treasury shares. Under the Stock Bonus Plan,
the Company's employees, directors, officers, consultants and advisors are
eligible to receive a grant of the Company's shares; provided, however, that
bona fide services must be rendered by consultants or advisors and such services
must not be in connection with the offer or sale of securities in a
capital-raising transaction.
Other Information Regarding the Plans. The Plans are administered by
the Company's Board of Directors. The Board of Directors has the authority to
interpret the provisions of the Plans and supervise the administration of the
Plans. In addition, the Board of Directors is empowered to select those persons
to whom shares or options are to be granted, to determine the number of shares
subject to each grant of a stock bonus or an option and to determine when, and
upon what conditions, shares or options granted under the Plans will vest or
otherwise be subject to forfeiture and cancellation.
In the discretion of the Board of Directors, any option granted
pursuant to the Plans may include installment exercise terms such that the
option becomes fully exercisable in a series of cumulating portions. The Board
<PAGE>
of Directors may also accelerate the date upon which any option (or any part of
any options) is first exercisable. Any shares issued pursuant to the Stock Bonus
Plan and any options granted pursuant to the Incentive Stock Option Plan or the
Non-Qualified Stock Option Plan will be forfeited if the "vesting" schedule
established by the Board of Directors at the time of the grant is not met. For
this purpose, vesting means the period during which the employee must remain an
employee of the Company or the period of time a non-employee must provide
services to the Company. At the time an employee ceases working for the Company
(or at the time a non-employee ceases to perform services for the Company), any
shares or options not fully vested will be forfeited and cancelled. In the
discretion of the Board of Directors payment for the shares of Common Stock
underlying options may be paid through the delivery of shares of the Company's
Common Stock having an aggregate fair market value equal to the option price,
provided such shares have been owned by the option holder for at least one year
prior to such exercise. A combination of cash and shares of Common Stock may
also be permitted at the discretion of the Board of Directors.
Options are generally non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plan will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Board of Directors when the shares were issued.
The Board of Directors of the Company may at any time, and from time to
time, amend, terminate, or suspend one or more of the Plans in any manner it
deems appropriate, provided that such amendment, termination or suspension
cannot adversely affect rights or obligations with respect to shares or options
previously granted. The Board of Directors may not, without shareholder
approval: make any amendment which would materially modify the eligibility
requirements for the Plans; increase or decrease the total number of shares of
Common Stock which may be issued pursuant to the Plans except in the case of a
reclassification of the Company's capital stock or a consolidation or merger of
the Company; reduce the minimum option price per share; extend the period for
granting options; or materially increase in any other way the benefits accruing
to employees who are eligible to participate in the Plans.
The Plans are not qualified under Section 401(a) of the Internal
Revenue Code, nor are they subject to any provisions of the Employee Retirement
Income Security Act of 1974.
Summary. The following sets forth certain information as of March 15,
2000, concerning the stock options and stock bonuses granted by the Company.
Each option represents the right to purchase one share of the Company's Common
Stock.
Total Shares Remaining
Shares Reserved for Shares Options/
Reserved Outstanding Issued As Shares
Name of Plan Under Plan Options Stock Bonus Under Plan
- ------------ ---------- ------------ ----------- ----------
Incentive Stock Option Plan 300,000 -- N/A --
Non-Qualified Stock Option
Plan 400,000 -- N/A --
Stock Bonus Plan 300,000 N/A -- --
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In April 1999 the Company
issued shares of its common stock to the persons, in the amounts, and for the
consideration set forth below:
Number
Name of Shares Consideration
Douglas Sinclair 800,000 $800
Robert H. Humber 1,580,000 $1,580
Kimberly Landry 2,120,000 $212
Mr. Sinclair may be deemed the beneficial owner of the shares owned by Ms.
Landry by virtue of his common law relationship with Ms. Landry.
In April 1999 the Company acquired from Luna Technologies, Inc.
("LTI"), a corporation formed by Ms. Landry in December 1994, the rights to the
Company's patent application and related technology. The patent application and
related technology were assigned to LTI by Mr. Sinclair and Ms. Landry in
November 1997. In consideration for this acquisition, the Company agreed to pay
LTI $90,000, without-interest, on or before June 30, 2000. As of February 29,
2000 the patent application assigned to the Company was pending before the U.S.
Patent and Trademark Office.
In November 1999, the Company acquired from Mr. Sinclair the
proprietary technology required to manufacture Lunaplast into PVC sheets, vinyl
rolls and paints as well as the trademark rights to these products. In
consideration for the assignment of this technology and the trademarks, the
Company agreed to pay Mr. Sinclair $60,000, without interest, or before November
30, 2000.
On December 15, 1999 Mr. Sinclair acquired 1,000 shares of the
Company's common stock from Brian Sims, a principal shareholder of the Company.
ITEM 8. DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 30,000,000 shares of common stock.
As of March 15, 2000 the Company had 4,500,000 shares of common stock issued and
outstanding Holders of common stock are each entitled to cast one vote for each
share held of record on all matters presented to shareholders. Cumulative voting
is not allowed; hence, the holders of a majority of the outstanding common stock
can elect all directors.
<PAGE>
Holders of common stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefore and,
in the event of liquidation, to share pro rata in any distribution of the
Company's assets after payment of liabilities. The Board of Directors is not
obligated to declare a dividend and it is not anticipated that dividends will be
paid until the Company is in profit.
Holders of common stock do not have preemptive rights to subscribe to
additional shares if issued by the Company. There are no conversion, redemption,
sinking fund or similar provisions regarding the common stock. All of the
outstanding shares of common stock are fully paid and non-assessable and all of
the shares of common stock offered hereby will be, upon issuance, fully paid and
non-assessable.
Preferred Stock
The Company is authorized to issue up to 5,000,000 shares of Preferred
Stock. The Company's Articles of Incorporation provide that the Board of
Directors has the authority to divide the Preferred Stock into series and,
within the limitations provided by Colorado statute, to fix by resolution the
voting power, designations, preferences, and relative participation, special
rights, and the qualifications, limitations or restrictions of the shares of any
series so established. As the Board of Directors has authority to establish the
terms of, and to issue, the Preferred Stock without shareholder approval, the
Preferred Stock could be issued to defend against any attempted takeover of the
Company.
Series A Preferred Stock
In July 1999, the Company's directors established the Company's Series A
Preferred Stock and authorized the issuance of up to 500,000 shares of Series A
Preferred Stock as part of this series. Each share of Series A Preferred Stock
is entitled to a dividend at the rate of $0.20 per share when, as and if
declared by the Board of Directors out of funds legally available for the
payment of dividends. Dividends not declared by the Board of Directors do not
cumulate. Upon any liquidation or dissolution of the Company, each outstanding
share of the Series A Preferred Stock is entitled to distribution of $2.00 per
share prior to any distribution to the holders of the Company's common stock.
The holders of the Series A Preferred Stock are not entitled to any voting
rights. Each share of the Series A Preferred Stock is convertible into 1.1
shares of the Company's common stock at any time prior to May 31, 2000.
By means of this Private Offering Memorandum the Company is offering up to
500,000 Series A Preferred Shares at a price of $2.00 per share.
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
As of March 15, 2000 there were 66 owners of the Company's common stock
and six owners of the Company's Series A Preferred Stock. At the present time,
there is no public market for the Company's preferred or common stock.
Holders of common stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefor and,
in the event of liquidation, to share pro rata in any distribution of the
Company's assets after payment of liabilities. The Board of Directors is not
obligated to declare a dividend. The Company has not paid any dividends and the
Company does not have any current plans to pay any dividends.
The provisions in the Company's Articles of Incorporation relating to the
Company's preferred stock would allow the Company's directors to issue preferred
stock with rights to multiple votes per share and dividends rights which would
have priority over any dividends paid with respect to the Company's common
stock. The issuance of preferred stock with such rights may make more difficult
the removal of management even if such removal would be considered beneficial to
shareholders generally, and will have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers if such
transactions are not favored by incumbent management.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not engaged in any litigation, and the officers and
directors presently know of no threatened or pending litigation in which it is
contemplated that the Company will be made a party.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The following sets forth certain information concerning all securities
issued by the Company which have not been registered under the Securities Act of
1933.
In April, 1999 the Company sold 4,500,000 shares of its common stock to 54
persons for $4,500 in cash.
Between July 30, 1999 and March 15, 2000 the Company sold 70,325 shares of
its Series A Preferred stock to six persons at a price of $2.00 per share.
<PAGE>
The sales of the common and preferred shares were exempt from registration
pursuant to Rule 504 of the Securities and Exchange Commission. No underwriters
were involved with the sale of these securities and no commissions or other
forms of remuneration were paid to any person in connection with such sales.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Bylaws authorize indemnification of a director, officer,
employee or agent of the Company against expenses incurred by him in connection
with any action, suit, or proceeding to which he is named a party by reason of
his having acted or served in such capacity, except for liabilities arising from
his own misconduct or negligence in performance of his duty. In addition, even a
director, officer, employee, or agent of the Company who was found liable for
misconduct or negligence in the performance of his duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reason- ably
entitled to indemnification. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers, or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is therefore unenforceable.
<PAGE>
LUNA TECHNOLOGIES INTERNATIONAL, INC.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
AUDITORS' REPORT
CONSOLIDATED BALANCE SHEET
CONSOLIDATED STATEMENT OF OPERATIONS
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
LABONTE & CO.
- ----------------------------------------------------------------------------
C H A R T E R E D A C C O U N T A N T S
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
1205 - 1095 West Pender Street
Vancouver, BC Canada V6E 2M6
Telephone (604) 682-2778
Facsimile (604) 689-2778
Email [email protected]
AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Directors of Luna Technologies International, Inc.
We have audited the consolidated balance sheet of Luna Technologies
International, Inc. as at December 31, 1999 and the consolidated statements of
operations, changes in stockholders' equity and cash flows for the period then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits 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
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 1999
and the results of its operations and the changes in stockholders' equity and
cash flows for the period then ended in accordance with generally accepted
accounting principles in the United States.
"LaBonte & Co."
CHARTERED ACCOUNTANTS
January 31, 2000, except as to Note 9 which is as of March 1, 2000
Vancouver, B.C.
COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-UNITED STATES REPORTING
DIFFERENCES
- -------------------------------------------------------------------------------
In the United States, reporting standards for auditors' would require the
addition of an explanatory paragraph following the opinion paragraph when the
financial statements are affected by a significant uncertainty such as referred
to in Note 1 regarding the Company's ability to continue as a going concern. Our
report to the directors dated January 31, 2000 is expressed in accordance with
Canadian reporting standards which do not permit a reference to such
uncertainties in the auditors' report when the uncertainties are adequately
disclosed in the financial statements.
"LaBonte & Co."
CHARTERED ACCOUNTANTS
January 31, 2000 Vancouver, B.C.
<PAGE>
LUNA TECHNOLOGIES INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
<PAGE>
December 31, 1999
- -------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash $ 21,809
Due from related parties (Note 5) 8,119
- --------------------------------------------------------------------------------
29,928
FURNITURE AND EQUIPMENT, net of depreciation 8,468
TECHNOLOGY RIGHTS (Note 3) 150,000
- --------------------------------------------------------------------------------
$ 188,396
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 8,266
Notes payable (Note 4) 150,000
- --------------------------------------------------------------------------------
158,266
- --------------------------------------------------------------------------------
CONTINGENCIES (Notes 1 and 8)
STOCKHOLDERS' EQUITY
Capital stock
Common stock, $0.0001 par value, 30,000,000 shares
authorized
4,500,000 issued and outstanding 450
Preferred stock, $0.0001 par value, 5,000,000 shares
authorized
34,475 issued and outstanding 3
Additional paid-in capital 72,997
Accumulated deficit (42,962)
Accumulated other comprehensive income (loss) (358)
- --------------------------------------------------------------------------------
30,130
- --------------------------------------------------------------------------------
$ 188,396
================================================================================
The accompanying notes are an integral part of these
consolidated financial statements
<PAGE>
LUNA TECHNOLOGIES INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
March 25,1999
(inception)
to December
31, 1999
- --------------------------------------------------------------------------------
GENERAL AND ADMINISTRATIVE EXPENSES
Consulting $ 13,902
Depreciation 1,006
Office and general 14,296
Professional fees 13,758
- --------------------------------------------------------------------------------
NET LOSS FOR THE PERIOD $ 42,962
================================================================================
BASIC NET LOSS PER SHARE $ 0.01
================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,500,000
================================================================================
The accompanying notes are an integral part of these
consolidated financial statements
<PAGE>
LUNA TECHNOLOGIES INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 25, 1999 (INCEPTION) TO DECEMBER 31, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Preferred Stock Common Stock
Accumulated
Additional other
Number of Number of Paid In Accumulated Comprehensive
shares Amount shares Amount Capital Deficit Income (loss) Total
- -----------------------------------------------------------------------------------------------------------------------------------
Common stock issued for - $ - 4,500,000 $ 450 $ 4,050 $ - $ - $ 4,500
cash
Preferred stock issued 34,475 3 - - 68,947 - - 68,950
for cash
Net loss for the period - - - - - (42,962) - (42,962)
Currency translation - - - - - - (358) (358)
adjustment
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 34,475 $ 3 4,500,000 $ 450 $ 72,997 $ (42,962) $ (358) $ 30,130
===================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
<PAGE>
LUNA TECHNOLOGIES INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
March 25, 1999
(inception) to December
31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (42,962)
Adjustments to reconcile net loss to net cash from
operating activities:
- depreciation 1,006
- accounts payable 8,266
NET CASH USED IN OPERATING ACTIVITIES (33,690)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets (9,474)
NET CASH FLOWS FROM INVESTING ACTIVITIES (9,474)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances to related parties (8,119)
Proceeds on sale of preferred stock 68,950
Proceeds on sale of common stock 4,500
NET CASH FLOWS FROM FINANCING ACTIVITIES 65,331
EFFECT OF EXCHANGE RATE CHANGES ON CASH (358)
INCREASE IN CASH 21,809
CASH, BEGINNING OF PERIOD -
CASH, END OF PERIOD $ 21,809
Non-cash activities:
During the period ended December 31, 1999 the Company issued notes payable
of $150,000 in conjunction with the purchase of certain technology rights
(Refer to Note 3).
The accompanying notes are an integral part of these
consolidated financial statements
<PAGE>
LUNA TECHNOLOGIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
The Company was incorporated on March 25, 1999 in the state of Delaware. By
agreement effective April 30, 1999, the Company acquired proprietary technology
and patent rights from Luna Technology Inc. ("LTBC"), a private British Columbia
company with certain directors and shareholders in common with the Company. In
addition, by agreement effective November 15, 1999, the Company acquired
proprietary technology and the trademark rights to "LUNA" and "LUNAPLAST" from
Douglas Sinclair, an officer and employee of LTBC, which relate to the acquired
Photoluminescent technology. (Refer to Note 3)
This technology is used for the development and production of photoluminescent
signage, wayfinding systems and other novelty products with applications in
marine, commuter rail, subway, building and toy markets.
The company is currently undertaking a Form 10SB registration with the United
States Securities and Exchange Commission ("SEC") and intends to raise $975,000,
net of offering costs, by way of a Regulation D Offering of Preferred Shares at
$2.00 per share. As at December 31, 1999 $68,970 has been raised. (Refer to Note
6)
The consolidated financial statements have been prepared on the basis of a going
concern which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. At December 31, 1999 the Company
has a working capital deficiency of $128,338. The ability of the Company and its
subsidiary to continue as a going concern is dependent on raising additional
capital and on generating future profitable operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
Principles of Consolidation
The financial statements include the accounts of the Company and its
wholly-owned subsidiary 586941 B.C. Ltd. ("586941"), a company incorporated June
9, 1999 in the province of British Columbia. 586941 was incorporated to conduct
all future business activities in Canada. All significant intercompany balances
and transactions are eliminated on consolidation.
Use of Estimates and Assumptions
Preparation of the Company's financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
Furniture and Equipment
Furniture and equipment are stated at cost. Depreciation is computed by the
straight-line method on estimated useful lives of three to five years.
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
- --------------------------------------------------------------------------------
Technology Rights
The Company capitalizes the cost of acquiring proprietary technology rights and
trademarks. These costs will be amortized on a straight-line basis over
estimated useful lives of ten years commencing January 1, 2000, at which time
the Company began commercial production using this technology. Ongoing product
and technology development costs are expensed as incurred.
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance
with Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation", foreign denominated monetary assets and liabilities are translated
to their United States dollar equivalents using foreign exchange rates which
prevailed at the balance sheet date. Revenue and expenses are translated at
average rates of exchange during the year. Related translation adjustments are
reported as a separate component of stockholders' equity, whereas gains or
losses resulting from foreign currency transactions are included in results of
operations.
<PAGE>
Fair Value of Financial Instruments
In accordance with the requirements of SFAS No. 107, the Company has determined
of the estimated fair value of financial instruments using available market
information and appropriate valuation methodologies. The fair value of financial
instruments classified as current assets or liabilities including cash and cash
equivalents and notes and accounts payable approximate carrying value due to the
short-term maturity of the instruments.
Net Loss per Common Share
Basic earnings per share includes no dilution and is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding for the period. Dilutive earnings per share reflects the potential
dilution of securities that could share in the earnings of the Company. Because
the Company does not have any potentially dilutive securities, the accompanying
presentation is only of basic loss per share.
NOTE 3 - ACQUISITION OF TECHNOLOGY RIGHTS
- ------------------------------------------------------------------------------
By agreement effective April 30, 1999, the Company acquired proprietary
technology from LTBC by way of an assignment of the patent rights to a
Photoluminescent Light Emitter with Enhanced Photometric Brightness
Characteristics. In consideration for this assignment, the Company issued a
$90,000 non-interest-bearing promissory note to LTBC due on or before June 30,
2000. LTBC had originally acquired the patent rights by agreement dated November
27, 1997 from Kimberly Landry, a director of the Company, and Douglas Sinclair
(the "Inventors"). The original patent application was filed by the Inventors on
November 17, 1997 and is pending final approval.
In addition, by agreement effective November 15, 1999, the Company acquired from
Douglas Sinclair the proprietary technology and batching formulations for the
production and manufacturing of Photoluminescent PV Sheets, Photoluminescent
Vinyl Rolls and Photoluminescent Paints as well as the trademark rights to LUNA
and LUNAPLAST for the above mentioned products. In consideration for this
acquisition, the Company issued a $60,000 non-interest-bearing promissory note
to Doug Sinclair due on or before November 30, 2000.
NOTE 4 - NOTES PAYABLE
- -------------------------------------------------------------------------------
Pursuant to the acquisitions as described in Note 3, the Company has the
following notes payable:
1999
---------
Luna Technologies Inc. - Non-interest bearing, due June $ 90,000
30, 2000
Douglas Sinclair - Non-interest bearing, due November
30, 2000 60,000
---------
$150,000
=========
NOTE 5 - RELATED PARTY TRANSACTIONS
- -------------------------------------------------------------------------------
During the period the Company made net advances of $51,095 to and had $35,078 of
expenses paid by LTBC and certain directors of the Company. In addition, the
Company purchased $7,898 of furniture and equipment from LTBC. Amounts due from
related parties are non-interest bearing and have no specific terms of
repayment.
Refer to Notes 1, 3 and 4.
<PAGE>
NOTE 6 - CAPITAL STOCK
- -------------------------------------------------------------------------------
During the initial period the company issued 4,500,000 shares of common stock at
$0.0001 per share for proceeds of $4,500 pursuant to Regulation 504 of the
Securities Act of 1933.
The Company also issued 34,475 shares of preferred stock at $2.00 per share for
proceeds of $68,950 pursuant to Regulation 504 of the Securities Act of 1933.
Each share of preferred stock is voting, is entitled to non-cumulative cash
dividends at the rate of $0.20 per share per year, and may be converted into
1.10 shares of common stock at any time prior to May 31, 2000. As at December
31, 1999 no preferred share conversions have been exercised.
Refer to Note 9.
NOTE 7 - INCOME TAXES
There were no temporary differences between the Company's tax and financial
bases, except for the Company's net operating loss carryforwards amounting to
approximately $43,000 at December 31, 1999. These carryforwards will expire, if
not utilized, beginning in 2006.
The Company has deferred tax assets amounting to approximately $8,600 at
December 31, 1999 related to the net operating loss carryovers. The realization
of the benefits from these deferred tax assets appears uncertain due to the
Company's limited operating history. Accordingly, a valuation allowance has been
recorded which offsets the deferred tax assets at the end of the period.
NOTE 8 - UNCERTAINTY DUE TO YEAR 2000 ISSUE
- -------------------------------------------------------------------------------
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
impact the Company'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 will be fully resolved.
NOTE 9 - SUBSEQUENT EVENTS
- --------------------------------------------------------------------------------
Subsequent to year end the Company's wholly owned subsidiary, 586941 B.C. Ltd.,
changed its name to Luna Technologies (Canada) Inc.
The Company issued 36,050 shares of preferred stock at $2.00 per share for net
proceeds of $72,100.
The Company completed sales totalling $75,000 and additional orders totalling
$110,600.
<PAGE>
2
PART III
EXHIBITS
Exhibit
Number Exhibit Name Page Number
Exhibit 2 Plan of Acquisition, Reorganization, Arrangement,
Liquidation, etc. None
Exhibit 3 Articles of Incorporation and Bylaws ____
Exhibit 4 Instruments Defining the Rights of Security Holders
Exhibit 4.1 Incentive Stock Option Plan ____
Exhibit 4.2 Non-Qualified Stock Option Plan ____
Exhibit 4.3 Stock Bonus Plan ____
Exhibit 5 Subscription Agreement None
Exhibit 9 Voting Trust Agreement None
Exhibit 10 Material Contracts ____
Exhibit 10.1 Agreement relating to purchase of patent rights ____
Exhibit 10.2 Assignment of patent rights ____
Exhibit 10.3 Agreement relating to purchase of proprietary
technology and trademarks ____
Exhibit 10.4 Assignment of trademarks ____
Exhibit 10.5 Non-Compete Agreement ____
Exhibit 10.6 Employment Agreement with Douglas Sinclair ____
Exhibit 10.7 Employment Agreement with Kimberly Landry ____
Exhibit 27 Financial Data Schedules ____
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized
Luna Technologies International, Inc.
By: /s/ Robert H. Humber
Robert H. Humber, President
Date: March 17, 2000
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-SB
LUNA TECHNOLOGIES INTERNATIONAL, INC.
61 B Fawcett Road
Coquitlam, British Columbia
Canada V3K 6V2
EXHIBITS
CERTIFICATE OF INCORPORATION
OF
LUNA TECHNOLOGIES INTERNATIONAL, INC.
The undersigned natural, adult person, acting as incorporator of a
corporation (hereinafter usually referred to as the "Corporation") pursuant to
the provisions of the Delaware Corporation Law, hereby adopts the following
Certificate of Incorporation for said Corporation:
ARTICLE I
Name
The name of the Corporation shall be Luna Technologies International, Inc.
ARTICLE II
Duration The period of duration of the Corporation shall be perpetual.
ARTICLE III
Purpose
The purpose for which the Corporation is organized is to transact any or all
lawful business for which corporations may be incorporated pursuant to the
Delaware Corporation Law.
ARTICLE IV
Capital Stock
The authorized capital stock of the Corporation shall consist of 30,000,000
shares of common stock, $0.0001 par value, and 5,000,000 shares of preferred
stock, $0.0001 par value.
ARTICLE V
Preferences, Limitations,
and Relative Rights of Capital Stock
No share of the common stock shall have any preference over or limitation in
respect to any other share of such common stock. All shares of common stock
shall have equal rights and privileges, including the following:
1. All shares of common stock shall share equally in dividends. Subject to
the applicable provisions of the laws of this State, the Board of Directors of
the Corporation may, from time to time, declare and the Corporation may pay
dividends in cash, property, or its own shares, except when the Corporation is
insolvent or when the payment thereof would render the Corporation insolvent or
when the declaration or payment thereof would be contrary to any restrictions
<PAGE>
contained in this Certificate of Incorporation. When any dividend is paid or any
other distribution is made, in whole or in part, from sources other than
unreserved and unrestricted earned surplus, such dividend or distribution shall
be identified as such, and the source and amount per share paid from each source
shall be disclosed to the stockholder receiving the same concurrently with the
distribution thereof and to all other stockholders not later than six months
after the end of the Corporation's fiscal year during which such distribution
was made.
2. All shares of common stock shall share equally in distributions in
partial liquidation. Subject to the applicable provisions of the laws of this
State, the Board of Directors of the Corporation may distribute, from time to
time, to its stockholders in partial liqui- dation, out of stated capital or
capital surplus of the Corporation, a portion of its assets in cash or property,
except when the Corporation is insolvent or when such distribution would render
the Corpora- tion insolvent. Each such distribution, when made, shall be
identified as a distribution in partial liquidation, out of stated capital or
capital surplus, and the source and amount per share paid from each source shall
be disclosed to all stockholders of the Corporation concurrently with the
distribution thereof. Any such distribution may be made by the Board of
Directors from stated capital without the affirmative vote of any stockholders
of the Corporation.
3.a. Each outstanding share of common stock shall be entitled to one vote at
stockholders' meetings, either in person or by proxy.
b. The designations, powers, rights, preferences, qualifications,
restrictions and limitations of the preferred stock shall be established from
time to time by the Corporation's Board of Directors, in accordance with the
Delaware Corporation Law.
c. i) Cumulative voting shall not be allowed in elections of directors
or for any purpose.
ii) No holders of shares of capital stock of the Corporation shall be entitled,
as such, to any preemptive or preferential right to subscribe to any
unissued stock or any other securities which the Corporation may now or
hereafter be authorized to issue. The Board of Directors of the
Corporation, however, in its discretion by resolution, may determine that
any unissued securities of the Corporation shall be offered for
subscription solely to the holders of common stock of the Corporation, or
solely to the holders of any class or classes of such stock, which the
Corporation may now or hereafter be authorized to issue, in such
proportions based on stock ownership as said board in its discretion may
determine.
iii. The Board of Directors may restrict the transfer of any of the
Corporation's stock issued by giving the Corporation or any stockholder
"first right of refusal to purchase" the stock, by making the stock
redeemable, or by restricting the transfer of the stock under such terms
and in such manner as the directors may deem necessary and as are not
<PAGE>
inconsistent with the laws of this State. Any stock so restricted must
carry a conspicuous legend noting the restriction and the place where such
restriction may be found in the records of the Corporation.
iv. The judgment of the Board of Directors as to the adequacy of any
consideration received or to be received for any shares, options, or any
other securities which the Corporation at any time may be authorized to
issue or sell or otherwise dispose of shall be conclusive in the absence of
fraud, subject to the provisions of these Articles of Incorporation and any
applicable law.
ARTICLE VI
Registered Agent
The name and address of the Corporation's initial registered agent
shall be:
The Company Corporation
1313 North Market Street
New Castle County
Wilmington, Delaware 19801-1151
The Board of Directors, however, from time to time may establish such other
offices, branches, subsidiaries, or divisions which it may consider to be
advisable.
ARTICLE VII
Directors
The affairs of the Corporation shall be governed by a board of not less than
one (1) director, who shall be elected in accordance with the Bylaws of the
Corporation. Subject to such limitation, the number of directors shall be fixed
by or in the manner provided in the Bylaws of the Corporation, as may be amended
from time to time. The organization and conduct of the board shall be in
accordance with the following:
l. The name and address of the initial Director, who shall hold office until
the first annual meeting of the stockholders of the Corporation or until his
successor shall have been elected and qualified, is:
Name Address
William T. Hart 1624 Washington St.
Denver, CO 80203
2. The directors of the Corporation need not be residents of Delaware and
shall not be required to hold shares of the Corporation's capital stock.
3. Meetings of the Board of Directors, regular or special, may be held
within or without Delaware upon such notice as may be prescribed by the Bylaws
<PAGE>
of the Corporation. Attendance of a director at a meeting shall constitute a
waiver by him of notice of such meeting unless he attends only for the express
purpose of objecting to the transaction of any business thereat on the ground
that the meeting is not lawfully called or convened.
4. A majority of the number of directors at any time constituting the Board
of Directors shall constitute a quorum for the transaction of business.
5. By resolution adopted by a majority of the Directors at any time
constituting the Board of Directors, the Board of Directors may designate two or
more directors to constitute an Executive Committee or one or more other
committees each of which shall have and may exer- cise, to the extent permitted
by law or in such resolution, all the authority of the Board of Directors in the
management of the Corpora- tion; but the designation of any such committee and
the delegation of authority thereto shall not operate to relieve the Board of
Direc- tors, or any member thereof, of any responsibility imposed on it or him
by law.
6. Any vacancy in the Board of Directors, however caused or created, may be
filled by the affirmative vote of a majority of the remaining directors, though
less than a quorum of the Board of Directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office and
until his successor is duly elected and qualified.
ARTICLE VIII
Officers
The officers of the Corporation shall be prescribed by the Bylaws of this
Corporation.
ARTICLE IX
Meetings of Stockholders
Meetings of the stockholders of the Corporation shall be held at such place
within or without Delaware and at such times as may be prescribed in the Bylaws
of the Corporation. Special meetings of the stockholders of the Corporation may
be called by the President of the Corporation, the Board of Directors, or by the
record holder or holders of at least ten percent (l0%) of all shares entitled to
vote at the meeting. At any meeting of the stockholders, except to the extent
otherwise provided by law, a quorum shall consist of a majority of the shares
entitled to vote at the meeting; and, if a quorum is present, the affirmative
vote of the majority of shares represented at the meeting and entitled to vote
thereat shall be the act of the stockholders unless the vote of a greater number
is required by law.
ARTICLE X
Voting
When, with respect to any action to be taken by stockholders of this
Corporation, the laws of Delaware requires the affirmative vote of the holders
of more than a majority of the outstanding shares entitled to vote thereon, or
<PAGE>
of any class or series, such action may be taken by the affirmative vote of the
holders of a majority of the outstanding shares entitled to vote on such action.
ARTICLE XI
Bylaws
The initial Bylaws of the Corporation shall be adopted by its Board of
Directors. Subject to repeal or change by action of the stockholders, the power
to alter, amend, or repeal the Bylaws or to adopt new Bylaws shall be vested in
the Board of Directors.
ARTICLE XII
Transactions with Directors and
Other Interested Parties
No contract or other transaction between the Corporation and any other
corporation, whether or not a majority of the shares of the capital stock of
such other corporation is owned by the Corporation, and no act of the
Corporation shall in any way be affected or invalidated by the fact that any of
the directors of the Corporation are pecuniarily or otherwise interested in, or
are directors or officers of, such other corporation. Any director of the
corporation, individually, or any firm with which such director is affiliated
may be a party to or may be pecuniarily or otherwise interested in any contract
or transaction of the Corporation; provided, however, that the fact that he or
such firm is so interested shall be disclosed or shall have been known to the
Board of Directors of the Corporation, or a majority thereof, at or before the
entering into such contract or transaction; and any director of the Corporation
who is also a director or officer of such other corporation, or who is so
interested, may be counted in determining the existence of a quorum at any
meeting of the Board of Directors of the Corporation which shall authorize such
contract or transaction, with like force and effect as if he were not such
director or officer of such other corporation or not so interested.
ARTICLE XIII
Limitation of Director Liability
and Indemnification
No director of the Corporation shall have liability to the Corpora- tion or
to its stockholders or to other security holders for monetary damages for breach
of fiduciary duty as a director; provided, however, that such provisions shall
not eliminate or limit the liability of a director to the Corporation or to its
shareholders or other security holders for monetary damages for: (i) any breach
of the director's duty of loyalty to the Corporation or to its shareholders or
other security holders; (ii) acts or omissions of the director not in good faith
or which involve intentional misconduct or a knowing violation of the law by
such director; (iii) acts by such director as specified by the Delaware
Corporation Law; or (iv) any transaction from which such director derived an
improper personal benefit.
No officer or director shall be personally liable for any injury to person
or property arising out of a tort committed by an employee of the Corporation
<PAGE>
unless such officer or director was personally involved in the situa- tion
giving rise to the injury or unless such officer or director committed a
criminal offense. The protection afforded in the preceding sentence shall not
restrict other common law protections and rights that an officer or director may
have.
The word "director" shall include at least the following, unless limited by
Delaware law: an individual who is or was a director of the Corporation and an
individual who, while a director of a Corporation is or was serving at the
Corporation's request as a director, officer, partner, trustee, employee or
agent of any other foreign or domestic corporation or of any partnership, joint
venture, trust, other enterprise or employee benefit plan. A director shall be
considered to be serving an employee benefit plan at the Corporation's request
if his duties to the Corporation also impose duties on or otherwise involve
services by him to the plan or to participants in or beneficiaries of the plan.
To the extent allowed by Delaware law, the word "director" shall also include
the heirs and personal representatives of all directors.
This Corporation shall be empowered to indemnify its officers and directors
to the fullest extent provided by law, including but not limited to the
provisions set forth in the Delaware Corporation Law, or any successor
provision.
ARTICLE XIII
Incorporator
The name and address of the incorporator of the Corporation is as
follows:
Name Address
William T. Hart 1624 Washington Street
Denver, CO 80203
IN WITNESS WHEREOF, the undersigned incorporator has hereunto affixed
his signature on the 24th day of March, 1999.
________________________
William T. Hart
BYLAWS
OF
LUNA TECHNOLOGIES INTERNATIONAL, INC.
ARTICLE I
OFFICES
Section l. Offices:
The principal office of the Corporation shall be determined by the
Board of Directors, and the Corporation shall have other offices at such places
as the Board of Directors may from time to time determine.
ARTICLE II
STOCKHOLDER'S MEETINGS
Section l. Place:
The place of stockholders' meetings shall be the principal office of
the Corporation unless some other place shall be determined and designated from
time to time by the Board of Directors.
Section 2. Annual Meeting:
The annual meeting of the stockholders of the Corporation for the
election of directors to succeed those whose terms expire, and for the
transaction of such other business as may properly come before the meeting,
shall be held each year on a date to be determined by the Board of Directors.
Section 3. Special Meetings:
Special meetings of the stockholders for any purpose or purposes may be
called by the President, the Board of Directors, or the holders of ten percent
(l0%) or more of all the shares entitled to vote at such meeting, by the giving
of notice in writing as hereinafter described.
Section 4. Voting:
At all meetings of stockholders, voting may be viva voce; but any
qualified voter may demand a stock vote, whereupon such vote shall be taken by
ballot and the Secretary shall record the name of the stockholder voting, the
number of shares voted, and, if such vote shall be by proxy, the name of the
proxy holder. Voting may be in person or by proxy appointed in writing, manually
signed by the stockholder or his duly authorized attorney-in-fact. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided therein. One third of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders.
<PAGE>
Each stockholder shall have such rights to vote as the Articles of
Incorporation provide for each share of stock registered in his name on the
books of the Corporation, except where the transfer books of the Corporation
shall have been closed or a date shall have been fixed as a record date, not to
exceed, in any case, fifty (50) days preceding the meeting, for the
determination of stockholders entitled to vote. The Secretary of the Corporation
shall make, at least ten (l0) days before each meeting of stockholders, a
complete list of the stockholders entitled to vote at such meeting or any
adjournment thereof, arranged in alphabetical order, with the address of and the
number of shares held by each, which list, for a period of ten (l0) days prior
to such meeting, shall be kept on file at the principal office of the
Corporation and shall be subject to inspection by any stockholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting.
Section 5. Order of Business:
The order of business at any meeting of stockholders shall be as
follows:
l. Calling the meeting to order.
2. Calling of roll.
3. Proof of notice of meeting.
4. Report of the Secretary of the stock represented at the meeting and
the existence or lack of a quorum.
5. Reading of minutes of last previous meeting and disposal of any
unapproved minutes.
6. Reports of officers.
7. Reports of committees.
8. Election of directors, if appropriate.
9. Unfinished business.
10. New business.
11. Adjournment.
12. To the extent that these Bylaws do not apply, Roberts' Rules of
Order shall prevail.
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
Section l. Organization and Powers:
The Board of Directors shall constitute the policy-making or legislative
authority of the Corporation. Management of the affairs, property, and business
of the Corporation shall be vested in the Board of Directors, which shall
consist of not less than one nor more than ten members, who shall be elected at
the annual meeting of stockholders by a plurality vote for a term of one (l)
year, and shall hold office until their successors are elected and qualify.
Directors need not be stockholders. Directors shall have all powers with respect
to the management, control, and determination of policies of the Corporation
that are not limited by these Bylaws, the Articles of Incorporation, or by
statute, and the enumeration of any power shall not be considered a limitation
thereof.
Section 2. Vacancies:
Any vacancy in the Board of Directors, however caused or created, shall
be filled by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board, or at a special meeting of the
stockholders called for that purpose. The directors elected to fill vacancies
shall hold office for the unexpired term and until their successors are elected
and qualify.
Section 3. Regular Meetings:
A regular meeting of the Board of Directors shall be held, without
other notice than this Bylaw, immediately after and at the same place as the
annual meeting of stockholders or any special meeting of stockholders at which a
director or directors shall have been elected. The Board of Directors may
provide by resolution the time and place, either within or without the State of
Colorado, for the holding of additional regular meetings without other notice
than such resolution.
Section 4. Special Meetings:
Special meetings of the Board of Directors may be held at the principal
office of the Corporation, or such other place as may be fixed by resolution of
the Board of Directors for such purpose, at any time on call of the President or
of any member of the Board, or may be held at any time and place without notice,
by unanimous written consent of all the members, or with the presence and
participation of all members at such meeting. A resolution in writing signed by
all the directors shall be as valid and effectual as if it had been passed at a
meeting of the directors duly called, constituted, and held.
<PAGE>
Section 5. Notices:
Notices of both regular and special meetings, save when held by unanimous
consent or participation, shall be mailed by the Secretary to each member of the
Board not less than three days before any such meeting and notices of special
meetings may state the purposes thereof. No failure or irregularity of notice of
any regular meeting shall invalidate such meeting or any proceeding thereat.
Section 6. Quorum and Manner of Acting:
A quorum for any meeting of the Board of Directors shall be a majority
of the Board of Directors as then constituted. Any act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Any action of such majority, although not at a regularly
called meeting, and the record thereof, if assented to in writing by all of the
other members of the Board, shall always be as valid and effective in all
respects as if otherwise duly taken by the Board of Directors.
Section 7. Executive Committee:
The Board of Directors may by resolution of a majority of the Board
designate two (2) or more directors to constitute an executive committee, which
committee, to the extent provided in such resolution, shall have and may
exercise all of the authority of the Board of Directors in the management of the
Corporation; but the designation of such committee and the delegation of
authority thereto shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed on it or him by law.
Section 8. Order of Business:
The order of business at any regular or special meeting of the Board of
Directors, unless otherwise prescribed for any meeting by the Board, shall be as
follows:
l. Reading and disposal of any unapproved minutes.
2. Reports of officers and committees.
3. Unfinished business.
4. New business.
5. Adjournment.
6. To the extent that these Bylaws do not apply, Roberts' Rules of
Order shall prevail.
<PAGE>
Section 9. Remuneration:
No stated salary shall be paid to directors for their services as such,
but, by resolution of the Board of Directors, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board. Members of special or standing committees may be allowed
like compensation for attending meetings. Nothing herein contained shall be
construed to preclude any director from receiving compensation for serving the
Corporation in any other capacity, subject to such resolutions of the Board of
Directors as may then govern receipt of such compensation.
ARTICLE IV
OFFICERS
Section l. Titles:
The officers of the Corporation shall consist of a President, one or
more Vice Presidents, a Secretary, and a Treasurer, who shall be elected by the
directors at their first meeting following the annual meeting of stockholders.
Such officers shall hold office until removed by the Board of Directors or until
their successors are elected and qualify. The Board of Directors may appoint
from time to time such other officers as it deems desirable who shall serve
during such terms as may be fixed by the Board at a duly held meeting. The
Board, by resolution, shall specify the titles, duties and responsibilities of
such officers.
Section 2. President:
The President shall preside at all meetings of stockholders and, in the
absence of a, or the, Chairman of the Board of Directors, at all meetings of the
directors. He shall be generally vested with the power of the chief executive
officer of the Corporation and shall countersign all certificates, contracts,
and other instruments of the Corporation as authorized by the Board of Directors
or required by law. He shall make reports to the Board of Directors and
stockholders and shall perform such other duties and services as may be required
of him from time to time by the Board of Directors.
Section 3. Vice President:
The Vice President shall perform all the duties of the President if the
President is absent or for any other reason is unable to perform his duties and
shall have such other duties as the Board of Directors shall authorize or
direct.
Section 4. Secretary:
The Secretary shall issue notices of all meetings of stockholders and
directors, shall keep minutes of all such meetings, and shall record all
proceedings. He shall have custody and control of the corporate records and
books, excluding the books of account, together with the corporate seal. He
<PAGE>
shall make such reports and perform such other duties as may be consistent with
his office or as may be required of him from time to time by the Board of
Directors.
Section 5. Treasurer:
The Treasurer shall have custody of all moneys and securities of the
Corporation and shall have supervision over the regular books of account. He
shall deposit all moneys, securities, and other valuable effects of the
Corporation in such banks and depositories as the Board of Directors may
designate and shall disburse the funds of the Corporation in payment of just
debts and demands against the Corporation, or as they may be ordered by the
Board of Directors, shall render such account of his transactions as may be
required of him by the President or the Board of Directors from time to time and
shall otherwise perform such duties as may be required of him by the Board of
Directors.
The Board of Directors may require the Treasurer to give a bond
indemnifying the Corporation against larceny, theft, embezzlement, forgery,
misappropriation, or any other act of fraud or dishonesty resulting from his
duties as Treasurer of the Corporation, which bond shall be in such amount as
appropriate resolution or resolutions of the Board of Directors may require.
Section 6. Vacancies or Absences:
If a vacancy in any office arises in any manner, the directors then in
office may choose, by a majority vote, a successor to hold office for the
unexpired term of the officer. If any officer shall be absent or unable for any
reason to perform his duties, the Board of Directors, to the extent not
otherwise inconsistent with these Bylaws, may direct that the duties of such
officer during such absence or inability shall be performed by such other
officer or subordinate officer as seems advisable to the Board.
Section 7. Compensation:
No officer shall receive any salary or compensation for his services
unless and until the Board of Directors authorizes and fixes the amount and
terms of such salary or compensation.
ARTICLE V
STOCK
Section 1. Regulations:
The Board of Directors shall have power and authority to take all such
rules and regulations as they deem expedient concerning the issue, transfer, and
registration of certificates for shares of the capital stock of the Corporation.
The Board of Directors may appoint a Transfer Agent and/or a Registrar and may
require all stock certificates to bear the signature of such Transfer Agent
and/or Registrar.
<PAGE>
Section 2. Restrictions on Stock: The Board of Directors may restrict any stock
issued by giving the Corporation or any stockholder "first right of refusal to
purchase" the stock, by making the stock redeemable or by restricting the
transfer of the stock, under such terms and in such manner as the directors may
deem necessary and as are not inconsistent with the Articles of Incorporation or
by statute. Any stock so restricted must carry a stamped legend setting out the
restriction or conspicuously noting the restriction and stating where it may be
found in the records of the Corporation.
ARTICLE VI
DIVIDENDS AND FINANCES
Section l. Dividends:
Dividends may be declared by the directors and paid out of any funds
legally available therefor under the laws of Colorado, as may be deemed
advisable from time to time by the Board of Directors of the Corporation. Before
declaring any dividends, the Board of Directors may set aside out of net profits
or earned or other surplus such sums as the Board may think proper as a reserve
fund to meet contingencies or for other purposes deemed proper and to the best
interests of the Corporation.
Section 2. Monies:
The monies, securities, and other valuable effects of the Corporation
shall be deposited in the name of the Corporation in such banks or trust
companies as the Board of Directors shall designate and shall be drawn out or
removed only as may be authorized by the Board of Directors from time to time.
Section 3. Fiscal Year:
Unless and until the Board of Directors by resolution shall determine
the fiscal year of the Corporation.
ARTICLE VII
AMENDMENTS
These Bylaws may be altered, amended, or repealed by the Board of
Directors by resolution of a majority of the Board.
ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify any and all of its directors or
officers, or former directors or officers, or any person who may have served at
its request as a director or officer of another corporation in which this
Corporation owns shares of capital stock or of which it is a creditor and the
<PAGE>
personal representatives of all such persons, against expenses actually and
necessarily incurred in connection with the defense of any action, suit, or
proceeding in which they, or any of them, were made parties, or a party, by
reason of being or having been directors or officers or a director or officer of
the Corporation, or of such other corporation, except in relation to matters as
to which any such director or officer or person shall have been adjudged in such
action, suit, or proceeding to be liable for negligence or misconduct in the
performance of any duty owed to the Corporation. Such indemnification shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled, independently of this Article, by law, under any Bylaw agreement, vote
of stockholders, or otherwise.
ARTICLE IX
CONFLICTS OF INTEREST
No contract or other transaction of the Corporation with any other
persons, firms or corporations, or in which the Corporation is interested, shall
be affected or invalidated by the fact that any one or more of the directors or
officers of the Corporation is interested in or is a director or officer of such
other firm or corporation; or by the fact that any director or officer of the
Corporation, individually or jointly with others, may be a party to or may be
interested in any such contract or transaction.
LUNA TECHNOLOGIES INTERNATIONAL, INC.
INCENTIVE STOCK OPTION PLAN
1. Purpose. The purpose of the Incentive Stock Option Plan (the "Plan")
is to advance the interests of Luna Technolgies International, Inc. and any
subsidiary corporation (hereinafter referred to as the "Company") and all of its
shareholders, by strengthening the Company's ability to attract and retain in
its employ individuals of training, experience, and ability, and to furnish
additional incentive to officers and valued employees upon whose judgment,
initiative, and efforts the successful conduct and development of its business
largely depends, by encouraging such officers and employees to become owners of
capital stock of the Company.
This will be effected through the granting of stock options as
herein provided, which options are intended to qualify as "Incentive Stock
Options" within the meaning of Section 422 of the Internal Revenue Code, as
amended (the "Code").
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the directors duly appointed to administer
the Plan.
(c) "Common Stock" means the Company's Common Stock.
(d) "Date of Grant" means the date on which an Option is granted
under the Plan.
(e) "Option" means an Option granted under the Plan.
(f) "Optionee" means a person to whom an Option, which has not
expired, has been granted under the Plan.
(g) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of any Optionee.
3. Administration of Plan. The Plan shall be administered by the
Company's Board of Directors or in the alternative, by a committee of two or
more directors appointed by the Board (the "Committee"). If a Committee should
be appointed, the Committee shall report all action taken by it to the Board.
The Committee shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom and the time or
times at which Options shall be granted and the number of shares and purchase
price of Common Stock covered by each Option; to construe and interpret the
<PAGE>
Plan; to determine the terms and provisions of the respective Option agreements,
which need not be identical, including, but without limitation, terms covering
the payment of the Option Price; and to make all other determinations and take
all other actions deemed necessary or advisable for the proper administration of
the Plan. All such actions and determinations shall be conclusively binding for
all purposes and upon all persons.
4. Common Stock Subject to Options. The aggregate number of shares of
the Company's Common Stock which may be issued upon the exercise of Options
granted under the Plan shall not exceed 300,000. The shares of Common Stock to
be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares bought on the market for
the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
shares subject to such Option but not purchased thereunder shall again be
available for Options to be granted under the Plan.
The aggregate fair market value (determined as of the time any option
is granted) of the stock for which any employee may be granted options which are
first exercisable in any single calendar year under this Plan (and any other
plan of the Company meeting the requirements for Incentive Stock Option Plans)
shall not exceed $100,000.
5. Participants. Options will be granted only to persons who are
employees of the Company or subsidiaries of the Company and only in connection
with any such person's employment. The term "employees" shall include officers
as well as other employees, and the officers and other employees who are
directors of the Company. The Committee will determine the employees to be
granted options and the number of shares subject to each option.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by an agreement executed by the Company and the recipient and
shall contain such terms and be in such form as the Committee may from time to
time approve, subject to the following limitations and conditions:
(a) Option Price. The purchase price of each option shall not be
less than 100% of the fair market value of the Company's common stock at the
time of the granting of the option provided, however, if the optionee, at the
time the option is granted, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, the purchase price
of the option shall not be less than 110% of the fair market value of the stock
at the time of the granting of the option.
(b) Period of Option. The maximum period for exercising an option
shall be 10 years from the date upon which the option is granted, provided,
however, if the optionee, at the time the option is granted, owns stock
possessing more than l0% of the total combined voting power of all classes of
stock of the Company, the maximum period for exercising an option shall be five
years from the date upon which the option is granted and provided further,
however, that these periods may be shortened in accordance with the provisions
of Paragraph 7 below.
Subject to the foregoing, the period during which each option may be
exercised, and the expiration date of each Option shall be fixed by the
Committee.
<PAGE>
If an optionee shall cease to be employed by the Company due to
disability, as defined in Section 22(e)(3) of the Code, he may, but only within
the one year next succeeding such cessation of employment, exercise his option
to the extent that he was entitled to exercise it on the date of such cessation.
The Plan will not confer upon any optionee any right with respect to continuance
of employment by the Company, nor will it interfere in any way with his right,
or his employer's right, to terminate his employment at any time.
(c) Vesting of Shareholder Rights. Neither an Optionee nor his
successor shall have any rights as a shareholder of the Company until the
certificates evidencing the shares purchased are properly delivered to such
Optionee or his successor.
(d) Exercise of Option. Each Option shall be exercisable from time
to time during a period (or periods) determined by the Committee and ending upon
the expiration or termination of the Option; provided, however, the Committee
may, by the provisions of any Option Agreement, limit the number of shares
purchaseable thereunder in any period or periods of time during which the Option
is exercisable. An Option shall not be exercisable in whole or in part prior to
the date of shareholder approval of the Plan.
Options may be exercised in part from time to time during the
option period. The exercise of any option will be contingent upon compliance by
the Optionee (or purchaser acting pursuant to Section 6(b)) with the provisions
of Section 10 below and upon receipt by the Company of either (i) cash or
certified bank check payable to its order in the amount of the purchase price of
such shares (ii) shares of Company stock having a fair market value equal to the
purchase price of such shares, or (iii) a combination of (i) and (ii). If any
law or regulation requires the Company to take any action with respect to the
shares to be issued upon exercise of any option, then the date for delivery of
such stock shall be extended for the period necessary to take such action.
(e) Nontransferability of Option. No Option shall be transferable
or assignable by an Optionee, otherwise than by will or the laws of descent and
distribution and each Option shall be exercisable, during the Optionee's
lifetime, only by him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar process except
with the express consent of the Committee.
(f) Death of Optionee. In the event of the death of an optionee
while in the employ of the Company, the option theretofore granted to him shall
be exercisable only within the three months succeeding such death and then only
<PAGE>
(i) by the person or persons to whom the optionee's rights under the option
shall pass by the optionee's will or by the laws of descent and distribution,
and (ii) if and to the extent that he was entitled to exercise the option at the
date of his death.
7. Assumed Options. In connection with any transaction to which Section
424(a) of the Code is applicable, options may be granted pursuant hereto in
substitution of existing options or existing options may be assumed as
prescribed by that Section and any regulations issued thereunder.
Notwithstanding anything to the contrary contained in this Plan, options granted
pursuant to this Paragraph shall be at prices and shall contain such terms,
provisions, and conditions as may be determined by the Committee and shall
include such provisions and conditions as may be necessary to meet the
requirements of Section 424(a) of the Code.
8. Certain Dispositions of Shares. Any options granted pursuant to this
Plan shall be conditioned such that if, within the earlier of (i) the two-year
period beginning on the date of grant of an option or (ii) the one-year period
beginning on the date after which any share of stock is transferred to an
individual pursuant to his exercise of an option, such an individual makes a
disposition of such share of stock by way of sale, exchange, gift, transfer of
legal title, or otherwise, such individual shall promptly report such
disposition to the Company in writing and shall furnish to the Company such
details concerning such disposition as the Company may reasonably request.
9. Reclassification, Consolidation, or Merger. If and to the extent
that the number of issued shares of Common Stock of the Corporation shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to Option and the Option price per share shall be proportionately
adjusted by the Committee, whose determination shall be conclusive. If the
Corporation is reorganized or consolidated or merged with another corporation,
an Optionee granted an Option hereunder shall be entitled to receive Options
covering shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. The new
Option or assumption of the old Option shall not give Optionee additional
benefits which he did not have under the old Option, or deprive him of benefits
which he had under the old Option.
10. Restrictions on Issuing Shares. The exercise of each Option shall
be subject to the condition that if at any time the Company shall determine in
its discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with, such
<PAGE>
exercise or the delivery or purchase of shares purchased thereto, then in any
such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
Unless the shares of stock covered by the Plan have been registered
with the Securities and Exchange Commission pursuant to Section 5 of the
Securities Act of l933, each optionee shall, by accepting an option, represent
and agree, for himself and his transferees by will or the laws of descent and
distribution, that all shares of stock purchased upon the exercise of the option
will be acquired for investment and not for resale or distribution. Upon such
exercise of any portion of an option, the person entitled to exercise the same
shall, upon request of the Company, furnish evidence satisfactory to the Company
(including a written and signed representation) to the effect that the shares of
stock are being acquired in good faith for investment and not for resale or
distribution. Furthermore, the Company may, if it deems appropriate, affix a
legend to certificates representing shares of stock purchased upon exercise of
options indicating that such shares have not been registered with the Securities
and Exchange Commission and may so notify its transfer agent. Such shares may be
disposed of by an optionee in the following manner only: (l) pursuant to an
effective registration statement covering such resale or reoffer, (2) pursuant
to an applicable exemption from registration as indicated in a written opinion
of counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If shares of
stock covered by the Plan have been registered with the Securities and Exchange
Commission, no such restrictions on resale shall apply, except in the case of
optionees who are directors, officers, or principal shareholders of the Company.
Such persons may dispose of shares only by one of the three aforesaid methods.
11. Use of Proceeds. The proceeds received by the Company from the sale
of Common Stock pursuant to the exercise of Options granted under the Plan shall
be added to the Company's general funds and used for general corporate purposes.
l2. Amendment, Suspension, and Termination of Plan. The Board of
Directors may alter, suspend, or discontinue the Plan, but may not, without the
approval of a majority of those holders of the Company's Common Stock voting in
person or by proxy at any meeting of the Company's shareholders, make any
alteration or amendment thereof which operates to (a) make any material change
in the class of eligible employees as defined in Section 5, (b) extend the term
of the Plan or the maximum option periods provided in paragraph 6, (c) decrease
the minimum option price provided in paragraph 6, except as provided in
paragraph 9, or (d) materially increase the benefits accruing to employees
participating under this Plan.
Unless the Plan shall theretofore have been terminated by the Board,
the Plan shall terminate ten years after the effective date of the Plan. No
Option may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without an
Optionee's consent, alter or impair any of the rights or obligations under any
Option theretofore granted to such Optionee under the Plan.
13. Limitations. Every right of action by any person receiving options
pursuant to this Plan against any past, present or future member of the Board,
or any officer or employee of the Company arising out of or in connection with
<PAGE>
this Plan shall, irrespective of the place where such action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
14. Governing Law. The Plan shall be governed by the laws of the State
of Delaware.
l5. Expenses of Administration. All costs and expenses incurred in
the operation and administration of this Plan shall be borne by the Company.
LUNA TECHNOLOGIES INTERNATIONAL, INC.
NON-QUALIFIED STOCK OPTION PLAN
l. Purpose. This Non-Qualified Stock Option Plan (the "Plan") is
intended to advance the interests of Luna Technologies International, Inc. (the
"Company") and its shareholders, by encouraging and enabling selected officers,
directors, consultants and key employees upon whose judgment, initiative and
effort the Company is largely dependent for the successful conduct of its
business, to acquire and retain a proprietary interest in the Company by
ownership of its stock. Options granted under the Plan are intended to be
Options which do not meet the requirements of Section 422 of the Internal
Revenue Code of 1954, as amended (the "Code").
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the directors duly appointed to administer the
Plan.
(c) "Common Stock" means the Company's Common Stock.
(d) "Date of Grant" means the date on which an Option is granted under
the Plan.
(e) "Option" means an Option granted under the Plan.
(f) "Optionee" means a person to whom an Option, which has not expired,
has been granted under the Plan.
(g) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of any Optionee.
3. Administration of Plan. The Plan shall be administered by the
Company's Board of Directors or in the alternative, by a committee of two or
more directors appointed by the Board (the "Committee"). If a Committee should
be appointed, the Committee shall report all action taken by it to the Board.
The Committee shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom and the time or
times at which Options shall be granted and the number of shares and purchase
price of Common Stock covered by each Option; to construe and interpret the
Plan; to determine the terms and provisions of the respective Option agreements,
which need not be identical, including, but without limitation, terms covering
the payment of the Option Price; and to make all other determinations and take
all other actions deemed necessary or advisable for the proper administration of
the Plan. All such actions and determinations shall be conclusively binding for
all purposes and upon all persons.
<PAGE>
4. Common Stock Subject to Options. The aggregate number of shares of
the Company's Common Stock which may be issued upon the exercise of Options
granted under the Plan shall not exceed 400,000. The shares of Common Stock to
be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares bought on the market for
the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
shares subject to such Option but not purchased thereunder shall again be
available for Options to be granted under the Plan.
5. Participants. Options may be granted under the Plan to employees,
directors and officers, and consultants or advisors to the Company (or the
Company's subsidiaries), provided however that bona fide services shall be
rendered by such consultants or advisors and such services must not be in
connection with the offer or sale of securities in a capital-raising
transaction.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by an agreement executed by the Company and the recipient and
shall contain such terms and be in such form as the Committee may from time to
time approve, subject to the following limitations and conditions:
(a) Option Price. The Option Price per share with respect to each
Option shall be determined by the Committee but shall in no instance be less
than the par value of the Common Stock.
(b) Period of Option. The period during which each option may be
exercised, and the expiration date of each Option shall be fixed by the
Committee, but, notwithstanding any provision of the Plan to the contrary, such
expiration date shall not be more than ten years from the date of Grant.
(c) Vesting of Shareholder Rights. Neither an Optionee nor his
successor shall have any rights as a shareholder of the Company until the
certificates evidencing the shares purchased are properly delivered to such
Optionee or his successor.
(d) Exercise of Option. Each Option shall be exercisable from time
to time during a period (or periods) determined by the Committee and ending upon
the expiration or termination of the Option; provided, however, the Committee
may, by the provisions of any Option Agreement, limit the number of shares
purchaseable thereunder in any period or periods of time during which the Option
is exercisable.
(e) Nontransferability of Option. No Option shall be transferable
or assignable by an Optionee, otherwise than by will or the laws of descent and
distribution and each Option shall be exercisable, during the Optionee's
<PAGE>
lifetime, only by him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar process except
with the express consent of the Committee.
(f) Death of Optionee. If an Optionee dies while holding an Option
granted hereunder, his Option privileges shall be limited to the shares which
were immediately purchasable by him at the date of death and such Option
privileges shall expire unless exercised by his successor within four months
after the date of death.
7. Reclassification, Consolidation, or Merger. If and to the extent
that the number of issued shares of Common Stock of the Corporation shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to Option and the Option price per share shall be proportionately
adjusted by the Committee, whose determination shall be conclusive. If the
Corporation is reorganized or consolidated or merged with another corporation,
an Optionee granted an Option hereunder shall be entitled to receive Options
covering shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. The new
Option or assumption of the old Option shall not give Optionee additional
benefits which he did not have under the old Option, or deprive him of benefits
which he had under the old Option.
8. Restrictions on Issuing Shares. The exercise of each Option shall be
subject to the condition that if at any time the Company shall determine in its
discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares purchased thereto, then in any
such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
Unless the shares of stock covered by the Plan have been
registered with the Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of l933, each optionee shall, by accepting an option,
represent and agree, for himself and his transferrees by will or the laws of
descent and distribution, that all shares of stock purchased upon the exercise
of the option will be acquired for investment and not for resale or
distribution. Upon such exercise of any portion of an option, the person
entitled to exercise the same shall, upon request of the Company, furnish
evidence satisfactory to the Company (including a written and signed
representation) to the effect that the shares of stock are being acquired in
good faith for investment and not for resale or distribution. Furthermore, the
Company may, if it deems appropriate, affix a legend to certificates
representing shares of stock purchased upon exercise of options indicating that
<PAGE>
such shares have not been registered with the Securities and Exchange Commission
and may so notify the Company's transfer agent. Such shares may be disposed of
by an optionee in the following manner only: (l) pursuant to an effective
registration statement covering such resale or reoffer, (2) pursuant to an
applicable exemption from registration as indicated in a written opinion of
counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If shares of
stock covered by the Plan have been registered with the Securities and Exchange
Commission, no such restrictions on resale shall apply, except in the case of
optionees who are directors, officers, or principal shareholders of the Company.
Such persons may dispose of shares only by one of the three aforesaid methods.
9. Use of Proceeds. The proceeds received by the Company from the sale
of Common Stock pursuant to the exercise of Options granted under the Plan shall
be added to the Company's general funds and used for general corporate purposes.
l0. Amendment, Suspension, and Termination of Plan. The Board of Directors
may alter, suspend, or discontinue the Plan at any time.
Unless the Plan shall theretofore have been terminated by the Board, the
Plan shall terminate ten years after the effective date of the Plan. No Option
may be granted during any suspension or after the termination of the Plan. No
amendment, suspension, or termination of the Plan shall, without an Optionee's
consent, alter or impair any of the rights or obligations under any Option
theretofore granted to such Optionee under the Plan.
11. Limitations. Every right of action by any person receiving options
pursuant to this Plan against any past, present or future member of the Board,
or any officer or employee of the Company arising out of or in connection with
this Plan shall, irrespective of the place where such action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
l2. Governing Law. The Plan shall be governed by the laws of
the State of Delaware.
13. Expenses of Administration. All costs and expenses incurred in the
operation and administration of this Plan shall be borne by the Company.
LUNA TECHNOLOGIES INTERNATIONAL, INC.
STOCK BONUS PLAN
l. Purpose. The purpose of this Stock Bonus Plan is to advance the
interests of Luna Technologies International, Inc. (the "Company") and its
shareholders, by encouraging and enabling selected officers, directors,
consultants and key employees upon whose judgment, initiative and effort the
Company is largely dependent for the successful conduct of its business, to
acquire and retain a proprietary interest in the Company by ownership of its
stock, to keep personnel of experience and ability in the employ of the Company
and to compensate them for their contributions to the growth and profits of the
Company and thereby induce them to continue to make such contributions in the
future.
2. Definitions.
A. "Board" shall mean the board of directors of the Company.
B. "Committee" means the directors duly appointed to administer
the Plan.
C. "Plan" shall mean this Stock Bonus Plan.
D. "Bonus Share" shall mean the shares of common stock of the
Company reserved pursuant to Section 4 hereof and any such shares issued to a
Recipient pursuant to this Plan.
E. "Recipient" shall mean any individual rendering services for
the Company to whom shares are granted pursuant to this Plan.
3. Administration of Plan. The Plan shall be administered by a
committee of two or more directors appointed by the Board (the "Committee"). The
Committee shall report all action taken by it to the Board. The Committee shall
have full and final authority in its discretion, subject to the provisions of
the Plan, to determine the individuals to whom and the time or times at which
Bonus Shares shall be granted and the number of Bonus Shares; to construe and
interpret the Plan; and to make all other determinations and take all other
actions deemed necessary or advisable for the proper administration of the Plan.
All such actions and determinations shall be conclusively binding for all
purposes and upon all persons.
4. Bonus Share Reserve. There shall be established a Bonus Share
Reserve to which shall be credited 300,000 shares of the Company's common stock.
In the event that the shares of common stock of the Company should, as a result
of a stock split or stock dividend or combination of shares or any other change,
or exchange for other securities by reclassification, reorganization, merger,
consolidation, recapitalization or otherwise, be increased or decreased or
changed into or exchanged for, a different number or kind of shares of stock or
other securities of the Company or of another corporation, the number of shares
<PAGE>
then remaining in the Bonus Share Reserve shall be appropriately adjusted to
reflect such action. Upon the grant of shares hereunder, this reserve shall be
reduced by the number of shares so granted. Distributions of Bonus Shares may,
as the Committee shall in its sole discretion determine, be made from authorized
but unissued shares or from treasury shares. All authorized and unissued shares
issued as Bonus Shares in accordance with the Plan shall be fully paid and
non-assessable and free from preemptive rights.
5. Eligibility, and Granting and Vesting of Bonus Shares. Bonus Shares
may be granted under the Plan to the Company's (or the Company's subsidiaries)
employees, directors and officers, and consultants or advisors to the Company
(or its subsidiaries), provided however that bona fide services shall be
rendered by such consultants or advisors and such services must not be in
connection with the offer or sale of securities in a capital-raising
transaction.
The Committee, in its sole discretion, is empowered to grant to an
eligible Participant a number of Bonus Shares as it shall determine from time to
time. Each grant of these Bonus Shares shall become vested according to a
schedule to be established by the Committee directors at the time of the grant.
For purposes of this plan, vesting shall mean the period during which the
recipient must remain an employee or provide services for the Company. At such
time as the employment of the Recipient ceases, any shares not fully vested
shall be forfeited by the Recipient and shall be returned to the Bonus Share
Reserve. The Committee, in its sole discretion, may also impose restrictions on
the future transferability of the bonus shares, which restrictions shall be set
forth on the notification to the Recipient of the grant.
The aggregate number of Bonus Shares which may be granted pursuant
to this Plan shall not exceed the amount available therefore in the Bonus Share
Reserve.
6. Form of Grants. Each grant shall specify the number of Bonus Shares
subject thereto, subject to the provisions of Section 5 hereof.
At the time of making any grant, the Committee shall advise the
Recipient by delivery of written notice, in the form of Exhibit A hereto
annexed.
7. Recipients' Representations.
A. The Committee may require that, in acquiring any Bonus Shares,
the Recipient agree with, and represent to, the Company that the Recipient is
acquiring such Bonus Shares for the purpose of investment and with no present
intention to transfer, sell or otherwise dispose of shares except such
distribution by a legal representative as shall be required by will or the laws
of any jurisdiction in winding-up the estate of any Recipient. Such shares shall
<PAGE>
be transferable thereafter only if the proposed transfer shall be permissible
pursuant to the Plan and if, in the opinion of counsel (who shall be
satisfactory to the Committee), such transfer shall at such time be in
compliance with applicable securities laws.
B. To effectuate Paragraph A above, the Recipient shall deliver to
the Committee, in duplicate, an agreement in writing, signed by the Recipient,
in form and substance as set forth in Exhibit B hereto annexed, and the
Committee shall forthwith acknowledge its receipt thereof.
8. Restrictions Upon Issuance. A. Bonus Shares shall forthwith after
the making of any representations required by Section 6 hereof, or if no
representations are required then within thirty (30) days of the date of grant,
be duly issued and transferred and a certificate or certificates for such shares
shall be issued in the Recipient's name. The Recipient shall thereupon be a
shareholder with respect to all the shares represented by such certificate or
certificates, shall have all the rights of a shareholder with respect to all
such shares, including the right to vote such shares and to receive all
dividends and other distributions (subject to the provisions of Section 7(B)
hereof) paid with respect to such shares. Certificates of stock representing
Bonus Shares shall be imprinted with a legend to the effect that the shares
represented thereby are subject to the provisions of this Agreement, and to the
vesting and transfer limitations established by the Committee, and each transfer
agent for the common stock shall be instructed to like effect with respect of
such shares.
B. In the event that, as the result of a stock split or stock
dividend or combination of shares or any other change, or exchange for other
securities, by reclassification, reorganization, merger, consolidation,
recapitalization or otherwise, the Recipient shall, as owner of the Bonus Shares
subject to restrictions hereunder, be entitled to new or additional or different
shares of stock or securities, the certificate or certificates for, or other
evidences of, such new or additional or different shares or securities, together
with a stock power or other instrument of transfer appropriately endorsed, shall
also be imprinted with a legend as provided in Section 7(A), and all provisions
of the Plan relating to restrictions herein set forth shall thereupon be
applicable to such new or additional or different shares or securities to the
extent applicable to the shares with respect to which they were distributed.
C. The grant of any Bonus Shares shall be subject to the condition
that if at any time the Company shall determine in its discretion that the
satisfaction of withholding tax or other withholding liabilities, or that the
listing, registration, or qualification of any Bonus Shares upon such exercise
upon any securities exchange or under any state or federal law, or that the
consent or approval of any regulatory body, is necessary or desirable as a
condition of, or in connection with, the issuance of any Bonus Shares, then in
any such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
<PAGE>
D. Unless the Bonus Shares covered by the Plan have been
registered with the Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of l933, each Recipient shall, by accepting a Bonus Share,
represent and agree, for himself and his transferees by will or the laws of
descent and distribution, that all Bonus Shares were acquired for investment and
not for resale or distribution. The person entitled to receive Bonus Shares
shall, upon request of the Committee, furnish evidence satisfactory to the
Committee (including a written and signed representation) to the effect that the
shares of stock are being acquired in good faith for investment and not for
resale or distribution. Furthermore, the Committee may, if it deems appropriate,
affix a legend to certificates representing Bonus Shares indicating that such
Bonus Shares have not been registered with the Securities and Exchange
Commission and may so notify the Company's transfer agent. Such shares may be
disposed of by a Recipient in the following manner only: (l) pursuant to an
effective registration statement covering such resale or reoffer, (2) pursuant
to an applicable exemption from registration as indicated in a written opinion
of counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If Bonus
Shares covered by the Plan have been registered with the Securities and Exchange
Commission, no such restrictions on resale shall apply, except in the case of
Recipients who are directors, officers, or principal shareholders of the
Company. Such persons may dispose of shares only by one of the three aforesaid
methods.
9. Limitations. Neither the action of the Company in establishing the
Plan, nor any action taken by it nor by the Committee under the Plan, nor any
provision of the Plan, shall be construed as giving to any person the right to
be retained in the employ of the Company.
Every right of action by any person receiving shares of common
stock pursuant to this Plan against any past, present or future member of the
Board, or any officer or employee of the Company arising out of or in connection
with this Plan shall, irrespective of the place where action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
10. Amendment, Suspension or Termination of the Plan. The Board of
Directors may alter, suspend, or discontinue the Plan at any time.
Unless the Plan shall theretofore have been terminated by the Board,
the Plan shall terminate ten years after the effective date of the Plan. No
Bonus Share may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without a
recipient's consent, alter or impair any of the rights or obligations under any
Bonus Share theretofore granted to such recipient under the Plan.
<PAGE>
11. Governing Law. The Plan shall be governed by the laws of the State
of Delaware.
12. Expenses of Administration. All costs and expenses incurred in the
operation and administration of this Plan shall be borne by the Company.
<PAGE>
- EXHIBIT A -
LUNA TECHNOLOGIES INTERNATIONAL, INC.
STOCK BONUS PLAN
TO: Recipient: PLEASE BE ADVISED that Luna Technologies International,
Inc. has on the date hereof granted to the Recipient the number of Bonus Shares
as set forth under and pursuant to the Stock Bonus Plan. Before these shares are
to be issued, the Recipient must deliver to the Committee that administers the
Stock Bonus Plan an agreement in duplicate, in the form as Exhibit B hereto. The
Bonus Shares are issued subject to the following vesting and transfer
limitations.
Vesting:
Number of Shares Date of Vesting
Transfer Limitations:
LUNA TECHNOLOGIES INTERNATIONAL, INC.
By
Date its
<PAGE>
- EXHIBIT B -
Luna Technologies International, Inc.
61 B Fawcett Rd.
Coquitlam, British Columbia
Canada V3K 6V2
Gentlemen:
I represent and agree that said Bonus Shares are being acquired by me for
investment and that I have no present intention to transfer, sell or otherwise
dispose of such shares, except as permitted pursuant to the Plan and in
compliance with applicable securities laws, and agree further that said shares
are being acquired by me in accordance with and subject to the terms, provisions
and conditions of said Plan, to all of which I hereby expressly assent. These
agreements shall bind and inure to the benefit of my heirs, legal
representatives, successors and assigns.
My address of record is:
and my social security number: .
Very truly yours,
Receipt of the above is hereby acknowledged.
LUNA TECHNOLOGIES INTERNATIONAL, INC.
By
Date its
THIS AGREEMENT made in triplicate on the 31st day of March 1999
BY AND BETWEEN:
LUNA TECHNOLOGIES INC. a body corporate incorporated under the laws
of the Province of British Columbia, Canada
(hereinafter referred to as "the Vendor")
OF THE FIRST PART
AND
LUNA TECHNOLOGIES INTERNATIONAL, INC. a body corporate incorporated
under the laws of the State of Delaware, USA
(hereinafter referred to as "the Purchaser")
OF THE SECOND PART
WHEREAS the Vendor operates and carries on a photoluminescent sign,
photoluminescent product design and emergency wayfinding systems business.
AND WHEREAS the Vendor has incurred significant research and development
expenditures on the invention hereinafter referred to and is the assignee of all
the exclusive right, title and interest, pursuant to an assignment in writing
dated the 19th day of November 1997 made between the Vendor as assignee and
Douglas Sinclair and Kimberly Landry (hereinafter called the "Inventors") as
assignors, of proprietary technology for a new photoluminescence illumination
invention and process known as a "PHOTOLUMINESCENT LIGHT EMITTER WITH ENHANCED
PHOTOMETRIC BRIGHTNESS CHARACTERISTICS" (hereinafter referred to as "the
invention"):
AND WHEREAS the Vendor is desirous of selling, assigning and transferring all
its right, title and interest in the said invention and patent application based
thereon to the Purchaser.
AND WHEREAS the Purchaser is desirous of purchasing the exclusive right, title
and interest of the Vendor in the invention and patent application based thereon
and having the following assigned from the Vendor to the Purchaser on the terms
and conditions herein set forth:
o the patent application dated the 19th day of November 1997 made by
Kimberly Landry and Douglas Sinclair and assigned to the Vendor on the
19th day of November 1997(a copy of which is attached hereto as
Schedule "A"), and
WITNESSETH THEREFORE IN CONSIDERATION OF THE MUTUAL PROMISES, COVENANTS, AND
REPRESENTATIONS CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:
<PAGE>
ARTICLE I DEFINITIONS:
1.01 In this agreement unless there is something in the subject matter or
context inconsistent therewith:
(a)"Closing Date" shall mean:
(i) The 3Oth day of April 1999
(ii) Such other earlier date as the Parties hereto may mutually agree
(b) "Effective Date" shall mean the 31st day of March 1999
ARTICLE II - SALE OF TECHNOLOGY
2.01 The Vendor agrees to sell and the Purchaser agrees to purchase as at the
Effective Date, at and for the price of Ninety Thousand Dollars USD ($90,000
USD), all of the Vendor's right, title and interest in the invention and which
for greater clarity but without in any way restricting the foregoing definition,
shall include:
(i) that certain patent application dated the 19th day of November 1997 made by
Douglas Sinclair and Kimberly Landry and assigned to the Vendor on the 19th
day of November 1997 for the proprietary technology known as a
PHOTOLUMINESCENT LIGHT EMITTER WITH ENHANCED PHOTOMETRIC BRIGHTNESS
CHARACTERISTICS including all research and development expended on such
technology to the date hereof. The said Douglas Sinclair and Kimberly
Landry having developed the proprietary technology and having applied for a
patent pursuant to application number 08/979,094 filed with United States
Patent and Trademark Office, a copy of which is appended hereto as Schedule
"A".
The Purchaser hereby acknowledges that the invention herein purchased and the
patent application based thereon is being purchased without any warranty or
representation from the Vendor or the Inventors that a patent will issue for
such invention IN THE UNITED STATES PATENT AND TRADEMARK OFFICE or in any other
country or jurisdiction and further that such invention has any commercial
viability or fitness for any particular purpose.
2.03 The Vendor's right, title and interest in the invention at the Effective
Date and on the Closing Date shall be free and clear of all claims,
encumbrances, charges and other third party rights or interests.
2.04 The Purchaser shall not be deemed by this agreement to have accepted any
obligation or assumed any obligation or responsibility for the payment of any
debt, obligation, liability, claim or demand of whatsoever nature of or against
the Vendor in respect of the invention or patent application.
ARTICLE III UNDERTAKING BY THE VENDOR
The Vendor undertakes that it will not, prior to the Closing Date sell or
otherwise in any way assign, transfer, alienate, hypothecate or dispose of to
any person, firm or corporation its right, title, and interest in the invention
or the patent application sold to the Purchaser.
<PAGE>
ARTICLE IV EXAMINATION AND VERIFICATION
The Purchaser shall have the right during the period from the date hereof to the
date of closing to verify or cause to be verified the representations and
warranties set out herein below, and to examine all the technical documents,
records, reports and files of the Vendor so as to satisfy the Purchaser of the
technical and financial viability of such invention. Any such examination shall
not prejudice the Purchaser's right with respect to any of the Purchaser's
rights with respect to any claims for breach of any such representations and
warranties.
ARTICLE V INTERIM OPERATION
(a) During the period from and including the Effective Date to and
including the Closing Date, the Vendor shall not undertake any activity
or do anything which will result in the reduction of the value of the
invention or impair the patent application process based thereon.
ARTICLE VI TERMINATION
If prior to the Closing Date:
(a) The examination and verification by the Purchaser or on its behalf shall
reveal that the representations and warranties set out herein are not
accurate or true, or
(b) Any condition which is to be fulfilled by the Vendor before the Closing
Date is not so fulfilled and the Purchaser has not waived its fulfillment,
The Purchaser shall give the Vendor immediate notice in writing of such fact,
giving the pertinent details known to the Purchaser in respect thereof, and the
Closing Date shall then be postponed for a period of Seven (7) days and if such
breach or failure complained of is not remedied within Five (5) days of such
notice, the Purchaser, at its option, within Two (2) days from the expiry of
said delay of Five (5) days, may terminate the Agreement by notice in writing to
the Vendor, whereupon the transaction contemplated by this agreement shall be
cancelled ab initio and the Parties hereto will be reinstated to the same
position in which they were prior to the date hereof; Provided however, that in
the event the Purchaser does not then so terminate the Agreement, the decision
not to terminate the Agreement shall not prejudice the Purchaser's right with
respect to any claims for breach of the said representations and warranties.
ARTICLE VII DELIVERY AT CLOSING DATE
Unless the Agreement shall have been terminated by the Purchaser prior to the
Closing Date pursuant to ARTICLE VI hereof:
(a) The Purchaser shall:
(i) deliver to the Vendor on the date for closing at the place for
closing, a promissory note in the sum of Ninety Thousand Dollars USD
($90,000 USD), which sum shall be due and payable without interest on
or before the 30th day of June 2000. The Purchaser shall have the right
to prepay any or the entire said sum without notice or bonus.
<PAGE>
(ii) deliver to the Vendor on the date for closing at the place for
closing a certificate signed by the Directors that all necessary
corporate action has been taken to approve, confirm, and adopt this
agreement and to authorize the execution and delivery of all documents
herein and the performance of acts and consummation of all transactions
on the part of Purchaser to be done or performed hereunder.
(a) The Vendor shall:
(i) have taken all necessary corporate action by the Directors to
approve, ratify, confirm and adopt this agreement, and to authorize the
execution and delivery of all documents herein and the performance of
all acts and consummation of all transactions on the part of the Vendor
to be done or performed hereunder.
(ii) deliver to the Purchaser at the Closing Date a certificate signed
by the Directors to the effect that the following representations and
warranties which the Vendor is hereby making to the Purchaser, are true
and correct as at the Closing Date.
(iii) deliver to the Purchaser an assignment in registerable form of
Patent Application 08/979,094 satisfactory to the Purchaser, which
assignment has been acknowledged, approved and consented to by the
Inventors.
ARTICLE VIII THE DIRECTORS OF THE VENDOR WARRANT AND REPRESENT:
(a) That the Vendor was duly incorporated and is a valid and subsisting company
(b) That the Vendor has the corporate power to sell the invention and assign
the patent application based thereon set out in Schedule "A" herein.
(c) That no other person, firm or company has any right, title or interest in
the patent application filed by Douglas Sinclair and Kimberly Landry, for
the proprietary technology and invention known as a PHOTOLUMINESCENT LIGHT
EMITTER WITH ENHANCED PHOTOMETRIC BRIGHTNESS CHARACTERISTICS and the Vendor
is currently the developer and exclusive owner of the aforesaid invention
which is more particularly described in Schedule "A".
ARTICLE IX REPRESENTATIONS FOR PURCHASER'S BENEFIT
All of the representations and warranties hereby made by the Vendor and to be
made by the Vendor at the Closing Date and all of conditions contained herein to
be performed by the Vendor shall be for the Purchaser's benefit and the
Purchaser shall have the right at any time to waive the same without prejudice
to any of its recourses with respect to any other breaches by the Vendor. All of
the representations and warranties contained herein and made by the Vendor shall
survive the Closing Date.
ARTICLE X REDUCTION IN PURCHASE PRICE FOR BREACH
It is understood and agreed that any recourse in favor of the Purchaser arising
from:
<PAGE>
(a) Any loss and claims the cause of which originated prior or that might
be sustained after the Closing Date, as a result of undisclosed claims,
charges and liabilities generally, to the extent that said loss is not
covered by insurance, and as a result of any misrepresentations or
warranties by the Vendor herein,
shall be exercised against but not limited to the balance (if any) of the
purchase price and shall operate in reduction of same provided that, in the
event any such claim shall be made or any loss shall be sustained, then the
Purchaser shall give the Vendor notice in writing of such claim or loss, and the
Vendor shall be afforded reasonable facilities for investigating such claim or
loss, and the Purchaser shall act in accordance with the Vendors instructions,
if the Vendors instructions are communicated to the Purchaser in ample time to
enable the Purchaser to take appropriate action, or, failing receipt of such
instructions, as the Purchaser may deem expedient in the circumstances; and if
the Purchaser then pays any amount in settlement, including penalties and
interest, if any, and for legal and accounting services in respect of
negotiations for settlement thereof or by way of costs upon or in respect of the
contestation thereof, and the Vendor shall not have paid the Purchaser, upon
demand, the purchase price to be paid to the Vendor shall be reduced
proportionately by the amount that the sum paid by the Purchaser bears to the
value of the invention and patent application sold, transferred or assigned at
the date of this agreement.
ARTICLE XI CLOSING
The closing shall take place at the Vendor's offices at Vancouver, British
Columbia, at 10:00 a.m. on April 30th, 1999 or such other date as may be agreed
upon by the Parties.
ARTICLE XII NOTICE
Any notice to be given hereunder shall be deemed to have been duly given if
reduced to writing, signed by or on behalf of the Party giving such notice and
delivered by hand or mailed by registered mail, postage prepaid and addressed as
follows:
(a) If for the Purchaser, at: 4714 Ballard Avenue NW #300 Seattle, Washington
USA
(b) If for the Vendor, at: #2 - 2773 Barnet Highway, Coquitlam BC, Canada
and if mailed, such notice shall be deemed to have been received on the fifth
business day next following the date of mailing. Any Party may, by notice given
in accordance with the foregoing, change their address for the purposes of this
clause.
ARTICLE XIII SUCCESSORS AND ASSIGNS
This agreement shall inure to the benefit of and be binding upon the Parties
hereto and their respective legal representatives, successors and assigns.
ARTICLE XIV LAWS
This Agreement shall be governed by and interpreted in accordance with the laws
of the State of Washington, USA.
<PAGE>
ARTICLE XVI CONFIDENTIALITY
In the event the transaction contemplated hereby, for any reason whatsoever is
cancelled, the Purchaser shall then be under the obligation to treat all
information that the Purchaser might then have acquired in relation to the
Vendor's proprietary technology, invention and patent application as strictly
confidential.
ARTICLE XVII COSTS
It is understood and agreed that each of the Parties hereto shall pay their own
costs and expenses relating to the transaction contemplated herein including all
fees and expenses of their accountants and counsel.
IN WITNESS WHEREOF THE PARTIES HERETO HAVE AFFIXED THEIR RESPECTIVE CORPORATE
SEALS BY THEIR OFFICERS PROPERLY AUTHORIZED IN THAT BEHALF, THE DAY AND YEAR
FIRST ABOVE WRITTEN.
LUNA TECHNOLOGIES INTERNATIONAL, INC.
Per:
- ---------------------------------------
LUNA TECHNOLOGIES INC.
Per:
- ----------------------------------------
THIS ASSIGNMENT made this 30th day of April 1999
BETWEEN:
Luna Technologies Inc., a body corporate having a place of business
at #61 A Fawcett Road in the City of Coquitlam in the Province of
British Columbia, Canada
(hereinafter called "the Assignor")
And
Luna Technologies International, Inc.,
a body corporate having an office
at, 4714 Ballard Avenue N.W.#300,
in the City of
Seattle, Washington USA
(hereinafter called "the Assignee")
WHEREAS Douglas Sinclair and Kimberly Landry, both of Coquitlam, British
Columbia, ("the Inventors") did sell, assign and transfer to the Assignor their
full and exclusive right, title, and interest in and to the invention described
as PHOTOLUMINESCENT LIGHT EMITTER WITH ENHANCED PHOTOMETRIC BRIGHTNESS
CHARACTERISTICS pursuant to an assignment in writing dated the 19th day of
November 1997.
AND WHEREAS Luna Technologies International, Inc., a corporation incorporated in
the State of Delaware, USA and having an office at 4714 Ballard Avenue, North
West, #300 Seattle, Washington 98107-4850, USA is desirous of acquiring all of
the Assignor's right, title and interest in and to the invention.
NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, Luna Technologies Inc. hereby sells, assigns, and transfers
to Luna Technologies International, Inc., the full and exclusive right, title
and interest in and to the said invention, said patent application, and any and
all patent rights and letters patent for said invention in the United States and
elsewhere throughout the world, including foreign patent priority rights and the
right to apply for patents in foreign countries in its name or in the name of
Luna Technologies International, Inc. and further including all divisions and
continuations of said application and of any foreign patent applications and all
reissues and extensions of patent rights and letters patent for said invention,
all to be held and enjoyed by Luna Technologies International, Inc., for its own
use and benefit, for the full duration of the terms for which patent rights and
letters patent may be granted in this or any foreign country, and covenants that
Luna Technologies Inc. has the full right so to do, and agrees that it will
communicate to Luna Technologies International, Inc., and its successors and
assigns, any facts known to it respecting said invention, and have testify its
Officers, Employees, Consultants and the Inventors in any legal proceeding, sign
all lawful papers, execute all lawful divisional, continuation, and reissue
applications, and all rightful declarations or oaths sworn by its Officers,
Employees, Consultants and Inventors, and do everything lawfully possible to aid
Luna
<PAGE>
Technologies International, Inc., and its successors and assigns, to obtain and
enforce proper patent protection for said invention in this or any foreign
country.
IN WITNESS WHEREOF the Assignor and the Assignee have affixed their respective
seals by their Officers properly authorized in that behalf at the City of
Coquitlam, in the Province of British Columbia, Canada, the day and year first
above written.
LUNA TECHNOLOGIES INC.
Per:
- -----------------------------
LUNA TECHNOLOGIES INTERNATIONAL, INC.
Per:
- ------------------------------
The Inventors hereby acknowledge receiving notice of the assignment from Luna
Technologies Inc. to Luna Technologies International, Inc. and hereby consent to
this assignment by affixing their respective hands and seals at the City of
Coquitlam in the Province of British Columbia, Canada, the 30th day of April
1999.
- ----------------------------------
Douglas Sinclair
- ----------------------------------
Kimberly Landry
This Agreement made this 15th day of October 1999
BETWEEN:
Douglas Sinclair of the City of Coquitlam, in the Province of British
Columbia, Canada
(hereinafter referred to as the "Vendor")
OF THE FIRST PART
And
Luna Technologies International Inc., a body corporate having a place of
business at the City of Seattle in the State of Washington USA
(hereinafter referred to as the "Purchaser")
OF THE SECOND PART
Whereas the Vendor is the owner of the processes, batching formulations,
manufacturing processes for the production and manufacturing of photoluminescent
products including all research and development expended on such technology to
the date hereof (all hereinafter referred to as "the proprietary technology")
and is the assignee of the following related trademarks:
o "LUNA" Photoluminescence PVC sheets and rolls primarily for use in the
manufacture of signage, evacuation and wayfaring systems and secondary
lighting sources in International Class 17
o "LUNAPLAST" Photoluminescence PVC sheets and rolls primarily for use in the
manufacture of signage, evacuation and wayfaring systems and secondary
lighting sources in International Class 17
Whereas the Purchaser is desirous of promoting, distributing and selling and
having manufactured for it photoluminescent products and is desirous of
acquiring from the Vendor all right, title and interest to the proprietary
technology and the related trade marks and to manufacture or have manufactured
for it, sell, distribute and put into commercial use the proprietary technology
hereinbefore referred to and to exploit the proprietary technology and the
processes, trade secrets, manufacturing techniques and knowledge owned by the
Vendor.
NOW WITNESSETH THEREFORE IN CONSIDERATION OF THE MUTUAL PROMISES, COVENANTS, AND
REPRESENTATIONS CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:
Article 1.1 DEFINITIONS
(a) "Business Day" means any day except Saturday or Sunday or any public
holiday customarily observed in the Province of British Columbia.
(b) "Confidential Information" means the records and anything relating to the
Photoluminescent products which are the subject of the proprietary
technology referred herein or to the Vendor's batching formulas, processes
or any written communication, technical report which is disclosed by
either of the parties to the other and clearly marked as "Confidential".
<PAGE>
(c)"Vendor's Documents" consists of the copyrights, trade marks, batching
formulas, manufacturer and supplier lists, service and consultant contracts
currently or previously used by the Vendor, technical reports, patent
applications and any other similar rights relating to the products which
are established before or after this Agreement is signed.
(d) "Proprietary Technology" means the batching formulations, manufacturing
processes and all-proprietary technology, research and development
associated therewith in the development of the Photoluminescent Products.
(e) "Closing Date" shall mean:
(i) The 15th day of November 1999.
(ii) Such other earlier date as the Parties hereto may mutually agree.
(f) "Effective Date" shall mean the 15th day of October 1999.
Article 1.2 - SALE OF MATERIAL AND PROPRIETARY TECHNOLOGY
The Vendor agrees to sell and the Purchaser agrees to purchase as at the
Effective Date, at and for the price of Sixty Thousand Dollars USD ($60,000
USD), all of the Vendor's documents and proprietary technology, and which for
greater clarity but without in any way restricting the foregoing definition,
shall include:
(a) the documents and proprietary technology and processes of manufacturing
Strontium Aluminate (SrAl) based photoluminescence products.
(b) the rights to those contracts with various consultants, manufacturers,
suppliers of goods, wares, merchandise, suppliers and services currently
used by the Vendor.
(c) the rights to all customer lists, technical documents, and contracts of the
Vendor.
(d) all licenses, permits and other regulatory authorizations issued by the
government.
(e) The trademarks described as "LUNA" and "LUNAPLAST" (a copy of each is
cumulatively attached as Schedule "A").
The Purchaser hereby acknowledges that the documents and proprietary technology
herein purchased is being purchased without any representation or warranty by
the Vendor.
Article 2.0 UNDERTAKING BY THE VENDOR
(a) The Vendor undertakes not to sell or otherwise in any way alienate or
dispose of the documents and proprietary technology referred to herein to
any other person, firm, or corporation.
Article 3.0 EXAMINATION AND VERIFICATION
The Purchaser shall have the right during the period from the date hereof to the
date of closing to verify or cause to be verified the representations and
warranties set out herein below, and to examine all, documents, records,
accounts and files of the Vendor. Any such examination shall not prejudice the
Purchaser's right with respect to any of the Purchaser's right with respect to
any claims for breach of any such representations and warranties.
<PAGE>
Article 4.0 TERMINATION
If prior to the Closing Date:
(a) The examination and verification by the Purchaser or on its behalf shall
reveal that the representations and warranties set out herein are not
accurate or true, or
(b) Any condition which is to be fulfilled by the Vendor before the Closing
Date is not so fulfilled and the Purchaser has not waived its fulfillment,
The Purchaser shall give the Vendor immediate notice in writing of such fact,
giving the pertinent details known to the Purchaser in respect thereof, and the
Closing Date shall then be postponed for a period of Seven (7) days and if such
breach or failure complained of is not remedied within Five (5) days of such
notice, the Purchaser, at its option, within Two (2) days from the expiry of
said delay of Five (5) days, may terminate the Agreement by notice in writing to
the Vendor, whereupon the transaction contemplated by this agreement shall be
cancelled ab initio and the Parties hereto will be reinstated to the same
position in which they were prior to the date hereof; Provided however, that in
the event the Purchaser does not then so terminate the Agreement, the decision
not to terminate the Agreement shall not prejudice the Purchaser's right with
respect to any claims for breach of the said representations and warranties.
Article 5.0 DELIVERY AT CLOSING DATE
Unless the Agreement shall have been terminated by the Purchaser prior to the
Closing Date pursuant to Article 4.0 hereof:
(a) The Purchaser shall:
(i) deliver to the Vendor on the date for closing at the place for closing, a
promissory note in the sum of Sixty Thousand Dollars USD ($60,000 USD),
which sum shall be due and payable without interest on or before the 31st
day of October 2000. The Purchaser shall have the right to prepay any or
the entire said sum without notice or bonus.
(ii) deliver to the Vendor on the date for closing at the place for closing, a
certificate signed by the Directors that all necessary corporate action has
been undertaken to approve, confirm and adopt this agreement and to
authorize the execution and delivery of all documents herein and the
performance of acts and consumation of all transactions on the part of the
Purchaser to be done or performed hereunder.
Article 6.0 REPRESENTATIONS FOR PURCHASER'S BENEFIT
6.1 The documents, trademarks and proprietary technology hereby sold to the
Purchaser at the Effective Date and on the Closing Date shall be free and
clear of all encumbrances, claims, charges and other third party rights or
interest and the Vendor has the full unfettered authority to sell the
documents and proprietary technology to the Purchaser.
6.2 The Purchaser shall not be deemed by this agreement to have accepted any
obligation or assumed any obligation or responsibility for the payment of
any debt, obligation, liability, claim or demand of whatsoever nature of
or against the Vendor.
6.3 All of the representations and warranties hereby made by the Vendor
and to be made by the Vendor at the Closing Date and all of conditions
contained herein to be performed by the Vendor shall be for the
Purchaser's benefit and the Purchaser shall have the right at any time
to waive the same without prejudice to any of its recourses with
respect to any other breaches by the Vendor. All of the
representations and warranties contained herein and made by the Vendor
shall survive the Closing Date.
<PAGE>
Article 7.0. COVENANT NOT TO COMPETE
It is understood and agreed that the Vendor shall not, directly or indirectly,
whether on his account or as an employee, consultant, partner, officer, or
director of any other person, firm, partnership or corporation be engaged or
interested in any business which incorporates the use of the documents and
proprietary technology sold to the Purchaser by the Vendor for a period of Five
(5) years from and after the closing date.
Article 8.0 REDUCTION IN PURCHASE PRICE FOR BREACH
It is understood and agreed that any recourse in favor of the Purchaser arising
from:
(a) Any claims the cause of which originated prior to the Closing Date and
any loss that might be sustained subsequent to the Closing Date, as a
result of undisclosed liabilities or claims by third parties
generally, to the extent that said loss is not covered by insurance,
and as a result of any misrepresentations or warranties by the Vendor
herein,
shall be exercised against but not limited to the balance (if any) of the
purchase price and shall operate in reduction of same provided that, in the
event any such claim shall be made or any loss shall be sustained, then the
Purchaser shall give the Vendor notice in writing of such claim or loss, and the
Vendor shall be afforded reasonable facilities for investigating such claim or
loss, and the Purchaser shall act in accordance with the Vendors instructions,
if the Vendors instructions are communicated to the Purchaser in ample time to
enable the Purchaser to take appropriate action, or, failing receipt of such
instructions, as the Purchaser may deem expedient in the circumstances; and if
the Purchaser then pays any amount in settlement, including penalties and
interest, if any, and for legal and accounting services in respect of
negotiations for settlement thereof or by way of costs upon or in respect of the
contestation thereof, and the Vendor shall not have paid the Purchaser, upon
demand, the purchase price to be paid to the Vendor shall be reduced
proportionately by the amount that the sum paid by the Purchaser bears to the
value of the material and proprietary technology sold at the date of this
agreement.
Article 9.0 POST CLOSING OPERATIONS
The Parties agree hereto, that the Vendor shall after the date of Closing
testify in any legal proceeding, sign all lawful papers, execute all lawful
divisional, continuation, and reissue applications, make all rightful
declarations or oaths, and do everything lawfully possible to aid the Purchaser
and its successors and assigns, to obtain and enforce proper protection for said
proprietary technology and trade marks in this or any foreign country.
Article 10.0 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser shall deliver to the Vendor at the Closing Date a certificate
signed by the Directors of the Purchaser to the effect that the following
representations and warranties which the Purchaser is hereby making to the
Vendor, are true and correct as at the Closing Date.
(a) The Purchaser is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware, has all
necessary corporate powers to own properties and carry on a business,
and is qualified to do business in Delaware. All actions taken by the
Incorporators, Directors and Shareholders of the Purchaser have been
valid and in accordance with the laws of the State of Delaware.
<PAGE>
Article 11.0 CLOSING
The closing shall take place at the #61A Fawcett Road at Coquitlam, British
Columbia, at 10:00 a.m. on November 15th, 1999 or such other date as may be
agreed upon by the Parties.
Article 12.0 NOTICE
Any notice to be given hereunder shall be deemed to have been duly given if
reduced to writing, signed by or on behalf of the Party giving such notice and
delivered by hand or mailed by registered mail, postage prepaid and addressed as
follows:
(a) If for the Purchaser, at: 4714 Ballard Avenue NW #300, Seattle,
Washington USA
(b) If for the Vendor, at: #2 - 2773 Barnet Highway, Coquitlam BC, Canada
and if mailed, such notice shall be deemed to have been received on the fifth
business day next following the date of mailing. Any Party may, by notice given
in accordance with the foregoing, change their address for the purposes of this
clause.
Article 13.0 HEADINGS
The headings of the Articles and paragraphs are intended to be used in
conjunction with the Index for reference only. Nothing is to be inferred from
the headings themselves.
Article 14.0 APPROVALS
Each Party may be asked to give their approval before some things can be done.
Neither of the Parties will unreasonably or arbitrarily delay giving or refuse
to give their approval. The Parties will answer a request to give their approval
within five (5) business days. Failure to answer will mean that the approval
requested has been given.
Article 15.0 TIME
The Parties will act promptly and if something is required to be done within a
stated period of time or by a date, the parties will adhere to that requirement
exactly.
Article 16.0 ONLY AGREEMENT
This document sets forth the entire agreement and understanding of the Parties
relating to the subject matter herein and merges all prior discussions and
negotiations between the parties or their representatives. Neither party shall
be bound by any conditions, representations or warranties with respect to the
subject matter of this agreement other than as expressly provided herein or as
duly set forth subsequent to the date hereof in writing signed by a duly
authorized representative of the party to be bound thereby.
Article 17.0 LAWS
Questions about the interpretation or enforcement of this Agreement will be
decided by applying the laws of the State of Washington, USA.
<PAGE>
Article 18.0 SUCCESSORS AND ASSIGNS
This agreement shall inure to the benefit of and be binding upon the Parties
hereto and their respective legal representatives, successors and assigns.
Article 19.0 CONFIDENTIALITY
In the event the transaction contemplated hereby, for any reason whatsoever is
cancelled, the Purchaser shall then be under the obligation to treat all
information that the Purchaser might then have acquired in relation to the
Vendor's documents or proprietary technology as strictly confidential.
Article 20.0 COSTS
It is understood and agreed that each of the Parties hereto shall pay their own
costs and expenses relating to the transaction contemplated herein including all
fees and expenses of their accountants and counsel.
IN WITNESS WHEREOF THE VENDOR HAS AFFIXED HIS HAND AND SEAL AND THE PURCHASER
HAS AFFIXED THEIR CORPORATE SEALS BY THEIR OFFICERS PROPERLY AUTHORIZED IN THAT
BEHALF, THE DAY AND YEAR FIRST ABOVE WRITTEN.
LUNA TECHNOLOGIES INTERNATIONAL INC.
Per:
- -------------------------------------
- -------------------------------------
Douglas Sinclair
THIS AGREEMENT made this 15th day of November1999
BETWEEN:
Douglas Sinclair, of the City of Coquitlam in the Province of British
Columbia, Canada
(hereinafter called "the Assignor")
And
Luna Technologies International, Inc.,
a body corporate having an office at
331 Andover Park East, Suite 1050, in
the City of Seattle,
Washington USA
(hereinafter called "the Assignee")
WHEREAS the Assignor is the Assignee (hereinafter called the "Prior Assignee")
of the trade-marks, pursuant to an assignment in writing dated the 15th day of
October 1999 and entered into between Luna Technologies Inc. as Assignor(
hereinafter called the "Prior Assignor") and Douglas Sinclair as Prior Assignee
and which is registered in the USA under the registration numbers set out in
Schedule "A" hereunto annexed all of which are used in association with the
Assignor's photoluminescence products.
AND WHEREAS on October15, 1999 the Assignor entered into an agreement with the
Assignee to sell his proprietary technology including the trade-marks set out in
Schedule "A" which are used in association of the Assignor's photoluminescence
product technology.
AND WHEREAS the Assignor and Assignee wish to confirm the earlier transfer of
the trademarks set out in Schedule "A" from the Assignor to the Assignee.
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which the
Assignor and Assignee acknowledge, the Assignor confirms that it did as of the
15th day of November 1999, sell, assign and transfer to the Assignee all its
right, title and interest in the trade-marks more particularly set out in
Schedule "A" hereunto annexed and the goodwill of the business relating to the
trade-marks.
IN WITNESS WHEREOF the Assignor and the Assignee have affixed their respective
seals by their Officers properly authorized in that behalf at the City of
Coquitlam, in the Province of British Columbia, Canada, the day and year first
above written.
- -------------------------------
Douglas Sinclair
LUNA TECHNOLOGIES INTERNATIONAL, INC.
Per:
- ------------------------------
<PAGE>
THIS IS SCHEDULE "A" ANNEXED TO THAT CERTAIN ASSIGMENT DATED THE 15th DAY
OF NOVEMBER 1999 AND ENTERED INTO BETWEEN DOUGLAS SINCLAIR AS ASSIGNOR AND
LUNA TECHNOLOGIES INTERNATIONAL, INC. AS ASSIGNEE
TRADEMARK SERIAL NUMBER DATE
LUNA SN 75-384915 November 5,1997
LUNAPLAST SN 75-384916 November 5,1997
LUNA TECHNOLGIES INC.hereby acknowledges receiving notice of this Assignment
from Luna Technologies International Inc. and hereby consents to this Assignment
by affixing its corporate seal by its Officers properly authorized in that
behalf this 15th day of November 1999.
Luna Technologies Inc.
Per:
- -------------------------------
This Agreement Dated this 15st day of November 1999
Between:
Luna Technologies International, Inc., a body corporate incorporated under
the laws of the State of Delaware, USA ("the Purchaser")
Party of the First Part
And
Douglas Sinclair both of the City of Coquitlam in the Province of British
Columbia, Canada ("the Covenantor")
Party of the Second Part
WHEREAS the Purchaser and the Vendor are parties to an agreement dated the 15th
day of October 1999 for the sale of the proprietary technology and trademarks
related to the proprietary technology of the Vendor (hereinafter called the
"Sale Agreement").
AND WHEREAS it is a term of the closing of the transactions contemplated by the
by the Sale Agreement entered into between the Vendor and the Covenantor that
the Covenantor execute and deliver this Non-Competition Agreement.
1. Non-Competition
(i) For a period of Five (5) years from the date hereof, the Covenantor
will not personally, or on behalf of any other person, partnership,
company, corporation or other entity, contact any supplier, or
customer, directly or indirectly, or aid, abet or assist any other
person or entity in contacting any supplier or customer of the
Covenantor, for the purpose of initiating, engaging in or furthering
competition with the business which incorporates the use of the
trademarks and proprietary technology purchased by the Purchaser.
(ii) The Covenantor, for a period of Five (5) years from the date hereof
shall not accept employment with or directly or indirectly organize or
participate in the organization of any firm, partnership, corporation,
joint venture, sole proprietorship or other business entity within
North America if such firm, partnership, corporation, joint venture,
sole proprietorship, or entity is engaged or to be engaged in any
similar business, conduct or activity in competition to the business
which incorporates the trademarks and proprietary technology purchased
by the Purchaser; and:
(iii)The Covenantor shall not, directly or indirectly, either individually
or as a consultant, employee, partner, owner, officer or stockholder,
or in any other capacity whatsoever with respect to any person, firm
partnership, corporation, joint venture, sole proprietorship or other
business entity within North America, except as a shareholder for
investment purposes holding less than a One Per Cent (1%) interest in
a corporation whose shares are traded on a securities exchange or on
an over-the-counter market, engage in or aid, assist or abet any other
person or entity to carry on, be engaged in any business which
<PAGE>
incorporates the trademarks or proprietary technology, conduct or
activity in competition to the proprietary technology purchased by the
Purchaser, advise or act as a consultant for, lend money to, guarantee
the debts or obligations of, or otherwise provide financial assistance
to any person or entity in any business incorporating the technology
and trademarks, conduct or activity in competition to the business
incorporating the technology and trademarks purchased by the
Purchaser.
(iv) The Covenantor expressly acknowledges that the foregoing restrictions
are reasonable in the circumstances and acknowledges that damages are
an inadequate remedy for the Purchaser in the event of a breach of
this covenant and therefore agrees that the Purchaser shall be
entitled to injunctive relief, in addition to all other remedies
provided by law, for any breach of this covenant.
(v) Notwithstanding the foregoing, if the time limitation in the foregoing
covenant is at time determined to be unreasonable by a Court of
competent jurisdiction adjudicating upon the validity of covenant,
then such time limitation shall be reduced to a period of Three (3)
years.
Nothing in the foregoing shall be read or construed as a prohibition against the
Covenantor accepting employment by the Purchaser or any subsidiary of the
Purchaser.
2. Notice:
Any notice to be given hereunder shall be deemed to have been duly given if
reduced to writing, signed by or on behalf of the Party giving such notice and
delivered by hand or mailed by registered mail, postage prepaid, and addressed
as follows:
(a) If for the Purchaser at: 331 Andover Park East, Suite 1050 Seattle
Washington
(b) If for the Covenantor: #2 Barnett Highway, Coquitlam, British
Columbia, Canada
And if mailed, such notice shall be deemed to have been received on the Fifth
business day next following the date of mailing. Any Party may, by notice given
in accordance with the foregoing, change their respective address for the
purposes of this clause.
3. Successors and Assigns
This agreement shall inure to the benefit of and be binding upon the Parties
hereto and their respective legal representatives, successors and assigns.
4. Laws
This agreement shall be governed by and interpreted by the laws of the State of
Washington.
IN WITNESS WHEREOF THE COVENANTOR hereto has hereunto affixed his hand and seal
and the Purchaser has affixed its corporate seal by its officers properly
authorized in that behalf the day and year first above written.
)
)
- ---------------------------------- )
Douglas Sinclair
Luna Technologies International, Inc.
Per:
==================================
THIS AGREEMENT IN TRIPLICATE THIS 15th DAY OF JANUARY 2000
BETWEEN:
LUNA TECHNOLOGIES (CANADA) LTD., a body corporate,
duly incorporated under the laws of the Province
of British Columbia
(hereinafter referred to as "the Employer")
OF THE FIRST PART
AND
Douglas Sinclair, of the City of Coquitlam,
in the Province of British Columbia
(hereinafter referred to as "the Employee")
OF THE SECOND PART
WHEREAS the Employer carries on the business of a manufacturer of
Photoluminescence products.
AND WHEREAS the Employee is skilled and experienced and has a proprietary
knowledge of the photoluminescent business.
AND WHEREAS the Employer wishes to employ the Chief Executive Officer as part of
the management team required to manage and operate its business.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants and agreements herein contained, the parties do hereby covenant and
agree each with the other as follows:
ARTICLE 1. APPOINTMENT AND TERM
1.1 The Employer hereby appoints and retains the Employee as Chief Executive
Officer to be part of the Employer's management team to manage and conduct the
day to day business operations of the Employer. It is agreed that all services
contracted for by the Employer from the Employee herein are to be performed in
Canada. The Employee agrees to accept the position of Chief Executive Officer
and to be part of the management team to conduct the day to day business
operations on behalf of the Employer, for a term commencing on the 1st day of
January 2000 and expiring on the 31st day of December 2000 or such earlier date
as this Agreement may be terminated, and subject to any renewals, as hereinafter
provided. The parties hereby agree that after the 1st day of June 2000, either
party may terminate this agreement by giving 30 days written notice to the other
party of their intention to terminate this agreement
<PAGE>
ARTICLE 2. COMPENSATION
2.1 The Employer shall pay to the Employee, in consideration for the services to
be performed by the Employee, pursuant to the terms of this Agreement:
(i) the sum of FIVE THOUSAND DOLLARS ($5,000) per month payable in
bi-monthly installments of TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500) each
in each month, the first of such bi-monthly payments to commence on the
15th day of January 2000 and to continue thereafter in consecutive
bi-monthly installments during the term of this agreement.
(ii) a sum equal and in reimbursement for all expenses incurred by the
Employee during the currency of this agreement related to the Employee's
management and operation of the business including but without limiting
the generality of the foregoing, all travel expenses including the cost of
accommodation and meals, all automobile expenses including the cost of
gasoline, insurance and repairs for the use of the Employee's automobile
while used in the performance of the Employees duties as Chief Executive
Officer of the Employer, all telephone, cellular, fax or communication
charges incurred by the Employee in the performance of his duties, all
entertainment charges incurred by the Employee in the performance of his
duties and all other expenses or charges incurred by the Employee in the
performance of his duties as Chief Executive Officer. All such expenses or
charges shall be reimbursed at the end of any given month during the
currency of this agreement and shall be verified and submitted by the
Employee with copies of all bills, invoices or other proof of payment
acceptable to the Employer.
ARTICLE 3. RENEWAL
3.1 This agreement shall be automatically renewed for a further term of six (6)
months at the expiry of the term hereof, with automatic renewals of further
terms of six (6) months each, unless terminated by the parties as hereinafter
provided.
ARTICLE 4. COMPENSATION DURING RENEWAL
4.1 Upon renewal of this agreement according to Article 3.1 hereof, the
compensation to be paid to the Employee, in consideration of his managing the
day to day operations of the business, shall be such salary as is agreed to the
by the parties, and until the parties reach agreement on the salary to be paid
during the renewal period; the Employer shall pay to the Employee the same
salary as was paid during the initial six (6) months, or the previous six (6)
month period prior to any renewal period, whichever is appropriate in the
<PAGE>
circumstances. Upon agreement being reached, the parties shall adjust the salary
paid back to the date of renewal. In the event the parties are unable to agree
to the salary to be paid to the Employee during any renewal term, within 90 days
of the renewal date, this agreement shall terminate.
ARTICLE 5. DUTIES OF THE EMPLOYEE
5.1 The Employee is empowered and engaged to perform the following duties:
(a) the furnishing of all management services for the economic and
efficient day to day operation of the business.
(b) the employment, in the name of the Employer and at its expense, of all
employees necessary to carry out the business of the Employer and the
direction, control and termination of employment of all such
employees. Provided however the Employee shall not hire or terminate
any employee without first notifying the Board of Directors of the
Employer.
(c) ensuring that proper books of account and records relating to the
business operations of the business are kept and to have prepared and
supply reports of the results of the business as and when directed by
the Board of Directors of the Employer.
(d) ensuring that all proper statutory, regulatory filings or reports and
tax returns are filed in a diligent and prompt manner to all necessary
Governmental or regulatory bodies
(e) devoting such reasonable time, skill, labor and attention as shall be
necessary to carry out the Employee's obligations hereunder during the
term or any renewal hereof.
(f) exercise reasonable efforts to manage the day to day operations so as
to enhance and promote the Employer's business in as profitable manner
as possible, having due regard at all times to the instructions of the
Board of Directors of the Employer.
(g) obey and carry out all lawful orders given by the Employer's Officers
and Board of Directors.
5.2 It is agreed and understood by the parties hereto that the Employee shall
make a full time commitment of his time and attention to the management of the
Employer's business, and shall not without the consent in writing of the
Employer, engage in any other new business or occupation outside of his current
business and financial interests, or become a director, manager, or agent of any
new company, firm, or individual, without the written consent of the Board of
Directors first had and received.
<PAGE>
ARTICLE 6. CONTRACTS
6.1 Subject to the instructions of the Board of Directors of the Employer, from
time to time, the Employee shall have the authority to make the usual contracts
necessary for carrying on the Employer's business in the ordinary course.
ARTICLE 7. CONFIDENTIALITY
7.1 The Employee shall well and faithfully serve the Employer and use his best
efforts to promote the interest thereof, and shall not disclose the private
affairs of the Employer, or any secret of the Employer, any customers or
suppliers of the Employer, or the financial status of the Employer, or any other
business information concerning the business operations of the Employer, to any
person other than the Board of Directors of the Employer, and shall not use for
his own purpose, or any other purpose than those of the Employer, any
information he may acquire with respect to the Employer's business.
ARTICLE 8. ASSIGNMENT
8.1 Neither party may assign this Agreement without the express prior written
consent of the other party, which may be arbitrarily withheld.
ARTICLE 9. NOTICE
9.1 Any notice, demand, request or approval which may, or is required to be
given, pursuant to the terms of this Agreement, shall be in writing and shall be
sufficiently given or made if served personally on the Employee or a director or
officer of the Employer, or if mailed prepaid registered mail, and in the case
of:
THE EMPLOYEE:
#2 - 2773 Barnet Highway, Coquitlam, BC, V3B 1C2
THE EMPLOYER:
61B Fawcett Road, Coquitlam, BC, V3K 6V2
or to such other address as the parties may from time to time by written notice
change. The date of receipt of any such notice, demand, request or approval if
served personally shall be deemed the date of delivery, or if mailed as
aforesaid, the second business day following the date of mailing.
ARTICLE 10. ENUREMENT
10.1 This Agreement shall be effective as of the 1st day of January 2000 and
enure to the benefit of and be binding upon the heirs, executors, administrators
and permitted assigns of the parties hereto.
<PAGE>
IN WITNESS WHEREOF the Employee has hereunto affixed his hand and seal and the
Employer has hereunto affixed its corporate seal by its officers properly
authorized in that behalf on the day and year above written.
- -------------------------------------
Douglas Sinclair
Luna Technologies (Canada) Ltd.
Per:
- -------------------------------------
Robert H. Humber
THIS AGREEMENT IN TRIPLICATE THIS 15th DAY JANUARY 2000
BETWEEN:
LUNA TECHNOLOGIES (CANADA) LTD., a body corporate,
duly incorporated under the laws of the Province
of British Columbia
(hereinafter referred to as "the Employer")
OF THE FIRST PART
AND
Kimberly landry, of the City of Coquitlam,
in the Province of British Columbia
(hereinafter referred to as "the Employee")
OF THE SECOND PART
WHEREAS the Employer carries on the business of a manufacturer of
Photoluminescence products.
AND WHEREAS the Employee is skilled and experienced in the general management
and all facets of the photoluminescent business.
AND WHEREAS the Employer wishes to employ the Employee as Secretary and
Vice-President to be part of the management team required to manage and operate
its business.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants and agreements herein contained, the parties do hereby covenant and
agree each with the other as follows:
ARTICLE 1. APPOINTMENT AND TERM
1.1 The Employer hereby appoints and retains the Employee as Secretary and
Vice-President to be part of the Employer's management team to manage and
conduct the day to day business operations of the Employer. It is agreed that
all services contracted for by the Employer from the Employee herein are to be
performed in Canada. The Employee agrees to accept the position of Secretary and
Vice-President and to be part of the management team to conduct the day to day
business operations on behalf of the Employer, for a term commencing on the 1st
day of January 2000 and expiring on the 31st day of December 2000 or such
earlier date as this Agreement may be terminated, and subject to any renewals,
as hereinafter provided. The parties hereby agree that after the 1st day of June
2000, either party may terminate this agreement by giving 30 days written notice
to the other party of their intention to terminate this agreement
<PAGE>
ARTICLE 2. COMPENSATION
2.1 The Employer shall pay to the Employee, in consideration for the services to
be performed by the Employee, pursuant to the terms of this Agreement:
(i) the sum of FOUR THOUSAND FIVE HUNDRED DOLLARS ($4,500) per month
payable in bi-monthly installments of TWO THOUSAND TWO HUNDRED and FIFTY
DOLLARS ($2,250) each in each month, the first of such bi-monthly payments
to commence on the 15th day of January 2000 and to continue thereafter in
consecutive bi-monthly installments during the term of this agreement.
(ii) a sum equal and in reimbursement for all expenses incurred by the
Employee during the currency of this agreement related to the Employee's
management and operation of the business including but without limiting
the generality of the foregoing, all travel expenses including the cost of
accommodation and meals, all automobile expenses including the cost of
gasoline, insurance and repairs for the use of the Employee's automobile
while used in the performance of the Employees duties as Secretary and
Vice-President of the Employer, all telephone, cellular, fax or
communication charges incurred by the Employee in the performance of her
duties, all entertainment charges incurred by the Employee in the
performance of her duties and all other expenses or charges incurred by
the Employee in the performance of her duties as Secretary and
Vice-President. All such expenses or charges shall be reimbursed at the
end of any given month during the currency of this agreement and shall be
verified and submitted by the Employee with copies of all bills, invoices
or other proof of payment acceptable to the Employer.
ARTICLE 3. RENEWAL
3.1 This agreement shall be automatically renewed for a further term of six (6)
months at the expiry of the term hereof, with automatic renewals of further
terms of six (6) months each, unless terminated by the parties as hereinafter
provided.
ARTICLE 4. COMPENSATION DURING RENEWAL
4.1 Upon renewal of this agreement according to Article 3.1 hereof, the
compensation to be paid to the Employee, in consideration of her managing the
day to day operations of the business, shall be such salary as is agreed to the
by the parties, and until the parties reach agreement on the salary to be paid
during the renewal period; the Employer shall pay to the Employee the same
salary as was paid during the initial six (6) months, or the previous six (6)
month period prior to any renewal period, whichever is appropriate in the
<PAGE>
circumstances. Upon agreement being reached, the parties shall adjust the salary
paid back to the date of renewal. In the event the parties are unable to agree
to the salary to be paid to the Employee during any renewal term, within 90 days
of the renewal date, this agreement shall terminate.
ARTICLE 5. DUTIES OF THE EMPLOYEE
5.1 The Employee is empowered and engaged to perform the following duties:
(a) the furnishing of all management services for the economic and
efficient day to day operation of the business.
(b) the employment, in the name of the Employer and at its expense, of all
employees necessary to carry out the business of the Employer and the
direction, control and termination of employment of all such
employees. Provided however the Employee shall not hire or terminate
any employee without first notifying the Board of Directors of the
Employer.
(c) ensuring that proper books of account and records relating to the
business operations of the business are kept and to have prepared and
supply reports of the results of the business as and when directed by
the Board of Directors of the Employer.
(d) ensuring that all proper statutory, regulatory filings or reports and
tax returns are filed in a diligent and prompt manner to all necessary
Governmental or regulatory bodies.
(e) devoting such reasonable time, skill, labor and attention as shall be
necessary to carry out the Employee's obligations hereunder during the
term or any renewal hereof.
(f) exercise reasonable efforts to manage the day to day operations so as
to enhance and promote the Employer's business in as profitable manner
as possible, having due regard at all times to the instructions of the
Board of Directors of the Employer.
(g) obey and carry out all lawful orders given by the Employer's Board of
Directors.
5.2 It is agreed and understood by the parties hereto that the Employee shall
make a full time commitment of her time and attention to the management of the
Employer's business, and shall not without the consent in writing of the
Employer, engage in any other new business or occupation outside of his current
business and financial interests, or become a director, manager, or agent of any
new company, firm, or individual, without the written consent of the Board of
Directors first had and received.
<PAGE>
ARTICLE 6. CONTRACTS
6.1 Subject to the instructions of the Board of Directors of the Employer, from
time to time, the Employee shall have the authority to make the usual contracts
necessary for carrying on the Employer's business in the ordinary course.
ARTICLE 7. CONFIDENTIALITY
7.1 The Employee shall well and faithfully serve the Employer and use her best
efforts to promote the interest thereof, and shall not disclose the private
affairs of the Employer, or any secret of the Employer, any customers or
suppliers of the Employer, or the financial status of the Employer, or any other
business information concerning the business operations of the Employer, to any
person other than the Board of Directors of the Employer, and shall not use for
her own purpose, or any other purpose than those of the Employer, any
information she may acquire with respect to the Employer's business.
ARTICLE 8. ASSIGNMENT
8.1 Neither party may assign this Agreement without the express prior written
consent of the other party, which may be arbitrarily withheld.
ARTICLE 9. NOTICE
9.1 Any notice, demand, request or approval which may, or is required to be
given, pursuant to the terms of this Agreement, shall be in writing and shall be
sufficiently given or made if served personally on the Employee or a director or
officer of the Employer, or if mailed prepaid registered mail, and in the case
of:
THE EMPLOYEE:
1653 Plateau Crescent, Coquitlam, BC, V3B 1C2
THE EMPLOYER:
61B Fawcett Road, Coquitlam, BC, V3K 6V2
or to such other address as the parties may from time to time by written notice
change. The date of receipt of any such notice, demand, request or approval if
served personally shall be deemed the date of delivery, or if mailed as
aforesaid, the second business day following the date of mailing.
ARTICLE 10. ENUREMENT
10.1 This Agreement shall be effective as of the first day of January 2000 and
enure to the benefit of and be binding upon the heirs, executors, administrators
and permitted assigns of the parties hereto.
<PAGE>
IN WITNESS WHEREOF the Employee has hereunto affixed her hand and seal and the
Employer has hereunto affixed its corporate seal by its officers properly
authorized in that behalf on the day and year above written.
- -------------------------------------
Kimberly Landry
Luna Technologies (Canada) Ltd.
Per:
- -------------------------------------
Robert H. Humber
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