<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR 12(g)
INTERNATIONAL COMMODITY LOGISTICS, INC.
(Name of small business issuer as specified in its charter)
COLORADO 84-1113056
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
300 - 5th Avenue S.W., #620
Calgary, Alberta,
Canada T2P 3C4
(Address, including postal code, of registrant's principal executive offices)
(403) 234-7700
(Telephone number including area code)
Securities to be registered under Section 12(b)
of the Exchange Act: NONE
Securities to be registered under Section 12(g)
of the Exchange Act: COMMON STOCK
<PAGE> 2
INTERNATIONAL COMMODITY LOGISTICS, INC.
FORM 10-SB
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Cautionary Statement Concerning Forward Looking Statements..........................................1
Item 1. Description of Business.............................................................................1
Item 2. Plan of Operation...................................................................................4
Item 3. Description of Property.............................................................................4
Item 4. Security Ownership of Certain Beneficial Owners and Management......................................5
Item 5. Directors, Executive Officers, Promoters and Control Persons........................................5
Item 6. Executive Compensation..............................................................................7
Item 7. Certain Relationships and Related Transactions.....................................................11
Item 8. Legal Proceedings..................................................................................11
Item 9. Market for Common Equity and Related Stockholder Matters...........................................12
Item 10. Recent Sales of Unregistered Securities............................................................12
Item 11. Description of Securities..........................................................................12
Item 12. Indemnification of Directors and Officers..........................................................13
Item 13. Financial Statements..............................................................................F-1
Item 14. Changes in and Disagreements with Accountants......................................................14
Item 15 A. List of Financial Statements...................................................................14
B. Index to Exhibits..............................................................................14
SIGNATURES....................................................................................................15
</TABLE>
ii
<PAGE> 3
PART I (ALTERNATIVE 3)
CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS
THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO
DIFFER FROM THOSE PROJECTED IN FORWARD LOOKING STATEMENTS
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, readers of this document and any document
incorporated by reference herein, are advised that this document and documents
incorporated by reference into this document contain both statements of
historical facts and forward looking statements. Forward looking statements are
subject to certain risks and uncertainties, which could cause actual results to
differ materially for those indicated by the forward looking statements.
Examples of forward looking statements include, but are not limited to (i)
projections of revenues, income or loss, earning or loss per share, capital
expenditures, dividends, capital structure and other financial items, (ii)
statements of the plans and objectives of the Company or its management of Board
of Directors, including the introduction of new products, or estimates or
predictions of actions by customers, suppliers, competitors or regulatory
authorities, (iii) statements of future economic performance, and (iv)
statements of assumptions underlying other statements and statements about the
Company or its business.
This document and any documents incorporated by reference herein also identify
important factors which could cause actual results to differ materially from
those indicated by forward looking statements. These risks and uncertainties
include price competition, the decisions of customers, the actions of
competitors, the effects of government regulation, possible delays in the
introduction of new products, customer acceptance of products and services, and
other factors which are described herein and/or in documents incorporated by
reference herein.
The cautionary statements made pursuant to the Private Litigation Securities
Reform Act of 1995 above and elsewhere by the Company should not be construed as
exhaustive or as any admission regarding the adequacy of disclosures made by the
Company prior to the effective date of such Act. Forward looking statements are
beyond the ability of the Company to control and in many cases the Company
cannot predict what factors would cause results to differ materially from those
indicated by the forward looking statements.
ITEM 1. DESCRIPTION OF BUSINESS
INTERNATIONAL COMMODITY LOGISTICS, INC.
International Commodity Logistics, Inc., formerly known as International Hydro
Carbon Group, Inc. or Roosevelt Capital Corporation ("ICL", the "Company" or the
"Registrant") was incorporated in the State of Colorado on March 15, 1989. The
Company's current business is world wide marketing and brokering of sulphur,
with a proposed Terminal Facility at Ridley Island Terminal, Prince Rupert,
British Columbia, Canada. The Company has two-wholly owned Canadian
subsidiaries: Sulphur Corporation of Canada, Ltd. ("SCC") and Sulport Services
International, Inc. ("SSI"). The Company and its Canadian subsidiaries maintain
administrative offices in Calgary, Alberta, Canada.
In March, 1998, the Company entered into an Agreement and Plan of Merger with
James D. Yamada pursuant to which the Company purchased all of the issued and
outstanding shares of stock of SCC and SSI from Mr. Yamada in exchange for
500,000 shares of the Company's common stock. As a result of the reorganization,
a new slate of officers and directors was elected to the Company.
1
<PAGE> 4
SUBSIDIARIES
SULPHUR CORPORATION OF CANADA, LTD. ("SCC")
SCC, a wholly-owned subsidiary of the Company, was incorporated in the Province
of Alberta, Canada on June 30, 1989 for the purpose of marketing, processing,
and storing North American sulphur, in the international marketplace. SCC is
currently developing a Sulphur Terminal Facility at Ridley Island Terminal in
Prince Rupert in British Columbia, Canada. SCC has reached agreements with
Ridley Terminal, Inc., Prince Rupert Port Authority and Canada Port Corporation
regarding the lease of Port property, exclusive usage of the terminal facility
for sulphur handling and throughput terms and conditions. As proposed, the
Terminal Facility will be the only sulphur handling and exporting terminal
facility in the world capable of storing, processing and loading Canadian
sulphur in both dry and liquid form simultaneously.
As planned, SCC's facility in Prince Rupert is expected be the first and only
facility in the world capable of loading large ships in 24 hours, and having
sulphur available to world markets in both liquid and dry form. It is proposed
to have the first and only enclosed dry sulphur storage capable of handling
75,000 to 100,000 metric tons, and its own forming facility on site.
SCC's main source of revenue will be from a "throughput fee" for storage,
handling and processing of Canadian sulphur. Current major producers in Canada
include companies such as: BP-AMOCO, Alberta Energy Company, Shell Canada
Limited, Husky Oil, etc.
SCC is negotiating several long-term throughput commitments from sulphur
producers and purchasers. The Company's business plan has projected the total
throughput volume over the next 5 years to exceed seven million metric tons.
This projection is based on current sulphur production in Alberta, and world
demand. There can be no assurance that such plans will be successful or that
such projections will be met.
SULPORT SERVICES INTERNATIONAL, INC. ("SSI")
SSI was incorporated in Canada on October 1, 1997 for the purpose of pursuing
marketing and brokering of sulphur world-wide, and is a wholly owned subsidiary
of the Company.
When the Terminal Facility in Prince Rupert is completed, SSI intends to enter
into different aspects of the sulphur industry to diversify within the industry
and widen the source of revenue opportunities for the Company.
THE SULPHUR INDUSTRY
The world sulphur consumption is approximately 50 million metric tons per year.
Canadian sulphur production is over 10 million metric tons annually, of which 7
million metric tons are exported and about 3 million plus metric tons stored on
the ground in Alberta. Canada is currently supplying over 10% of the world
consumption.
Sulphur is used primarily for the production of various fertilizers. As
developing countries change and their economies improve, demand for food supply
has increased accordingly. This trend is escalating, and increasing demand for
fertilizer may push sulphur prices higher. Demand from various heavy industrial
uses has increased as many developing countries are industrializing. The demand
from metal, chemical, and rubber industries is also increasing rapidly.
CURRENT SULPHUR PRICE
The price of solid sulphur at Vancouver is ranging between US$25-35 per metric
ton and the price of molten sulphur at Tampa Florida is ranging between
US$75-$80 per metric ton.
2
<PAGE> 5
SULPHUR TERMINAL FACILITIES IN NORTH AMERICA
There are three major Sulphur Terminal Facilities in North America, namely
"Vancouver, British Columbia, Canada", "Los Angeles, California, USA", and
"Tampa, Florida, USA". Most of the sulphur in the United States is produced and
consumed domestically; only a small percentage is exported.
Vancouver has been the only port in Canada to handle sulphur for export. The
current volume of sulphur exported is approximately 7 million metric tons per
year. Canada is the largest sulphur exporter in the world. There are over 10
million metric tons of sulphur produced every year in Western Canada alone. With
the current expansion plans of major oil and gas producers, production of
sulphur, too, will increase significantly.
PROPOSED SULPHUR HANDLING AND EXPORT TERMINAL AT RIDLEY ISLAND IN PRINCE RUPERT,
B.C.
This facility is proposed to be the first sulphur handling terminal in the world
with a capability of supplying Canadian sulphur to market in both "dry" and
"molten" form from one location. It will be the first to have its own forming
facility with totally enclosed sulphur storage, unlike other facilities in North
America where different types of dry sulphur are comingled and stored in open
storage. All sulphur will be formed on site, with only one type will be
produced, avoiding the problems associated with mixing different types. This
means that buyers can access higher quality sulphur without paying a premium
price. Furthermore, buyers from Asia will save approximately 4 days of ocean
freight time as well as 7 days loading time as opposed to using alternative
facilities.
CURRENT AND FUTURE COMPETITORS
CURRENT COMPETITORS
The proposed facility is being designed to relieve pressure on existing
facilities in North America at Vancouver, Los Angeles and Tampa. It does not, by
design, intend to compete directly with alternative ports.
FUTURE COMPETITORS
The Company believes that there is little chance that any new facilities will be
built to compete directly with the proposed facility in Prince Rupert for the
following reasons:
1. Between Vancouver and Prince Rupert, there is no other
location on the west coast with reasonable railroad access.
2. It could cost as much as US$100 million to build a complete
sulphur handling and export terminal and port infrastructure
in another area.
THE MARKETING OF SULPHUR BY THE COMPANY
The Company, through SSI, proposes to market sulphur utilizing the worldwide
network and connections in the sulphur industry developed over the years by SCC
and the Company's management team.
3
<PAGE> 6
ITEM 2. PLAN OF OPERATION
During the year ended June 30, 1998, the Company acquired two wholly-owned
subsidiary corporations, namely Sulphur Corporation of Canada Ltd. and Sulport
Services International, Inc, to enable the Company to enter into the sulphur
marketing, handling and terminaling business.
Sulphur Corporation of Canada, Ltd., has entered into a series of agreements
with Prince Rupert Port Authority and Ridley Terminals, Inc. in British
Columbia, Canada regarding the exclusive lease of the prime water-front property
at Ridley Terminal and exclusive use of the existing terminal infrastructure for
the handling of sulphur. SCC has started initial construction on the property
for construction of a sulphur handling terminal facility.
The Company must obtain additional funds to allow it to continue its operations
and to allow Sulphur Corporation of Canada, Ltd. to complete the construction
and operation of the sulphur handling terminal facility. The Company anticipates
that between $7.5 and $10 million in funds will be needed over the next twelve
months to complete the project, with approximately $2-$3 million needed within
the next 90 days to allow the project to continue on schedule. The Company is
pursuing various sources of debt and/or equity financing.
The Company, through its subsidiaries, has been negotiating with several
potential "throughput" customers with regard to "Take or Pay" Throughput
Contracts to start upon completion of the terminal.
Various factors affecting the Company raise doubt as to the Company's ability to
continue as a going concern. There can be no assurance that the Company will be
able to continue as a going concern, or achieve material revenues and profitable
operations. The Company requires additional financing. No assurances can be
given that financing will be available to the Company in the amounts required,
or that, if available, the financing will be available on terms satisfactory to
the Registrant.
The Year 2000 issue is the result of computer programs that use two digits
rather than four to define the applicable year. The Company has evaluated its
state of readiness with respect to the Year 2000 issue and has determined that
the potential consequences of the Year 2000 issue should have no material
effects on its business, as the use of date sensitive computer information is
presently very limited and the commercial software used for administrative
purposes is Year 2000 compliant. However, the Company can make no assurances
regarding the impact of the Year 2000 issue on its business as a result of acts
or omissions not within its control, such as acts or omissions of non-affiliated
parties with whom the Company does business.
The financial statements include all adjustments which in the opinion of and to
the best of management's knowledge are necessary to make the financial
statements not misleading.
ITEM 3. PROPERTY
Neither the Company nor its subsidiaries own any property. The Company and its
subsidiaries lease office space in Calgary, Alberta, Canada.
On March 24, 1999, the Company's subsidiary, SCC, entered into a sublease
agreement with Ridley Terminals Inc. to lease four parcels of prime water front
property located on Prince Rupert Harbor to facilitate the establishment of a
sulphur handling facility at Ridley Island Terminal in Prince Rupert, British
Columbia, Canada. The initial term of the sublease expires December 31, 2008
with the right to renew the sublease for two additional ten year periods.
4
<PAGE> 7
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date of this Report, the stock
ownership of each person known by the Registrant to be the beneficial owner of
five percent or more of the Registrant's Common Stock, each Officer and Director
individually and all Directors and Officers of the Registrant as a group. No
other class of voting securities is outstanding. Each person is believed to have
sole voting and investment power over the shares except as noted.
<TABLE>
<CAPTION>
=====================================================================================================
Amount and Nature of
Name and Address of Beneficial Ownership(1)(2) Percent of Class (3)
Beneficial Owner (1)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
James Yamada (4) 3,355,312 25.12%
- -----------------------------------------------------------------------------------------------------
Rod J. MacKenzie (5) 500,000 4.22%
=====================================================================================================
all officers and directors of the 3,855,312 28.86%
Registrant as a group (2 persons)
=====================================================================================================
</TABLE>
(1) Unless otherwise indicated, all shares are directly beneficially owned
and investing power is held by the persons named. The address of each
person is 300 - 5th Avenue S.W., #620, Calgary, Alberta, Canada T2P
3C4.
(2) Includes vested options beneficially owned but not yet exercised and
outstanding.
(3) Based upon 11,857,000 shares issued and outstanding, plus the amount of
shares each person or group has the right to acquire within 60 days
pursuant to options, warrants, conversion privileges or other rights.
(4) Mr. Yamada is an officer and director of the Registrant and each of its
subsidiaries. Beneficial Ownership figure includes 1,500,000 shares
underlying warrants.
(5) Mr. MacKenzie is an officer and director of the Registrant and each of
its subsidiaries. Beneficial Ownership figure includes 100,000 shares
owed by Mr. MacKenzie's wife.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE
COMPANY
(a) Directors and Executive Officers of Registrant. The Registrant has a Board
of Directors (the "Board") which is currently comprised of two members. Each
director holds office until the next annual meeting of shareholders or until a
successor is elected or appointed. The members of the Board and the executive
officers of the Registrant and their respective age and position are as follows:
<TABLE>
<CAPTION>
Director of
Name Age Position with Registrant Registrant Since
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rod J. MacKenzie 52 Chairman, Secretary, Treasurer and Director March, 1998
James Yamada 33 President/CEO and Director March, 1998
</TABLE>
5
<PAGE> 8
Directors and Executive Officers of SCC. The Registrant's subsidiary, SCC, has a
Board of Directors (the "Board") which is comprised of one member who holds
office until the next annual meeting of shareholders or until a successor is
elected or appointed. The members of the Board and the executive officers of SCC
and their respective age and position are as follows:
<TABLE>
<CAPTION>
Director of
Name Age Position with SCC SCC Since
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rod J. MacKenzie 52 President, Secretary, Treasurer and Director July, 1989
James Yamada 33 CEO March 1998
</TABLE>
Directors and Executive Officers of SSI. The Registrant's subsidiary, SSI, has a
Board of Directors (the "Board") which is comprised of two members. Each
director holds office until the next annual meeting of shareholders or until a
successor is elected or appointed. The members of the Board and the executive
officers of SSI and their respective age and position are as follows:
<TABLE>
<CAPTION>
Director of
Name Age Position with SSI SSI Since
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rod J. MacKenzie 52 Director and Secretary November, 1997
James Yamada 33 Director and President November, 1997
</TABLE>
(b) Family Relationships. None.
(c) Involvement in Certain Legal Proceedings. None.
DIRECTORS AND EXECUTIVE OFFICERS
RODERICK ("ROD") J. MACKENZIE: CHAIRMAN, SECRETARY, TREASURER AND A DIRECTOR OF
ICL; PRESIDENT AND A DIRECTOR OF SCC; SECRETARY AND A DIRECTOR OF SSI: Mr.
MacKenzie has been Chairman, Secretary, Treasurer and a Director of the Company
since March 1998; has been President and a Director of SCC since 1989; and has
been Secretary and a Director of SSI since November 1997. He is also a principal
of Global Hydrocarbon Corp. Ltd., which manages the operations of SCC. Mr.
MacKenzie is a highly experienced and respected expert in the international
sulphur industry. He has been responsible for designing and running various
sulphur handling and marketing operations for over 30 years. In Canada, these
include the sulphur forming and marketing operations at the Alberta Oil Sands
site in Fort McMurray, Alberta, and sulphur terminalling facilities in North
Vancouver British Columbia. Mr. MacKenzie has performed global research in the
field and has spoken at various international seminars relating to commodity
marketing and international trade. Mr. MacKenzie has been invited regularly by
groups such as the Canadian Fertilizer Association, the International Fertilizer
Association and various international seminars related to commodity marketing
and international trade. He has contributed his expertise to numerous
professional organizations such as The Canadian Fertilizer Association, The
International Fertilizer Association, and The Sulphur Institute, as well as
various government and privately sponsored forums.
JAMES YAMADA: PRESIDENT/CEO AND A DIRECTOR OF ICL; CHAIRMAN/CEO AND A DIRECTOR
OF SCC; PRESIDENT AND A DIRECTOR OF SSI: Mr. Yamada has been President/CEO and a
Director of the Company and Chairman/CEO and a Director of SCC since March 1998,
and President and a Director of SSI since November 1997. He has extensive
management experience and knowledge heading various public companies and
financing various venture companies in North America and Japan. Mr. Yamada is
also president and CEO of UniStar Products Inc., a private company based in
Washington State and Vancouver, Canada (since March 1996). Prior thereto he was
president of UniComm Signal (now known as Smart Tire Systems, a public company
in both the U.S. and Canada).
6
<PAGE> 9
SIGNIFICANT EMPLOYEES, CONSULTANTS AND ADVISORS
DAVID G. SHEARER: CONSULTING PROJECT MANAGER OF SCC: Mr. Shearer has been a
consultant to SCC since April 1998 and is managing the engineering and
construction of the new sulphur terminal. Mr. Shearer has been a consultant with
Semple Associates since 1998. From 1994 to 1997 he was Vice President of Prince
Rupert Port Corporation, in charge of new business development and technical
services. Prior thereto he was engineer manager at both the Ridley Island coal
and grain terminal projects in Prince Rupert. Mr. Shearer has extensive
knowledge and experience in infrastructure and marine terminal construction
projects. Mr. Shearer is responsible for coordinating permitting with
governmental agencies, such as Environment Canada, Department of Fisheries and
Oceans, and the BC Ministry of Environment.
ALLAN F. SODERBERG: CONSULTING MANAGER OF SULPHUR PROCESS AND DESIGN OF SCC: Mr.
Soderberg has been a consultant to SCC since April 1998 and is managing the
design of the Sulphur Export Terminal in Prince Rupert. Mr. Soderberg has been a
principal of Sultech Consulting Ltd. since 1992, and has extensive knowledge and
many years experience with the design and operation of molten and solid sulphur
forming facilities similar to that which the Company is now constructing. He has
worked on a broad range of projects involving molten sulphur handling and rail
transport, solid sulphur forming and handling, elemental sulphur fertilizer
manufacture and distribution, R&D of new sulphur based material and fertilizers,
sulphur block remelt and purification, sulphur emissions abatement, clean-up and
remediation of sulphur contaminated sites, for various companies in North
America.
ITEM 6. EXECUTIVE COMPENSATION
(a) General
The following information discloses all plan and non-plan compensation awarded
to, earned by, or paid to the executive officers of the Registrant for all
services rendered in all capacities to the Registrant and its subsidiaries. No
executive officer of the Registrant or its subsidiaries received a total annual
salary and bonus exceeding $100,000 for the fiscal year ended June 30, 1998, or
otherwise meets the reporting requirements of Item 402 of Regulation S-B.
(b) Summary Compensation Table
The following table sets forth all compensation, including bonuses, stock option
awards and other payments, paid or accrued by the Registrant and/or its
subsidiaries SCC and SSI, during the fiscal year ended June 30, 1998, to or for
the Registrant's Chief Executive Officer and each of the other executive
officers of the Registrant for the fiscal year ended June 30, 1998.
The Company had no compensated officers in prior years.
7
<PAGE> 10
<TABLE>
<CAPTION>
Annual Compensation
------------------------------------------------------
(a) (b) (c) (d) (e)
Name Other
And Year Annual
Principal Ended Salary Bonus Compensation
Position June 30 ($) ($) ($)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James Yamada, President, CEO, 1998 -0- -0- -0-
Director
Rod J. MacKenzie, Chairman, 1998 74,847 -0- -0-
Secretary, Treasurer, Director(n1)
</TABLE>
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------------------------
Awards Payouts
-----------------------------------------------------
(a) (b) (f) (g) (h) (i)
Name Restricted
And Year Stock Shares LTIP All Other
Principal Ended Award(s) Underlying Payouts Compensation
Position June 30 ($) Options ($) ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James Yamada, 1998 -0- 250,000 -0- -0-
President, CEO, Director
Rod J. MacKenzie, 1998 -0- 150,000 -0- -0-
Chairman, Secretary, Treasurer
and Director
</TABLE>
(n1) Mr. MacKenzie is currently serving without compensation for his
services as an officer and director of the Company and its
subsidiaries. However, Mr. MacKenzie receives compensation indirectly
from the Company's subsidiary, SCC, as a result of a Management
Agreement dated May 2, 1998, among Mr. MacKenzie, Global Hydrocarbon
Corporation Ltd. ("Global"), the Company, SCC and SSI. Mr. MacKenzie is
an officer, director and controlling shareholder of Global. Pursuant to
the Agreement, Global will manage SCC's operations. The Agreement
provides for SCC to compensation Global and/or Mr. MacKenzie as
follows: (1) US$120,000 per year; (2) health, life and disability
insurance; (3) payment of certain membership fees and dues; and (4) use
of an automobile. Also, Global is eligible to receive a bonus of US$.50
per ton of sulphur processed through the proposed facility at Prince
Rupert in excess of 400,000 tons per year.
(c) Option/SAR Grants in Last Fiscal Year
The information provided in the table below provides information with respect to
individual grants of stock options for the year ended June 30, 1998 to each of
the executive officers named in the Summary Compensation Table above. The
Registrant did not grant any stock appreciation rights for the year ended June
30, 1998.
8
<PAGE> 11
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
(a) (b) (c) (d) (e)
% of Total
Number of Options/SARS
Securities Granted to
Underlying Employees Exercise or
Options/SARs in Fiscal Base Price Expiration
Name Granted (#) Year (n1) ($/Sh) Date
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James Yamada, President, CEO, 250,000 17.86% $.10 03/31/01
Director
Rod J. MacKenzie, Chairman, 150,000 10.71% $.10 03/31/01
Secretary, Treasurer and Director
</TABLE>
(n1) The percentage of total options granted to employees in the
fiscal year is based upon all options granted to officers,
directors, employees, etc. in fiscal 1998.
(d) Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The information provided in the table below provides information with respect to
each exercise of stock options during most recent fiscal year by the executive
officers named in the Summary Compensation Table and the fiscal year end value
of unexercised options.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Value FY-End (#) FY-End($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($)(n1) Unexercisable Unexercisable(n1)(n2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James Yamada, -0- -0- 250,000/-0- N/A
President, CEO, Director
Rod J. MacKenzie, -0- -0- 150,000/-0- N/A
Chairman, Secretary,
Treasurer and Director
</TABLE>
(n1) The aggregate dollar values in columns (c) and (e) are
calculated by determining the difference between the fair
market value of the common stock underlying the options and
the exercise price of the options at exercise or fiscal year
end, respectively. In calculating the dollar value realized
upon exercise, the value of any payment of the exercise price
is not included. As of June 30, 1998, there was no market for
common stock of the Company.
9
<PAGE> 12
(n2) Subsequent to the year ended June 30, 1998, in May and June of
1999, both Mr. Yamada and Mr. MacKenzie exercised all of their
options. At the time of exercise, there was no market for the
common stock of the Company.
(e) Long-Term Incentive Plans ("LTIP") - Awards in Last Fiscal Year
This table has been omitted, as no executive officers named in the Summary
Compensation Table above received any awards pursuant to any LTIP during fiscal
1998.
(f) Compensation of Directors
No compensation was paid by the Registrant to its Directors for any service
provided as a director during the fiscal year ended June 30, 1998. There are no
other formal or informal understandings or arrangements relating to
compensation; however, Directors may be reimbursed for all reasonable expenses
incurred by them in conducting the Registrant's business. These expenses would
include out-of-pocket expenses for such items as travel, telephone, and postage.
(g) Employment Contracts and Termination of Employment and
Change-in-Control Arrangements
Mr. MacKenzie receives compensation indirectly from the Company's subsidiary,
SCC, as a result of a Management Agreement dated May 2, 1998, among Mr.
MacKenzie, Global Hydrocarbon Corporation Ltd. ("Global"), the Company, SCC and
SSI. Mr. MacKenzie is an officer, director and controlling shareholder of
Global. Pursuant to the Agreement, Global will manage SCC's operations. The
Agreement provides for SCC to compensate Global and/or Mr. MacKenzie as follows:
(1) US$120,000 per year; (2) health, life and disability insurance; (3) payment
of certain membership fees and dues; and (4) use of an automobile. Also, Global
is eligible to receive a bonus of US$.50 per ton of sulphur processed through
the proposed facility at Prince Rupert in excess of 400,000 tons per year. The
term of the management agreement is a minimum term of ten years or the duration
of certain agreements among SCC, Prince Rupert Port Authority and Ridley
Terminals, Inc., if longer.
As of the date of this report the Registrant has no additional employment
contracts or termination of employment and change-in-control arrangements in
effect for any executive officers identified in the Summary Compensation Table
above. However, the Registrant intends to enter into a written employment
contract with James Yamada.
The Registrant's Board of Directors has complete discretion as to the
appropriateness of (a) key-man life insurance, (b) obtaining officer and
director liability insurance, (c) employment contracts with and compensation of
executive officers and directors, (d) indemnification contracts, and (e)
incentive plan to award executive officers and key employees.
The Registrant's Board of Directors is responsible for reviewing and determining
the annual salary and other compensation of the executive officers and key
employees of the Registrant. The goals of the Registrant are to align
compensation with business objectives and performance and to enable the
Registrant to attract, retain and reward executive officers and other key
employees who contribute to the long-term success of the Registrant. The
Registrant intends to provide base salaries to its executive officers and key
employees sufficient to provide motivation to achieve certain operating goals.
Although salaries are not specifically tied into performance, incentive bonuses
may be available to certain executive officers and key employees. In the future,
executive compensation may include without limitation cash bonuses, stock option
grants and stock reward grants. In addition, the Registrant may set up a pension
plan or similar retirement plans.
(h) Report on Repricing of Options/SARs. - Not applicable.
10
<PAGE> 13
(i) Employee Benefit and Consulting Services Compensation Plan
On March 30, 1998, the Registrant adopted an employee benefit and consulting
services compensation plan (the "Plan"), covering 1,400,000 shares of the
Registrant's common stock. Under the Plan, the Registrant may issue common stock
and/or options to purchase common stock to certain officers, directors and
employees and consultants of the Registrant and its subsidiaries. The purpose of
the Plan is to promote the best interests of the Registrant and its shareholders
by providing a means of non-cash remuneration to eligible participants who
contribute to operating progress and earning power of the Registrant. The Plan
is administered by the Registrant's Board of Directors or a committee thereof
which has the discretion to determine from time to time the eligible
participants to receive an award; the number of shares of stock issuable
directly or to be granted pursuant to option; the price at which the option may
be exercised or the price per share in cash or cancellation of fees or other
payment which the Registrant or its subsidiaries is liable if a direct issue of
stock and all other terms on which each option shall be granted. As of the
fiscal year ended June 30, 1998, options to acquire 1,400,000 shares covered by
the Plan had been granted, all at an exercise price of $.10 per share, and are
fully vested, including grants to the following Officers and Directors of the
Registrant to acquire the number of shares indicated: Rod J. MacKenzie, 150,000
options; and James Yamada, 250,000 options. Also, Mr. MacKenzie's spouse was
granted 100,000 options.
Subsequent to year end, in May and June of 1999, all options granted under the
Plan were exercised. Shares of common stock issued pursuant to the Plan are
deemed to be issued pursuant to Rule 701 of the Securities Act of 1933 and are
restricted securities as defined in Rule 144(a)(3) of the Securities Act of
1933. Ninety days after the effective date of this registration statement,
participants in the Plan, including affiliates, may sell their shares in
accordance with the exemption provided by Rule 701 without being bound by the
one year holding period under Rule 144(d).
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 24, 1998, in connection with the reorganization of the Registrant, the
Registrant issued 500,000 shares of restricted common stock to James Yamada in
consideration of his 100% interest in both SCC and SSI. The amount paid was
based on arms-length negotiations between Mr. Yamada and the former management
of the Company.
On March 31, 1998, in connection with the reorganization of the Registrant, the
Registrant issued 1,500,000 warrants to James Yamada at an exercise price of
$1.10 per share. These warrants expire on March 30, 2002.
In May of 1998, Global, the Company, SCC and SSI entered into a Management
Agreement with the Company's subsidiary, SCC. Rod MacKenzie, an officer and
director of the Company, is an officer, director and controlling shareholder of
Global. Pursuant to the Management Agreement, Global receives a management fee
of US$120,000 per year. This management fee is subject to annual escalation tied
to, among other things, the Consumer Price Index and contains certain bonus
incentives, which are directly related to amounts of sulphur processed at the
Ridley Island Terminal. The term of the management agreement is a minimum term
of ten years or the duration of certain agreements among the Company, Prince
Rupert Port Authority and Ridley Terminals, Inc., if longer.
ITEM 8. LEGAL PROCEEDINGS
The Company is not a party to any pending material legal proceeding.
11
<PAGE> 14
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company is presently a privately-held company and there is no market for its
shares. As of July 31, 1999, there were 11,857,000 shares of common stock
outstanding, held by 109 shareholders of record and no shares of preferred stock
outstanding.
The Company has never paid cash dividends on its common stock. The Company
presently intends to retain future earnings, if any, to finance the expansion of
its business and does not anticipate that any cash dividends will be paid in the
foreseeable future. Future dividend policy will depend on the Company's
earnings, capital requirements, financial conditions and other relevant factors.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of securities of
the Registrant without registration within the past three years. No such sales
involved the use of an underwriter and no commissions were paid in connection
with the sale of any securities.
(a) Pursuant to an agreement and plan of reorganization between the Registrant
and James D. Yamada, individually and on behalf of SCC and SSI dated March 24,
1998, pursuant to which SCC and SSI became wholly-owned subsidiaries of the
Registrant, James Yamada, who owned 100% of SCC and SSI, was issued a total of
500,000 shares of restricted common stock of the Registrant in exchange for his
interest in SCC and SSI. The Registrant believes that the transaction was
consummated in reliance on Sections 4(2) and/or 4(6) of the Securities Act of
1933.
(b) In connection with the reorganization of the Registrant, on March 31, 1998,
the Registrant issued warrants to acquire 300,000 shares of common stock at an
exercise price of $.10 per share, which expire on March 30, 2003; and warrants
to acquire 3,500,000 shares of common stock at an exercise price of $1.10 per
share, which become exercisable on December 31, 1999 and expire on March 30,
2002. The Registrant believes that the issuance of these warrants was exempt
from registration pursuant to Sections 4(2) and/or 4(6) of the Securities Act of
1933.
(c) In April of 1998, pursuant to an employee benefit and consulting services
compensation plan, options to acquire 1,400,000 shares of common stock were
granted, at exercise prices of $.10 per share, including grants to certain
Officers and Directors of the Registrant. The grant of these options, and
subsequent issuance of shares upon exercise thereof, were exempt from
registration under Rule 701 of the Securities Act of 1933.
(d) Between May of 1998 and March of 1999, the Registrant made a private
placement of 957,000 shares of common stock in consideration of services
rendered and cash, at per share prices ranging from $.01 to $1.10, as determined
by the board of directors. No commissions were paid. The Registrant believes
that this offering was exempt from registration under Section 504 of Regulation
D of the Securities Act of 1933, as amended.
ITEM 11. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 100,000,000 shares of
common stock, no par value and 10,000,000 shares of preferred stock, no par
value.
COMMON STOCK
Each holder of shares of common stock is entitled to one vote for each share
held on all matters to be voted upon by the shareholders generally. The shares
do not have cumulative voting rights, which means that holders of more than 50%
of the shares of common stock voting for the election of directors can elect all
the directors, and that in such an event the holders of the remaining shares
would not be able to elect a
12
<PAGE> 15
single director. Holders of shares of common stock are entitled to receive
pro-rated such dividends, if any, as may be declared from time to time by the
Board of Directors out of funds legally available therefor. In the event of
liquidation, dissolution or winding up of the Company, the holders of shares of
common stock are entitled to share pro-rated in all assets remaining after
payment of liabilities. Shares of common stock have no preemptive, conversion or
other subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock.
As of July 31, 1999, there were 11,857,000 shares of common stock outstanding,
held of record by approximately 109 shareholders.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the Company to issue
10,000,000 shares of preferred stock, no par value. None are issued. The
preferred stock may be divided into and issued in one or more series as may be
determined by resolution of the Board of Directors. The Board of Directors is
authorized, without any further action by the shareholders, to determine
dividend rates, liquidation preferences, redemption provisions, sinking fund
provisions, conversion rights, voting rights, and other rights, preferences,
privileges and restrictions of any wholly unissued series of preferred stock and
the number of shares constituting any such series.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Articles of Incorporation and Bylaws provided the Registrant
may indemnify a controlling person, office or director from liability for acting
in such capacities, to the full extent permitted by the law of the State of
Colorado. The Articles of Incorporation further provide that, to the full extent
permitted by the Colorado Business Corporation Act, as the same exists or may
hereafter be amended, a director or officer of the Registrant shall not be
liable to the Registrant or its shareholders for monetary damages for breach of
fiduciary duty as a director or officer.
13
<PAGE> 16
Item 13. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
CONSOLIDATED FINANCIAL STATEMENTS
With
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
June 30, 1998, December 31, 1997 and 1996
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Certified Public Accountants F-2
Consolidated Financial statements:
Consolidated Balance Sheet F-3
Consolidated Statements of Operations F-4
Consolidated Statement of Changes in F-5
Stockholders' (Deficit)
Consolidated Statements of Cash Flows F-7
Notes to Consolidated Financial Statements F-8
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Nine Months Ended March 31, 1999
Consolidated Financial statements:
Consolidated Balance Sheet F-13
Consolidated Statements of Operations F-14
Consolidated Statement of Changes in F-15
Stockholders' (Deficit)
Notes to Consolidated Financial Statements F-16
</TABLE>
F-1
<PAGE> 17
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
International Commodity Logistics, Inc.
Calgary, Alberta
We have audited the accompanying consolidated balance sheet of International
Commodity Logistics, Inc. and Consolidated Subsidiaries (a development-stage
company) as of June 30, 1998, and the related consolidated statements of
operations; stockholders' (deficit) and cash flows for the six month period
ended June 30, 1998 and for the two years ended December 31, 1997 and 1996 and
from March 15, 1989 (date of inception) through June 30, 1998. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements, referred to above, present fairly, in
all material respects, the financial position of International Commodity
Logistics, Inc. and consolidated subsidiaries (a development-stage company) as
of June 30, 1998: and the results of its operations, changes in its
stockholders' (deficit) and its cash flows for the six month period ended June
30, 1998 and for the two years ended December 31, 1997 and 1996 and from March
15, 1989 (date of inception) through June 30, 1998; in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has a net capital deficiency as of June 30,
1998 and has no ongoing revenue producing business operations. These factors
raise substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters is also described in Note 1. The
financial statements do not include any adjustments that may result from the
outcome of this uncertainty.
/s/ Schumacher and Associates, Inc.
Schumacher and Associates, Inc.
Certified Public Accountants
12,835 E. Arapahoe Road
Tower II, Suite 110
Englewood, Colorado 80112
January 21, 1999
F-2
<PAGE> 18
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
CONSOLIDATED BALANCE SHEET
June 30, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets
Cash $ 45,350
Other 16,389
------------
Total Current Assets 61,739
Goodwill, net of accumulated amortization of $18,272 347,170
Furniture and equipment, net of accumulated
depreciation of $8,847 1,557
Other 483
------------
TOTAL ASSETS $ 410,949
============
LIABILITIES AND STOCKHOLDERS'(DEFICIT)
Current Liabilities
Accounts payable 34,169
Unearned income 66,669
Due to related parties 459,365
Other liability 114,298
------------
Total Current Liabilities 674,501
------------
TOTAL LIABILITIES 674,501
------------
Commitments and contingencies
(Note 1,2,3,6 and 7) --
Stockholders' (Deficit):
Preferred stock, no par value,
10,000,000 shares authorized
none issued and outstanding --
Common stock, no par value,
100,000,000 shares authorized,
10,125,500 shares issued and outstanding 92,530
Accumulated (Deficit) (356,082)
------------
TOTAL STOCKHOLDERS' (DEFICIT) (263,552)
------------
TOTAL LIABILITIES AND STOCKHOLDERS'(DEFICIT) $ 410,949
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 19
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From March 15, 1989
(date of inception)
through
Six Months Ended Years Ended December 31, June 30, 1998
---------------- ----------------------------- ---------------
June 30, 1998 1997 1996
<S> <C> <C> <C> <C>
Revenue $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
Expenses:
Consulting fees 196,084 -- -- 196,084
Rent 17,458 -- -- 17,458
Stock issued for services 5,500 -- -- 5,500
Advertising and promotion 2,892 -- -- 2,892
Amortization of goodwill 18,272 -- -- 18,272
Salaries 27,940 -- 27,940
Other 87,839 -- -- 87,936
------------ ------------ ------------ ------------
355,985 356,082
------------ ------------
Net (Loss) $( 355,985 ) $ -- $ -- $ (356,082)
============ ============ ============ ============
Per Share $ (.04) $ -- $ -- $ (.04)
============ ============ ============ ============
Weighted Average Shares Outstanding 9,562,750 9,000,000 9,000,000 9,056,275
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 20
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
From March 15, 1989 through June 30, 1998
<TABLE>
<CAPTION>
Common Stock Common Stock Accumulated
No./Shares Amount (Deficit) Total
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Balance of
March 15,1989 -- $ -- $ -- $ --
Common stock issued
During 1989 for cash
At $0.00003 per share 9,000,000 300 -- 300
Net loss 1989
Through 1995 -- -- (97) (97)
-------------- -------------- -------------- --------------
Balance at Dec. 31, 1995 9,000,000 300 (97) 203
Net Loss-year ended
Dec. 31, 1996 -- -- -- --
-------------- -------------- -------------- --------------
Balance at Dec. 31, 1996 9,000,000 300 (97) (203)
Net Loss-year ended
Dec. 31, 1997 -- -- -- --
-------------- -------------- -------------- --------------
Balance at Dec. 31, 1998 9,000,000 300 (97) 203
Common Stock
Issued:
March 31, 1998
Acquisition of Sulphur and Sulport,
at $.01 per share 500,000 5,000 -- 5,000
April 23, 1998
for services,
at $.01 per share 550,000 5,500 -- 5,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 21
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT), CONTINUED
From March 15, 1989 through June 30, 1998
<TABLE>
<CAPTION>
Common Stock Common Stock Accumulated
No./Shares Amount (Deficit) Total
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
May 26, 1998
through June 30, 1998,
for cash
at $1.10 per share 75,500 81,730 -- 81,730
Net Loss-six months
ended June 30, 1998 (355,985) (355,985)
---------- --------- ---------- ----------
Balance at
June 30, 1998 10,125,500 $ 92,530 $ (356,082) $(263,552)
========== ========= =========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 22
INTERNATIONAL COMMODITY LOGISTICS, INC
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From March 15, 1989
(date of inception)
Six Months Ended Years Ended December 31, through
June 30, 1998 1997 1996 June 30,1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Cash flows from Operating
Activities:
Net (loss) $ (355,985) $ -- $ -- $ (356,082)
Amortization of goodwill 18,272 -- -- 18,272
Increase in accounts payable 34,169 -- -- 34,169
-------------- -------------- -------------- --------------
Net Cash (Used In) Operating
Activities (303,544) -- -- (303,641)
-------------- -------------- -------------- --------------
Cash Flows from Investing
Activities:
Acquisition of equipment (1,557) -- -- (1,557)
-------------- -------------- -------------- --------------
Net Cash (used in) Investing
Activities (1,557) -- -- (1,557)
-------------- -------------- -------------- --------------
Cash Provided by Financing
Activities:
Common stock issued 87,230 -- -- 87,230
Advances from related parties 263,221 -- -- 263,318
-------------- -------------- -------------- --------------
Net Cash Provided by Financing
Activities 350,451 -- -- 350,548
-------------- -------------- -------------- --------------
Increase in Cash 45,350 -- -- 45,350
Cash, Beginning of Period -- -- -- --
Cash, End of Period $ 45,350 $ -- $ -- $ 45,350
============== ============== ============== ==============
Interest Paid $ 1,667 $ -- $ -- $ 1,667
============== ============== ============== ==============
Income Taxes Paid $ -- $ -- $ -- $ --
============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
Note: Effective March 31, 1998 the Company acquired Sulphur Corporation of
Canada and Sulport Services International, Inc. in exchange for the issuance of
500,000 of common stock.
F-7
<PAGE> 23
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development- stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998, December 31, 1997 and 1996
(1) Summary of Accounting Policies
A summary of the significant accounting policies consistently applied
in the preparation of the accompanying financial statements follows:
(a) Organization and Principles of Consolidation
International Commodity Logistic, Inc., (ICLI) formerly
Roosevelt Capital Corporation, was incorporated under the laws
of Colorado on March 15, 1989. Effective March 31, 1998 ICLI
acquired all of the outstanding stock of Sulphur Corporation
of Canada, Ltd. (Sulphur) and Sulport Services International,
Inc. (Sulport) in exchange for 500,000 shares of ICLI common
stock. References to the Company relate to ICLI and its
wholly-owned consolidated subsidiaries. Sulphur and Sulport
have focused their activities on attempting to develop a new
Sulphur Terminal Project with the Port of Prince Rupert in
British Columbia, Canada. Sulphur and Sulport were
incorporated under the Canada Business Corporations Act on
October 23, 1989 and November 26, 1997, respectively.
The consolidated financial statements include the accounts of
ICLI since inception and the accounts of Sulphur and Sulport
since March 31, 1998, date of acquisition. All intercompany
accounts have been eliminated in consolidation.
The business combination of ICLI with Sulphur and Sulport has
been accounted for as of purchase of Sulphur and Sulport by
ICLI.
The net purchase price has been allocated as follows:
<TABLE>
<S> <C>
Goodwill $ 366,443
Current assets 13,400
Furniture and equipment 1,557
Current liabilities (384,550)
---------
(3,150)
Net cash acquired 8,150
---------
Consideration $ 5,000
=========
</TABLE>
The consideration consisted of 500,000 shares of restricted
common stock of ICLI valued at $.01 per share on March 31,
1998.
The Company is considered to be a development-stage company
since principal planned operation have not yet commenced.
The Company has selected June 30 as its fiscal year end.
(b) Per Share Information
Per share information is based upon the weighted average
number of shares outstanding during the period.
F-8
<PAGE> 24
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998, December 31, 1997 and 1996
(1) Summary of Accounting Policies (Continued)
(c) Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could
differ from those estimates.
(d) Going Concern
At June 30, 1998 the Company has a net capital deficiency and
has no ongoing revenue producing business operation. These
factors raise substantial doubt about its ability to continue
as a going concern. If the Company does not establish revenue
producing business operations or obtain additional financing,
the Company may be unable to continue as a going concern. The
financial statements do not include any adjustments that may
result from the outcome of this uncertainty. Management has,
as disclosed above, completed a business combination and is
attempting to raise additional capital.
(e) Currency Translation
The Company's subsidiaries are Canadian companies and do
business principally in Canada. Since ICLI is a U.S.A.
company, all of the accounts of the subsidiaries included in
the financial statements have been converted to U.S. dollars.
(f) Goodwill and Related Amortization
Goodwill is amount of $366,104 related to the excess of the
cost over fair value of net assets of Sulphur and Sulport
acquired is being amortized on a straight-line basis over a
five-year period.
It is management's policy to review its intangible assets
including goodwill on a periodic basis, at least quarterly to
determine if there is any impairment in the carrying value. As
of June 30, 1998 management believes that there is no
impairment in the carrying value of the goodwill.
(g) Unearned Income
Sulport has sold $66,667 of Throughput Dividend Contracts
where Sulport has agreed to pay $.50 (Canadian dollars) per
metric ton for five years commencing the date of first
shipment of sulphur from the Sulport facility. Since Sulport
has not commenced any shipment of sulphur, the funds received
have been accounted for as unearned income. Upon commencement
of shipment of sulphur, the unearned income will be amortized
over the five-year period.
F-9
<PAGE> 25
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998, December 31, 1997 and 1996
(2) Related Party Transactions
As June 30, 1998 the Company had $ 459,365 payable to related parties.
Of this amount $133,333 is collateralized by all of the assets of the
Company, bears interest at 2% per month, interest is payable monthly
and the principal is due six months from the date of the advances which
were received at various dates between April 30, 1998 and June 27,
1998. The remaining balances of the advances from related parties have
no written repayment terms, bear no interest and are uncollaterized.
Included in amounts due to related parties is $105,000 related to
consulting services of which $25,000 was paid by the Company's
President on behalf of the Company and $80,000 payable to an entity
owned by a shareholder of the Company.
(3) Other Liability
Prior to June 30, 1997 Sulphur had received advances in the amount of
$114,298. Sulphur received these funds from an unrelated third party as
part of a verbal agreement whereby the third party would provide
certain funding related to the development of the Sulphur Terminal
Project. Sulphur believes that it has no responsibility to repay these
funds since the third party has, verbally indicated that no further
funding for the project would be provided; but has shown the balance as
a liability due to the contingency. The ultimate resolution and effects
of this matter cannot presently by determined.
(4) Furniture and Equipment
The Company's furniture and equipment consists principally of office
furniture and equipment carried at historical cost and being
depreciated on a straight-line basis over five years.
(5) Stock Issued For Services
Effective April 23, 1998, 100,000 shares of the ICLI common stock was
issued for legal services valued at $1,000. In addition effective
April 23, 1998 450,000 shares of ICLI common stock were issued for
consulting services valued at $4,500.
(6) Warrants and Options Outstanding
Effective March 30, 1998 the Company adopted an Employee Benefit and
consulting services Compensation Plan whereby 1,400,000 options to
acquire common stock of the company were authorized to be granted to
various employees, consultants and advisors. Effective April 1,1998 the
1,400,000 options were granted and are exercisable at $.10 per share at
any time through March 31, 2001.
F-10
<PAGE> 26
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998, December 31, 1997 and 1996
(6) Warrants and Options Outstanding (Continued)
On March 31, 1998 the Company granted 100,000 warrants to an entity
owned by a shareholder of the Company, allowing the entity the right to
acquire 100,000 shares at $.10 per share at anytime through March 30,
2003. These warrants were granted as part of the consideration for
consulting services provided to the company.
In addition, on March 31, 1998 the Company granted 1,500,000 warrants
to the Company's President and 1,000,000 each to two other individuals,
allowing them to an equal number of shares of the Company's common
stock at $1.10 per share at any time between December 31, 1999 and
March 30, 2002.
No compensation expense was recorded for any of the options or warrants
because the option prices exceeded the estimated current market value
of the common stock and compensation would be immaterial.
(7) Private Placement of Common Stock
Effective May 1, 1998 the Company's board of directors approved the
offering of up to $1,000,000 of the Company's common stock through a
private placement. As of June 30, 1998, 75,500 shares of the Company's
common stock were sold through this private placement at $1.10 per
share.
(8) Stock Split and Reduction in Authorized Stock
Effective February 10, 1998 the Company effected a 12-for-one stock
split. All referenced to common stock issued and outstanding have been
retroactively adjusted to give effect to this stock split.
Effective April 16, 1998 the Company amended its articles of
incorporation to reduce the authorized common stock from 800,000,000
shares to 100,000,000 shares. The amendment also authorized 10,000,000
shares of no par value preferred stock, which may be issued in one or
more series at the discretion of the board of directors.
(9) Income Taxes
As of June 30, 1998, ICLI has approximately $278,000 of USA net
operating losses expiring in years through 2013; available to offset
future taxable income, if any. As of June 30, 1998 ICLI had deferred
tax assets of approximately $56,000 related to new operating loss
carryovers. A valuation allowance has been provided for the total
amount since the amounts, if any, of future revenues necessary to be
able to utilize the carryovers are uncertain.
(10) Subsequent Event
In September, 1998 a lawsuit was filed against the Company claiming
unpaid consulting fees of $30,000. The Company has denied that any
amounts were owed but settled this matter with an agreement to pay the
$30,000 to avoid the costs of litigation.
F-11
<PAGE> 27
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended March 31, 1999
<TABLE>
<CAPTION>
Page
----
<S> <C>
Consolidated Balance Sheets
March 31, 1999 (unaudited)
and June 30, 1998 F-13
Consolidated Statement of Operations
for the year ended June 30, 1999 and
for the nine months ended March 31, 1999 and 1998 (unaudited) F-14
Consolidated Statement of Changes in Stockholder's (Deficit)
for the year ended June 30, 1999 and
for the nine months ended March 31, 1999 and 1998 (unaudited) F-15
Notes to Consolidated Financial Statements
for the nine months ended March 31 ,1999 F-16 - F-17
</TABLE>
F-12
<PAGE> 28
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
March 31, June 30,
1999 1998
--------- --------
(Audited)
<S> <C> <C>
CURRENT ASSETS
Cash on hand and at banks $ 781 45,350
Accounts receivable - net of allowance for doubtful accounts 21,047 13,887
Deposits and prepaid expenses 2,985
--------- --------
Total Current Assets 21,828 62,222
CAPITAL ASSETS: Office furniture and equipment - depreciated value 2,500 1,557
GOODWILL: arising on subsidiary acquisition - unamortized value 292,354 347,170
--------- --------
TOTAL ASSETS $ 316,682 410,949
========= ========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Bank overdrafts and loans $ 29,058
Refundable subscriptions 1,100
Accounts payable 111,954 33,071
Loans payable 120,300
Due to related parties 153,519 459,365
Other liability 114,298
--------- --------
Total Current Liabilities 414,832 607,834
--------- --------
DEFERRED REVENUE: Sulphur through-put royalties 291,667 66,667
--------- --------
SHAREHOLDER'S EQUITY
Share Capital - Authorized: 100,000,000 common shares of n.p.v
10,000,000 preferred shares of n.p.v
Issued and fully paid: 10,457,000 common shares $ 449,050 92,530
Options exercised and paid: 1,400,000 common shares due to be issued 140,000
Accumulated (Deficit) (978,866) (356,082)
--------- --------
Total Shareholders' (Deficit) (389,817) (263,552)
--------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 316,682 410,949
========= ========
</TABLE>
F-13
<PAGE> 29
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
CONSOLIDATED STATEMENT OF OPERATIONS
For The Nine Months Ended March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months Year
Ended Ended Ended
March 31, March 31, June 30,
1999 1998 1998
------------ ----------- ----------
ADMINISTRATION AND OVERHEAD (Audited)
<S> <C> <C> <C>
Accounting fees and costs $ 30,122 1,833
Advertising, promotion and business development 5,210 2,892
Audit fees and costs 24,009
Automobile and truck expenses 10,348 411
Bad debts and uncollectible accounts 556 203 203
Bank and other charges and interest 2,060 15 172
Computer operating, contract labour and lease 16,183 2,111 4,223
Consulting fees and costs - financial 61,565 34,342 136,084
Consulting fees: clerical 1,725 3,470 6,940
Consulting fees: engineering 211,180
Delivery, couriers, and postage 6,397 1,933 3,867
Depreciation of capital assets 339 61 122
Drafting, mapping, plotting and reprographics 11,558
Foreign exchange (14,012) 7,860
Goodwill amortization 54,816 18,272
Graphics and desk-top publishing 21,110 3,014 6,029
Insurance premiums 10,414 134
Interest on loans and advances 18,418 1,667
Legal fees and costs 30,905 19,700
Licenses, permits and business taxes 4,136
Management fees 90,219 30,000 60,000
Port Rental - Prince Rupert, British Columbia, Canada 23,333
Rental of office premises 40,421 8,729 17,458
Salaries and employee benefits 19,702 4,000 8,000
Stationery, office supplies and expenses 9,569 97 439
Surveying, site evaluation and reports 7,817
Telecommunications: phone, fax, cellular 19,355 9,439 18,878
Transfer and CUSIP fees and costs 883
Travelling 18,746 2,506 10,712
Executive assistant 10,500 21,000
Other 1,843 3,686
Stock issued for services 5,500
------------ --------- ---------
Total administration and overhead expenditure 737,082 112,263 356,082
"Other liability" taken by management as unliquidated damages $ (114,298)
Accumulated Deficit - beginning of period 356,082
------------ --------- ---------
ACCUMULATED DEFICIT - end of period $ 978,866 112,263 356,082
============ ========= =========
Net Loss per share 0.06 0.01 0.04
Shares outstanding - quarterly weighted average 10,454,350 9,100,000 9,325,100
</TABLE>
F-14
<PAGE> 30
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' (DEFICIT) For The Nine
Months Ended March 31st, 1999 (Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months Year
Ended Ended Ended
March 31, March 31, June 30,
1999 1998 1998
----------- ----------- ---------
(Audited)
<S> <C> <C> <C>
SOURCE OF FUNDS
Sale of shares in the capital stock of the Company $ 496,520 5,000 92,230
Sale of royalties in future through-put sulphur contracts 225,000 66,667 66,667
--------- -------- --------
Total Funds Provided 721,519 71,667 158,897
--------- -------- --------
FUNDS USED FOR
Total administration and overhead expenditure $ 622,784 112,263 356,082
Less: depreciation of capital assets and goodwill 55,155 61 18,394
--------- -------- --------
Net administration and overhead expenditure used 567,630 112,202 337,688
Acquisition of capital assets 1,281 1,679
Goodwill arising on acquisition/consolidation of subsidiaries 365,442
--------- -------- --------
Total Funds Used 568,911 112,202 704,809
--------- -------- --------
NET FUNDS PROVIDED (USED) $ 152,608 (40,535) (545,912)
Working Capital (Deficiency) - beginning of period (545,612) (545,612) 300
--------- -------- --------
WORKING CAPITAL (DEFICIENCY) - end of period (393,004) (586,147) (545,612)
========= ======== ========
Working Capital consists of:
Total Current Assets $ 21,828 84,082 62,222
Less: Total Current Liabilities 414,832 670,229 607,834
--------- -------- --------
Working Capital (Deficiency) - end of period $(393,004) (586,147) (545,612)
========= ======== ========
</TABLE>
F-15
<PAGE> 31
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended March 31st 1999 (Unaudited)
(1) Related Party Transactions
As at March 31st, 1999 the Company had $ 273,819 payable to related
parties and note-holders. $ 120,300 is secured by all of the assets of
the Company, bears interest at 2% per month payable monthly, and the
principal is due six months from the date of the advances which were
received at various dates between April 30th, 1998 and August 13th,
1998. Advances from related parties have no written repayment terms,
bear no interest, and are unsecured.
Included in amounts due to related parties is $ 66,524 related to
consulting services by an entity owned by a shareholder of the Company.
(2) Other Liability - Contingent Liability
Prior to June 30th, 1997 Sulphur Corporation of Canada Ltd. had
received advances in the amount of $ 114,298 from an unrelated third
party as part of a verbal agreement whereby the third party would
provide certain funding related to the development of the Sulphur
Terminal Project. Management of Sulphur Corporation of Canada Ltd.
believes it has no responsibility to repay these funds as the third
party has verbally indicated that no further funding for the project
would be provided. Although in two years there has been no
communication from the third party regarding this matter, the ultimate
resolution and effects of this matter cannot presently be determined.
It is to be noted that the Company may have a contingent liability of $
114,298.
(3) CAPITAL ASSETS
The Company's furniture and equipment consists mainly of office
furniture and equipment carried at historical cost depreciated on a
straight-line basis over five years. A computer was acquired by the
Company in March 1999.
(4) Stock Issued For Services
Effective April 23rd, 1998 100,000 shares in the capital stock of
International Commodity Logistics Inc. were issued for legal services
valued at $ 1,000 and 450,000 shares were issued for consulting
services valued at $ 4,500. Pursuant to a settlement with a consultant
10,000 shares in the capital stock of International Commodity Logistics
Inc. were issued for consulting services with an ascribed value of $
11,000.
(5) Warrants and Options Outstanding
Effective March 30th, 1998 the Company adopted an Employee Benefit and
Consulting Services Compensation Plan whereby 1,400,000 options to
acquire common shares in the capital stock of International Commodity
Logistics Inc. were authorized to be granted to various employees,
consultants and advisors. Effective April 1st, 1998 the 1,400,000
options were granted and are exercisable at $ 0.10 per share at any
time through March 31st, 2001. As at March 31st, 1999 all options were
paid and exercised, and shares were allotted but unissued.
On March 31st, 1998 the Company granted 100,000 warrants to an entity
owned by a shareholder of the Company allowing the entity the right to
acquire 100,000 shares in the capital stock of International Commodity
Logistics Inc. at $ 0.10 per share at any time up to and including
March 30th, 2003. These warrants were granted as part of the
consideration for consulting services provided to the Company.
F-16
<PAGE> 32
INTERNATIONAL COMMODITY LOGISTICS, INC.
AND CONSOLIDATED SUBSIDIARIES
(a development-stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONT.
For the Nine Months Ended March 31st 1999 (Unaudited)
On March 31st, 1998 the Company granted 1,500,000 warrants to the
Company's President and 1,000,000 warrants to each of two other
individuals, entitling them to an equal number of shares in the capital
stock of International Commodity Logistics Inc. at $ 1.10 per share
exercisable from January 1st, 2000 to March 29th, 2002 inclusive.
No compensation expense was recorded for any of the options or warrants
because the exercise prices exceeded the current market value of the
common stock and such compensation would be immaterial or non-existent.
(6) Private Placement of Common Stock
Effective May 1st, 1998 the Company's Board of Directors approved an
offering of up to $ 1,000,000 of the Company's common stock through a
private placement. As at March 31st, 1999, 447,700 shares of the
Company's common stock were sold through this private placement at $
1.10 per share, including the 10,000 shares at (4) above.
(7) Effective February 10th, 1998 the Company effected a 12-for-1 stock
split. All references to common stock issued and outstanding have been
adjusted to give effect to this stock split.
Effective April 16th, 1998 the Company amended its articles of
incorporation to reduce the authorized common stock from 800,000,000
shares to 100,000,000 shares. The amendment also authorized 10,000,000
preferred shares without nominal or par value, which may be issued in
one or more series at the discretion of the Board of Directors.
(8) Income Taxes
As at June 30th, 1998 International Commodity Logistics Inc. had
approximately $ 278,000 of net U.S.A. qualifying operating losses
expiring in years through 2013, available to offset future taxable
income, if any. As at June 30th, 1998 the Company had deferred tax
assets of approximately $ 56,000 related to new operating loss
carryovers. A valuation allowance has been provided for the total
amount since the amounts, if any, of future revenues necessary to be
able to utilize the carryovers are uncertain.
(9) Management Disclosure
All figures are expressed in currency of the United States of America.
Information was obtained from Management of Sulphur Corporation of
Canada Ltd. and is subject to audit verification. A material variation
from unaudited to audited statements may result from a Management audit
decision to capitalize preliminary construction costs. These Financial
Statements have been prepared without audit by Management of
International Commodity Logistics Inc.
F-17
<PAGE> 33
15 ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Item 15.A LIST OF FINANCIAL STATEMENTS
A list of financial statements included herein may be found in the
index to the financial statements on page F-1, which follows page 14 of this
Registration Statement.
Item 15.B. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
2.1 Plan of Reorganization dated March 24, 1998 between the
Company, James D. Yamada individually and on behalf of SCC
and SSI. (Filed herewith).
3.1 Articles of Incorporation, as amended and currently in
effect. (Filed herewith).
3.2 By-laws, as amended and restated on May 12, 1999. (Filed
herewith).
10.1 Management Agreement dated May 2, 1998 between SCC and Global
Hydrocarbon Corporation Ltd. (Filed herewith).
10.2 Form of Warrant to Purchase Common Stock, dated March 31,
1998. (Filed herewith).
10.3 Employee Benefit and Consulting Services Compensation Plan,
dated March 30, 1998. (Filed herewith).
10.4 Sulphur Handling Facility Project Agreement dated January 1,
1999 between Ridley Terminals Inc. and SCC. (Filed herewith).
10.5 Operating and Throughput Agreement dated January 1, 1999
between Ridley Terminals Inc, and SCC. (Filed herewith).
21.1 List of Subsidiaries. (Filed herewith).
27.1 Financial Data Schedule. (Filed herewith).
</TABLE>
14
<PAGE> 34
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this report or amendment to be signed on
its behalf by the undersigned, thereunto duly authorized.
INTERNATIONAL COMMODITY LOGISTICS, INC.
By: /s/ James Yamada
----------------------------------------------
James Yamada, President, Chief Executive Officer and Director
By: /s/ Roderick J. MacKenzie
----------------------------------------------
Roderick J. MacKenzie, Chairman, Secretary, Treasurer and Director
Dated: August 12, 1999
15
<PAGE> 35
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
2.1 Plan of Reorganization dated March 24, 1998 between the
Company, James D. Yamada individually and on behalf of SCC
and SSI. (Filed herewith).
3.1 Articles of Incorporation, as amended and currently in
effect. (Filed herewith).
3.2 By-laws, as amended and restated on May 12, 1999. (Filed
herewith).
10.1 Management Agreement dated May 2, 1998 between SCC and Global
Hydrocarbon Corporation Ltd. (Filed herewith).
10.2 Form of Warrant to Purchase Common Stock, dated March 31,
1998. (Filed herewith).
10.3 Employee Benefit and Consulting Services Compensation Plan,
dated March 30, 1998. (Filed herewith).
10.4 Sulphur Handling Facility Project Agreement dated January 1,
1999 between Ridley Terminals Inc. and SCC. (Filed herewith).
10.5 Operating and Throughput Agreement dated January 1, 1999
between Ridley Terminals Inc, and SCC. (Filed herewith).
21.1 List of Subsidiaries. (Filed herewith).
27.1 Financial Data Schedule. (Filed herewith).
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
ROOSEVELT CAPITAL CORPORATION
ACQUISITIONS OF
SULPHUR CORPORATION OF CANADA LTD.
AND
SULPORT SERVICES INTERNATIONAL INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
RECITALS
AGREEMENT
1. Plan of Reorganization
1.1 Acquisition
1.2 Exchange of Shares
1.3 Amendments to Roosevelt's Articles of Incorporation
1.4 Change in Management of Roosevelt
1.5 Taxes
2. Closing
2.1 Delivery of Shares
2.2 Closing Requirements
3. Representations of Yamada and Sulphur
3.1 Organization
3.2 Capitalization
3.3 Authority
3.4 Sulphur Stockholder(s)
3.5 Due Diligence
3.6 Approvals and Consent
3.7 Financial Statements
3.8 Undisclosed Liabilities
3.9 Assets
3.10 Litigation
3.11 Applicable Laws
3.12 Taxes
3.13 Breach of Contracts
3.14 Acquiree Disclosure
4. Representations of Yamada and Sulport
4.1 Organization
4.2 Capitalization
4.3 Authority
4.4 Sulport Stockholder(s)
4.5 Due Diligence
4.6 Approvals and Consent
4.7 Financial Statements
4.8 Undisclosed Liabilities
4.9 Assets
4.10 Litigation
4.11 Applicable Laws
4.12 Taxes
4.13 Breach of Contracts
4.14 Acquiree Disclosure
</TABLE>
Exhibit 2.1 - Plan of Reorganization ii
<PAGE> 3
<TABLE>
<S> <C>
5. Representations of Roosevelt
5.1 Organization
5.2 Capitalization
5.3 Authority
5.4 Due Diligence
5.5 Approvals and Consent
5.6 Litigation
5.7 Financial Statements
5.8 Employment/Consulting Contracts
5.9 Applicable Laws
5.10 Breach of Contracts
5.11 Taxes
5.12 Roosevelt Disclosure
5.13 Undisclosed Liabilities
5.14 Delivery of Records
6. Indemnification
7. Mutual Covenants of the Parties
8. Restrictions on Transfer of Shares
9. Nature and Survival of Representations
10. Miscellaneous
10.1 Undertakings and Further Assurances
10.2 Waiver
10.3 Notices
10.4 Headings
10.5 Governing Law and Arbitration Provision
10.6 Binding Effect
10.7 Entire Agreement
10.8 Time
10.9 Expenses
10.10 Severability
10.11 Counterparts and Facsimile Signatures
SIGNATURE PAGE
</TABLE>
Exhibit 2.1 - Plan of Reorganization iii
<PAGE> 4
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is
entered into as of the 24th day of March, 1998, by and between ROOSEVELT CAPITAL
CORPORATION, a Colorado corporation ("Roosevelt"); and Mr. James D. Yamada
(Yamada"), individually and on behalf of Sulphur Corporation of Canada Ltd.
("Sulphur") and Sulport Services International Inc. ("Sulport").
RECITALS
WHEREAS, Yamada owns 100% of the issued and outstanding common stock of
Sulphur (an aggregate of 10,000,000 shares); and
WHEREAS, Yamada owns 100% of the issued and outstanding common stock of
Sulport (an aggregate of 10,000,000 shares); and
WHEREAS, Roosevelt desires to acquire all of the issued and outstanding
common stock of both Sulphur and Sulport owned by Yamada, and Yamada desires to
exchange all of his shares of common stock in both Sulphur and Sulport for
shares of common stock of Roosevelt;
NOW, THEREFORE, for and in consideration of the mutual covenants and
representations and warranties of each other contained herein and other good and
valuable consideration, the receipt of which is hereby acknowledged, Roosevelt
and Yamada agree as follows:
1. Plan of Reorganization. The Plan of Reorganization is as follows:
1.1 Acquisition. At the Closing, Roosevelt shall acquire from Yamada, and Yamada
shall sell, transfer, assign and convey to Roosevelt (i) 10,000,000 shares of
common stock of Sulphur, which represents 100% of all the issued and outstanding
shares of common stock of Sulphur (the "Sulphur Shares"; and 10,000,000 shares
of common stock of Sulport, which represents 100% of all the issued and
outstanding shares of common stock of Sulport (the "Sulport Shares"); in
exchange for an aggregate of 500,000 shares of Roosevelt's common stock (the
"Roosevelt Shares"). The Roosevelt Shares issued shall have the rights,
restrictions and privileges set forth in Roosevelt's Articles of Incorporation
and in the stock certificates therefor. Upon the Closing, Sulphur and Sulport
shall each become wholly-owned subsidiaries of Roosevelt.
1.2 Exchange of Shares. To consummate the acquisition, Roosevelt Shares shall be
delivered by Roosevelt to Yamada in exchange for 100% of the Sulphur Shares and
100% of the Sulport Shares owned by Yamada.
1.3 Amendments to Roosevelt Articles of Incorporation. By executing this
Agreement, Roosevelt's President, George Anagnost, acting as proxy holder with
the power to vote 100% of the outstanding common shares of Roosevelt, hereby
votes said shares to amend the Articles of Incorporation to 1) change the name
of Roosevelt Capital Corporation to International Hydro Carbon Group, Inc., and
2) reduce the number of shares of common stock authorized to be issued from
eight hundred million (800,000,000) to one hundred million (100,000,000).
1.4 Change in Management of Roosevelt. By executing this Agreement, the current
directors of Roosevelt hereby (i) appoint Yamada as a director and as President
of Roosevelt, and (ii) resign as officers and directors of Roosevelt.
1.5 Taxes. Each party shall be responsible for and shall pay any and all taxes
charges or fees attributable to such party, including individual state and
federal income taxes, arising out of, or by reason of, the exchange of Roosevelt
Shares for the Sulphur Shares and Sulport Shares, or otherwise in
- --------------------------------------------------------------------------------
Initials: Roosevelt Yamada
------ ------
Exhibit 2.1 - Plan of Reorganization Page 1 of 10
<PAGE> 5
connection with the transactions contemplated hereby. Each party hereto
represents and warrants that he has relied solely on the opinions or advice of
his own professional advisors with respect to the tax consequences of this
transaction, if any, and has not relied on the opinions or advice of the other
parties or his professional advisors in any way with respect to the tax
consequences of this transaction.
2. Closing. The closing of the reorganization and the transactions contemplated
in this Agreement (the "Closing") shall be deemed to take place upon execution
of this Agreement by all of the parties hereto, whereupon Yamada shall be deemed
to have accepted delivery of the certificates of Roosevelt Shares to be issued
in his name, and in connection therewith, shall make delivery of his Sulphur
Shares and Sulport Shares to Roosevelt.
2.1 Delivery of Shares. Upon execution of this Agreement, Yamada shall deliver
his respective certificates representing the Sulphur Shares and Sulport Shares
duly endorsed in blank, free and clear of all claims and encumbrances, to
counsel to Roosevelt, and Roosevelt shall issue and deliver Roosevelt Shares to
counsel to Yamada. The Roosevelt Shares shall be duly issued in the name of
Yamada, and shall be duly recorded on the books and records of Roosevelt.
2.2 Closing Requirements. Subsequent to Closing, each of the parties shall
execute and deliver such instruments and documents and take such other actions
as may, in the reasonable opinion of counsel for each, be required to complete
the transactions under this Agreement. It is contemplated that within ten (10)
business days after the date of this Agreement, the following documents shall
have been delivered and the following activities shall have taken place, all of
which shall be deemed to have occurred contemporaneously at the Closing:
a) the securities to be delivered pursuant to Subparagraph 2.1 have
been delivered to the respective parties duly endorsed or issued
as the case may be, pursuant to Subparagraphs 1.3 and 2.1.
b) delivery of all corporate records of Roosevelt, Sulphur and
Sulport to the new management, as set forth in Paragraph 1.4,
including without limitation, corporate minute books (which shall
contain copies of the Articles of Incorporation and Bylaws, as
amended to the Closing), stock books, stock transfer books,
corporate seals, contracts, licenses and sub-licenses,
non-disclosure and confidentiality agreements, and such other
corporate books and records as may be reasonably requested.
c) copies of resolutions by Sulphur's Board of Directors authorizing
this Agreement;
d) copies of resolutions by Sulport's Board of Directors authorizing
this Agreement;
e) copies of resolutions by Roosevelt's Board of Directors
authorizing this Agreement; and
f) the parties hereto have signed and delivered such other
instruments and documents, if any, relating to and effecting the
transactions contemplated herein.
3. Representations of Yamada and Sulphur. Yamada and Sulphur hereby represent
and warrant that effective this date, the representations and warranties listed
below are true and correct:
3.1 Organization. Sulphur is a corporation duly incorporated, validly existing
and in good standing under the laws of the Province of Alberta, Canada with full
power and authority to own and use its properties and conduct its business as
presently conducted by it. Sulphur has furnished Roosevelt with copies of the
Articles of Incorporation and the Bylaws of Sulphur, including all amendments
thereto. Such copies are true, correct and complete and contain all amendments
through the date hereof, which, together with this Agreement, are sufficient to
effect the transactions hereunder and evidence the intent of the parties hereto.
- --------------------------------------------------------------------------------
Initials: Roosevelt Yamada
------ ------
Exhibit 2.1 - Plan of Reorganization Page 2 of 10
<PAGE> 6
3.2 Capitalization. The authorized stock of Sulphur consists of (a) unlimited
shares of common stock, and (b) no shares of preferred stock. Ten million
(10,000,000) shares of common stock have been issued All shares issued and
outstanding are duly and validly authorized and issued and are fully paid and
nonassessable. Sulphur does not have outstanding any security convertible into,
or any warrant, option or other right to subscribe for or acquire any equity
interest in Sulphur.
3.3 Authority. Sulphur has the requisite corporate authority to enter into and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement by Sulphur and the consummation of the transactions
contemplated hereby will not violate or conflict with any provisions of the
Articles of Incorporation, as amended, or Bylaws of Sulphur or contravene any
law, rule, regulation, court or administrative order binding on it, or result in
the breach of or constitute a default in the performance of any material
obligation, agreement, covenant or condition contained in any material contract,
lease, judgment, decree, order, award, note, loan or credit agreement or any
other material agreement or instrument to which Sulphur is a party or by which
it is bound, the default or breach of which would have a material adverse effect
on the property and assets of Sulphur, considered as a whole. Sulphur has taken
all requisite corporate action to authorize and approve the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby. Upon due execution and delivery of this Agreement, this
Agreement will constitute a valid, legal and binding obligation of Sulphur and
Yamada enforceable against them in accordance with its terms.
3.4 Sulphur Shareholder(s). Yamada is the owner of 100% of the issued and
outstanding common stock of Sulphur; such Sulphur Shares are free and clear from
any security interests, claims, liens, or other encumbrances; and Yamada have
the unqualified right to transfer and dispose of his Sulphur Shares. Yamada will
deliver, upon reasonable demand of Roosevelt, any approvals, consents or other
authorizations to Roosevelt and said approvals, consents and other
authorizations will have been duly executed, valid and binding.
3.5 Due Diligence. Sulphur has furnished to Roosevelt copies of all documents
requested by Roosevelt. No "due diligence" investigations undertaken by
Roosevelt shall in any event relieve Sulphur or Yamada of their responsibilities
for the accuracy and completeness of any representation or warranty of Sulphur
or of Yamada contained herein or the performance of any covenant or agreement of
Sulphur or of Yamada contained herein.
3.6 Approvals and Consent. No approval, authorization or other action by, or
filing with, any third-party, including a governmental authority is required in
connection with the execution, delivery and performance by Sulphur and Yamada of
their obligations under this Agreement and their respective performance of the
transactions contemplated hereby.
3.7 Financial Statements. Sulphur has provided unaudited financial statements of
Sulphur for the years ended June 30, 1995, 1996 and 1997.
3.8 Undisclosed Liabilities. Sulphur has no liabilities or obligations
whatsoever that exceed ten percent (10%) of the total assets of Sulphur, either
accrued, absolute, contingent or otherwise, except as disclosed on the unaudited
financial statements heretofore provided and those incurred in or as a result of
the ordinary course of business of Sulphur subsequent to the date of the
financial statements.
3.9 Assets. The assets of Sulphur as set forth in the unaudited financial
statements heretofore provided have been acquired in bona fide transactions,
fully supported by appropriate instruments of assignment, sale, or transfer,
where appropriate, and are offset by no liabilities or contingencies,
contractual or otherwise, except as indicated in the financial statements.
3.10 Litigation. Sulphur is not involved in any pending litigation or
governmental investigation or proceeding and, to the best knowledge of Sulphur
and Yamada, no litigation, claims, assessments, or governmental investigation or
proceeding is threatened against Sulphur, its Yamada or properties.
- --------------------------------------------------------------------------------
Initials: Roosevelt Yamada
------ ------
Exhibit 2.1 - Plan of Reorganization Page 3 of 10
<PAGE> 7
3.11 Applicable Laws. Sulphur has complied with all applicable laws in
connection with its formation, issuance of securities, organization,
capitalization and operations, and no contingent liabilities have been
threatened or claims made, and no basis for the same exists with respect to said
operations, formation or capitalization, including claims for violation of any
state or federal securities laws.
3.12 Taxes. Sulphur has filed all governmental, tax or related returns and
reports due or required to be filed and has paid all taxes or assessments which
have become due as of the date of this Agreement, including any employment
related taxes and withholdings, and Sulphur, to the best of its knowledge, is
not subject to a tax audit by any federal, state or local tax authority and its
properties are not subject to any tax liens.
3.13 Breach of Contracts. Sulphur has not breached, nor is there any pending or
threatened claims or any legal basis for a claim that Sulphur has breached, any
of the terms or conditions of any agreements, contracts or commitments to which
it is a party or is bound and the execution and performance hereof will not
violate any provisions of applicable law of any agreement to which Sulphur is
subject.
3.14 Sulphur Disclosure. At the date of this Agreement, Sulphur has disclosed
all events, conditions and facts materially affecting the business and prospects
of Sulphur. Sulphur has not withheld disclosure of any such events, conditions,
and facts which it, through management, has knowledge of, or has reasonable
grounds to know, which may materially affect the business and prospects of
Sulphur.
4. Representations of Yamada and Sulport. Yamada and Sulport hereby represent
and warrant that effective this date, the representations and warranties listed
below are true and correct:
4.1 Organization. Sulport is a corporation duly incorporated, validly existing
and in good standing under the laws of the Province of British Columbia, Canada
with full power and authority to own and use its properties and conduct its
business as presently conducted by it. Sulport has furnished Roosevelt with
copies of the Articles of Incorporation and the Bylaws of Sulport, including all
amendments thereto. Such copies are true, correct and complete and contain all
amendments through the date hereof, which, together with this Agreement, are
sufficient to effect the transactions hereunder and evidence the intent of the
parties hereto.
4.2 Capitalization. The authorized stock of Sulport consists of (a) fifty
million (50,000,000) shares of common stock, and (b) no shares of preferred
stock. Ten million (10,000,000) shares of common stock have been issued All
shares issued and outstanding are duly and validly authorized and issued and are
fully paid and nonassessable. Sulport does not have outstanding any security
convertible into, or any warrant, option or other right to subscribe for or
acquire any equity interest in Sulport.
4.3 Authority. Sulport has the requisite corporate authority to enter into and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement by Sulport and the consummation of the transactions
contemplated hereby will not violate or conflict with any provisions of the
Articles of Incorporation, as amended, or Bylaws of Sulport or contravene any
law, rule, regulation, court or administrative order binding on it, or result in
the breach of or constitute a default in the performance of any material
obligation, agreement, covenant or condition contained in any material contract,
lease, judgment, decree, order, award, note, loan or credit agreement or any
other material agreement or instrument to which Sulport is a party or by which
it is bound, the default or breach of which would have a material adverse effect
on the property and assets of Sulport, considered as a whole. Sulport has taken
all requisite corporate action to authorize and approve the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby. Upon due execution and delivery of this Agreement, this
Agreement will constitute a valid, legal and binding obligation of Sulport and
Yamada enforceable against them in accordance with its terms.
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Initials: Roosevelt Yamada
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Exhibit 2.1 - Plan of Reorganization Page 4 of 10
<PAGE> 8
4.4 Sulport Shareholder(s). Yamada is the owner of 100% of the issued and
outstanding common stock of Sulport; such Sulport Shares are free and clear from
any security interests, claims, liens, or other encumbrances; and Yamada have
the unqualified right to transfer and dispose of his Sulport Shares. Yamada will
deliver, upon reasonable demand of Roosevelt, any approvals, consents or other
authorizations to Roosevelt and said approvals, consents and other
authorizations will have been duly executed, valid and binding.
4.5 Due Diligence. Sulport has furnished to Roosevelt copies of all documents
requested by Roosevelt. No "due diligence" investigations undertaken by
Roosevelt shall in any event relieve Sulport or Yamada of their responsibilities
for the accuracy and completeness of any representation or warranty of Sulport
or of Yamada contained herein or the performance of any covenant or agreement of
Sulport or of Yamada contained herein.
4.6 Approvals and Consent. No approval, authorization or other action by, or
filing with, any third-party, including a governmental authority is required in
connection with the execution, delivery and performance by Sulport and Yamada of
their obligations under this Agreement and their respective performance of the
transactions contemplated hereby.
4.7 Financial Statements. Sulport was incorporated on November 26, 1997, and
consequently has not prepared financial statements.
4.8 Undisclosed Liabilities. Sulport has no liabilities or obligations
whatsoever that exceed ten percent (10%) of the total assets of Sulport, either
accrued, absolute, contingent or otherwise, except those incurred in or as a
result of the ordinary course of business of Sulport subsequent to the date of
incorporation.
4.9 Assets. The assets of Sulport have been acquired in bona fide transactions,
fully supported by appropriate instruments of assignment, sale, or transfer,
where appropriate, and are offset by no liabilities or contingencies,
contractual or otherwise, except those incurred in or as a result of the
ordinary course of business of Sulport.
4.10 Litigation. Sulport is not involved in any pending litigation or
governmental investigation or proceeding and, to the best knowledge of Sulport
and Yamada, no litigation, claims, assessments, or governmental investigation or
proceeding is threatened against Sulport, its Yamada or properties.
4.11 Applicable Laws. Sulport has complied with all applicable laws in
connection with its formation, issuance of securities, organization,
capitalization and operations, and no contingent liabilities have been
threatened or claims made, and no basis for the same exists with respect to said
operations, formation or capitalization, including claims for violation of any
state or federal securities laws.
4.12 Taxes. Sulport has filed all governmental, tax or related returns and
reports due or required to be filed and has paid all taxes or assessments which
have become due as of the date of this Agreement, including any employment
related taxes and withholdings, and Sulport, to the best of its knowledge, is
not subject to a tax audit by any federal, state or local tax authority and its
properties are not subject to any tax liens.
4.13 Breach of Contracts. Sulport has not breached, nor is there any pending or
threatened claims or any legal basis for a claim that Sulport has breached, any
of the terms or conditions of any agreements, contracts or commitments to which
it is a party or is bound and the execution and performance hereof will not
violate any provisions of applicable law of any agreement to which Sulport is
subject.
4.14 Sulport Disclosure. At the date of this Agreement, Sulport has disclosed
all events, conditions and facts materially affecting the business and prospects
of Sulport. Sulport has not withheld disclosure of any such events, conditions,
and facts which it, through management, has knowledge of, or has reasonable
grounds to know, which may materially affect the business and prospects of
Sulport.
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Initials: Roosevelt Yamada
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Exhibit 2.1 - Plan of Reorganization Page 5 of 10
<PAGE> 9
5. Representations of Roosevelt. Roosevelt hereby represents and warrants that
effective this date, the representations and warranties listed below are true
and correct:
5.1 Organization. Roosevelt is a corporation duly organized, validly existing
and in good standing under the laws of the State of Colorado with full power and
authority to own and use its properties and conduct its business as presently
conducted by it. Roosevelt is duly qualified and in good standing to do business
as a foreign corporation in any other jurisdiction where failure to so qualify
would have a material adverse effect on its business or assets. Roosevelt has
made available to Yamada copies of the Articles of Incorporation and the Bylaws
of Roosevelt, including all amendments thereto. Such copies are true, correct
and complete and contain all amendments through the date hereof, together with
this Agreement, which are sufficient to effect the transactions hereunder and
evidence the intent of the parties hereto.
5.2 Capitalization. The authorized stock of Roosevelt consists of (a) eight
hundred million (800,000,000) shares of common stock, and (b) ten million
(10,000,000) shares of preferred stock. Immediately prior to the Closing, there
will be exactly 9,000,000 shares of Roosevelt common stock issued and
outstanding and no shares of preferred stock issued and outstanding, prior to
the issuance of the 500,000 Roosevelt Shares to be delivered at Closing pursuant
to this Agreement. At the time of their issuance and delivery pursuant to this
Agreement, all Roosevelt Shares to be issued pursuant to the terms hereof shall
be duly and validly authorized and issued, fully paid and nonassessable.
Roosevelt does not have outstanding any security convertible into, or any
warrant, option or other right to subscribe for or acquire any shares of stock
of Roosevelt; nor is Roosevelt under any obligation, whether written or oral, to
issue any of its securities.
5.3 Authority. Roosevelt has the requisite corporate authority to enter into and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement by Roosevelt and the consummation of the transactions
contemplated hereby will not violate or conflict with any provisions of the
Articles of Incorporation, as amended, or Bylaws of Roosevelt or contravene any
law, rule, regulation, court or administrative order binding on it, or result in
the breach of or constitute a default in the performance of any material
obligation, agreement, covenant or condition contained in any material contract,
lease, judgment, decree, order, award, note, loan or credit agreement or any
other material agreement or instrument to which Roosevelt is a party or by which
it is bound, the default or breach of which would have a material adverse effect
on the property and assets of Roosevelt, considered as a whole. Roosevelt has
taken all requisite corporate action to authorize and approve the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby. Upon due execution and delivery of this
Agreement, this Agreement will constitute a valid, legal and binding obligation
of Roosevelt enforceable against it in accordance with its terms.
5.4 Due Diligence. Roosevelt has furnished to Yamada copies of all documents
requested by Yamada. No "due diligence" investigations undertaken by Yamada
shall in any event relieve Roosevelt or its current officers and directors of
their responsibilities for the accuracy and completeness of any representation
or warranty of Roosevelt contained herein or the performance of any covenant or
agreement of Roosevelt contained herein.
5.5 Approvals and Consent. No approval, authorization or other action by, or
filing with, any third-party, including a governmental authority is required in
connection with the execution, delivery and performance by Roosevelt of its
obligations under this Agreement and its performance of the transactions
contemplated hereby.
5.6 Litigation. Roosevelt is not involved in any pending litigation or
governmental investigation or proceeding and, to the best knowledge of
Roosevelt, no litigation, claims, assessments, or governmental investigation or
proceeding is threatened against Roosevelt, its Yamada or properties.
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Initials: Roosevelt Yamada
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Exhibit 2.1 - Plan of Reorganization Page 6 of 10
<PAGE> 10
5.7 Financial Statements. Roosevelt has provided to Yamada audited financial
statements of Roosevelt prepared in accordance with the requirements of
Regulation S-B of the Securities Act of 1933, as amended (the "Act"), for the
years ended December 31, 1995 and 1996.
5.8 Employment/Consulting Contracts. Roosevelt has no written or oral contracts
providing for any form of compensation whatsoever for employment, consulting or
other services.
5.9 Applicable Laws. Roosevelt has complied with all state, federal and local
laws in connection with its formation, issuance of securities, organization,
capitalization and operations, and no contingent liabilities have been
threatened or claims made, and no basis for the same exists with respect to said
operations, formation or capitalization, including claims for violation of any
state or federal securities laws.
5.10 Breach of Contracts. Roosevelt has not breached, nor is there any pending
or threatened claims or any legal basis for a claim that Roosevelt has breached,
any of the terms or conditions of any agreements, contracts or commitments to
which it is a party or is bound and the execution and performance hereof will
not violate any provisions of applicable law of any agreement to which Roosevelt
is subject.
5.11 Taxes. Roosevelt has filed all governmental, tax or related returns and
reports due or required to be filed and has paid all taxes or assessments which
have become due as of the date of this Agreement, including any employment
related taxes and withholdings, and Roosevelt, to the best of its knowledge, is
not subject to a tax audit by any federal, state or local tax authority and its
properties are not subject to any tax liens. Roosevelt will cause to be filed or
prepared, as applicable, by the date of this Agreement, all federal, state,
county and local income, excise, property and other tax returns, forms, or
reports, which are due or required to be filed by it prior to the date of this
Agreement.
5.12 Roosevelt Disclosure. At the date of this Agreement, Roosevelt has
disclosed all events, conditions and facts materially affecting the business and
prospects of Roosevelt. Roosevelt has not withheld disclosure of any such
events, conditions, and facts which it, through management, has knowledge of, or
has reasonable grounds to know, which may materially affect the business and
prospects of Roosevelt.
5.13 Undisclosed Liabilities. Roosevelt has no material liabilities or
obligations whatsoever, either accrued, absolute, contingent or otherwise,
except as disclosed on the audited financial statements heretofore provided. Any
and all undisclosed liabilities or obligations shall be deemed to be material to
the extent that they exceed $1,000 in the aggregate.
5.14 Delivery of Records. Roosevelt shall deliver the corporate financial
records, minute books, and other documents and records in their entirety to the
new management as contemplated by Subparagraph 1.4.
6. Indemnification. The parties hereby agree that for a period of two years
commencing the date hereof, and in accordance with the terms of Paragraph 9,
each party to this Agreement shall indemnify and hold harmless each other party
at all times after the date of this Agreement against and in respect of any
third-party liability, damage or deficiency, all actions, suits, proceedings,
demands, assessments, judgments, costs and expenses, including attorney's fees,
incident to any of the foregoing, resulting from any misrepresentation, breach
of covenant or warranty or nonfulfillment of any agreement on the part of such
party under this Agreement or from any misrepresentation in or intentional
omission from any document or certificate furnished or to be furnished to a
party hereunder. Subject to the terms of this Agreement, the defaulting party
shall reimburse the other party or parties with respect to such third-party's
actions on demand, for any reasonable payment made by said parties at any time
after the Closing, in respect of any liability or claim to which the foregoing
indemnity relates, if such payment is made after reasonable notice to the other
party to defend or satisfy the same and such party failed to defend or satisfy
the same. In the event a third-party action is threatened or commenced but not
resolved within
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Exhibit 2.1 - Plan of Reorganization Page 7 of 10
<PAGE> 11
said two-year period, the parties hereby agree to extend this indemnification
through resolution of the third-party action.
In addition, each party agrees to indemnify each other party for any
loss incurred as a result of the subsequent discovery of any liability that is
not disclosed in the financial statements or schedules provided under this
Agreement that was known to such knowledgeable party or parties at the time of
the Closing.
7. Mutual Covenants of the Parties. Roosevelt, Sulphur, Sulport and Yamada each
covenant and agree to execute any further documents or agreements and to take
any further acts that may be reasonably necessary to effect the transactions
contemplated hereunder, including, but not limited to, obtaining any consents or
approvals of any third-party required to be obtained to consummate the
transactions contemplated by this Agreement.
8. Restrictions on Transfer of Shares. The parties hereto acknowledge that
transferred and/or issued in connection with the transactions contemplated
hereby are restricted as to transfer and the certificates therefore shall bear
legends to such effect and no transfer of any shares may be effected, except
pursuant to an effective registration statement prepared and filed pursuant to
the Act or pursuant to an exemption from registration thereunder, as evidenced
by an opinion of counsel or as otherwise allowed under the laws of descent and
distribution.
9. Nature and Survival of Representations. All representations, warranties and
covenants made by any party in this Agreement shall survive the Closing
hereunder and the consummation of the transactions contemplated hereby for two
(2) years from the date hereof. All of the parties hereto are executing and
carrying out the provisions of this Agreement in reliance solely on the
representations, warranties and covenants and agreements contained in this
Agreement or at the Closing of the transactions herein provided for and not upon
any investigation upon which it might have made or any representations,
warranty, agreement, promise or information, written or oral, made by the other
party or any other person other than as specifically set forth herein.
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Initials: Roosevelt Yamada
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Exhibit 2.1 - Plan of Reorganization Page 8 of 10
<PAGE> 12
10. Miscellaneous.
10.1 Undertakings and Further Assurances. At any time, and from time to time,
hereafter, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to carry out the intent
and purposes of this Agreement.
10.2 Waiver. Any failure on the part of any party hereto to comply with any of
its obligations, agreements or conditions hereunder may be waived in writing by
the party to whom such compliance is owed.
10.3 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed to have been given if delivered in person or sent by prepaid
first class registered or certified mail, return receipt requested, or by
Federal Express or other means of overnight delivery to the addresses below:
Roosevelt: Roosevelt Capital Corporation
c/o George Anagnost
3997 St. Petersburg Street
Boulder, Colorado, USA 80301
Yamada,
Sulphur,
Sulport: James D. Yamada
20085 - 100A Avenue, Unit #1
Langley, B.C., Canada V1M 3G4
10.4 Headings. The paragraph and subparagraph headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.5 Governing Law and Arbitration Provision. This Agreement shall be governed
by the laws of the State of Colorado. Any dispute arising directly or indirectly
from this Agreement shall be settled by arbitration within the State of Colorado
(as designated by Roosevelt), if arbitration is demanded by Sulphur, Sulport or
Yamada; or within the State of Washington (as designated by Yamada), if
arbitration is demanded by Roosevelt. Any arbitration will be conducted by the
American Arbitration Association in accordance with its Rules of Commercial
Arbitration, and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The parties hereto agree that
service by certified mail to their business addresses shall constitute
sufficient service of process of any proposed arbitration.
10.6 Binding Effect. This Agreement shall be binding upon the parties hereto and
inure to the benefit of the parties, his respective heirs, administrators,
executors, successors and assigns. This Agreement shall not be assigned by any
party hereto, except upon the consent, in writing, of the other parties hereto.
10.7 Entire Agreement. This Agreement, including the Exhibits hereto and other
documents delivered pursuant to the terms hereof, is the entire agreement of the
parties covering everything agreed upon or understood with respect to the
transactions contemplated hereby and supersedes all prior agreements, covenants,
representations or warranties, whether written or oral, by any party hereto.
There are no oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements to the
execution hereof.
10.8 Time. Time is of the essence. The parties each agree to proceed promptly
and in good faith to consummate the transactions contemplated herein.
10.9 Expenses. Each of the parties hereto shall pay its own expenses incurred in
connection with the authorization, preparation, execution and performance of
this Agreement and obtaining any necessary regulatory approvals, including,
without limitation, all fees and expenses of his respective counsel.
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Initials: Roosevelt Yamada
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Exhibit 2.1 - Plan of Reorganization Page 9 of 10
<PAGE> 13
10.10 Severability. If any part of this Agreement is deemed to be unenforceable
the balance of the Agreement shall remain in full force and effect.
10.11 Counterparts and Facsimile Signatures. This Agreement and any Exhibits,
attachments, or documents ancillary hereto, may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument. Execution and
delivery of this Agreement by exchange of facsimile copies bearing the facsimile
signature of a party hereto shall constitute a valid and binding execution and
delivery of this Agreement by such party. Such facsimile copies shall constitute
enforceable original documents.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
ROOSEVELT CAPITAL CORPORATION
By: /s/ George Anagnost
---------------------------------------
George Anagnost, President and Director
By: /s/ John Venette
---------------------------------------
John Venette, Secretary and Director
SULPHUR
By: /s/ James D. Yamada
---------------------------------------
James D. Yamada, Chairman
SULPORT
By: /s/ James D. Yamada
---------------------------------------
James D. Yamada, President
YAMADA:
/s/ James D. Yamada
---------------------------------------
James D. Yamada, individually
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Initials: Roosevelt Yamada
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Exhibit 2.1 - Plan of Reorganization Page 10 of 10
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
INTERNATIONAL HYDRO CARBON GROUP, INC.
Pursuant the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the Corporation, International Hydro Carbon Group, Inc., is
hereby changed to International Commodity Logistics, Inc. Article I of the
Articles of Incorporation is amended to read as follows:
ARTICLE I
NAME
The name of the corporation shall be International Commodity Logistics,
Inc.
The foregoing amendments to the Articles of Incorporation were adopted on
December 15, 1998, as prescribed by the Colorado Business Corporation Act, by
vote of the shareholders. The number of shares voted for the amendment were
sufficient for approval.
International Commodity Logistics, Inc.
(formerly International Hydro Carbon Group, Inc.)
By: /s/ James D. Yamada
---------------------------------------------
James D. Yamada, President
<PAGE> 2
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
ROOSEVELT CAPITAL CORPORATION
Pursuant the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the Corporation, Roosevelt Capital Corporation, is hereby
changed to International Hydro Carbon Group, Inc. Article I of the Articles of
Incorporation is amended to read as follows:
ARTICLE I
NAME
The name of the corporation shall be International Hydro Carbon Group, Inc.
SECOND: The aggregate number of shares of Common Stock authorized to be issued
is reduced from Eight Hundred Million (800,000,000), no par value each, down to
One Hundred Million (100,000,000), no par value each. No exchange,
reclassification, or cancellation of issued shares shall be required. The first
paragraph of Article IV of the Articles of Incorporation is amended to read as
follows (the remainder of Article IV shall remain unchanged):
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares which this Corporation shall have authority to
issue is One Hundred Million (100,000,000), no par value each, which shares
shall be designated "Common Stock"; and Ten Million (10,000,000) shares of no
par value each, which shares shall be designated "Preferred Stock" and which may
be issued in one or more series at the discretion of the Board of Directors. In
establishing a series the Board of Directors shall give to it a distinctive
designation so as to distinguish it from the shares of all other series and
classes, shall fix the number of shares in such series, and the preferences,
rights and restrictions thereof. All shares of any one series shall be alike in
every particular except as otherwise provided by these Articles of Incorporation
or the Colorado Business Corporation Act.
The foregoing amendments to the Articles of Incorporation were adopted on March
24, 1998, as prescribed by the Colorado Business Corporation Act, by vote of the
shareholders. The number of shares voted for the amendments were sufficient for
approval.
International Hydro Carbon Group, Inc.
(formerly Roosevelt Capital Corporation)
By: /s/ George Anagnost
------------------------------------
George Anagnost, President
<PAGE> 3
ARTICLES OF INCORPORATION
OF
ROOSEVELT CAPITAL CORPORATION
KNOW ALL MEN BY THESE PRESENTS: That the undersigned incorporator being
a natural person of the age of eighteen years or more and desiring to form a
body corporate under the laws of the State of Colorado does hereby sign, verify
and deliver in duplicate to the Secretary of State of the State of Colorado,
these Articles of Incorporation:
ARTICLE I
NAME
The name of the Corporation shall be: Roosevelt Capital Corporation.
ARTICLE II
PERIOD OF DURATION
The Corporation shall exist in perpetuity, from and after the date of
filing these Articles of Incorporation with the Secretary of State of the State
of Colorado unless dissolved according to law.
ARTICLE III
PURPOSES AND POWERS
1. Purposes. Except as restricted by these Articles of Incorporation,
the Corporation is organized for the purpose of transacting all lawful business
for which corporations may be incorporated pursuant to the Colorado Corporation
Code.
2. General Powers. Except as restricted by these Articles of
Incorporation, the Corporation shall have and may exercise all powers and rights
which a corporation may exercise legally pursuant to the Colorado Corporation
Code.
3. Issuance of Shares. The board of directors of the Corporation may
divide and issue any class of stock of the Corporation in series pursuant to a
resolution properly filed with the Secretary of State of the State of Colorado.
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares which this Corporation shall have
authority to issue is Eight Hundred Million (800,000,000) shares of no par value
each, which shares shall be designated "Common Stock"; and Ten Million
(10,000,000) shares of no par value each, which shares shall be designated
"Preferred Stock" and which may be issued in one or more series at the
discretion of the Board of Directors. In establishing a series the Board of
Directors shall give to it a distinctive
1
<PAGE> 4
designation so as to distinguish it from the shares of all other series and
classes, shall fix the number of shares in such series, and the preferences,
rights and restrictions thereof. All shares of any one series shall be alike in
every particular except as otherwise provided by these Articles of Incorporation
or the Colorado Corporation Code.
1. Dividends. Dividends in cash, property or shares shall be paid upon
the Preferred Stock for any year on a cumulative or noncumulative basis as
determined by a resolution of the Board of Directors prior to the issuance of
such Preferred Stock, to the extent earned surplus for each such year is
available, in an amount as determined by a resolution of the Board of Directors.
Such Preferred Stock dividends shall be paid pro rata to holders of Preferred
Stock in any amount not less than nor more than the rate as determined by a
resolution of the Board of Directors prior to the issuance of such Preferred
Stock. No other dividend shall be paid on the Preferred Stock.
Dividends in cash, property or shares of the Corporation may be paid
upon the Common Stock, as and when declared by the Board of Directors, out of
funds of the Corporation to the extent and in the manner permitted by law,
except that no Common Stock dividend shall be paid for any year unless the
holders of Preferred Stock, if any, shall receive the maximum allowable
Preferred Stock dividend for such year.
2. Distribution in Liquidation. Upon any liquidation, dissolution or
winding up of the Corporation, and after paying or adequately providing for the
payment of all its obligations, the remainder of the assets of the Corporation
shall be distributed, either in cash or in kind, first pro rata to the holders
of the Preferred Stock until an amount to be determined by a resolution of the
Board of Directors prior to issuance of such Preferred Stock, has been
distributed per share, and, then, the remainder pro rata to the holders of the
Common Stock.
3. Redemption. The Preferred Stock may be redeemed in whole or in part
as determined by a resolution of the Board of Directors prior to the issuance of
such Preferred Stock, upon prior notice to the holders of record of the
Preferred Stock, published, mailed and given in such manner and form and on such
other terms and conditions as may be prescribed by the Bylaws or by resolution
of the Board of Directors, by payment in cash or Common Stock for each share of
the Preferred Stock to be redeemed, as determined by a resolution of the Board
of Directors prior to the issuance of such Preferred Stock. Common Stock used to
redeem Preferred Stock shall be valued as determined by a resolution of the
Board of Directors prior to the issuance of such Preferred Stock. Any rights to
or arising from fractional shares shall be treated as rights to or arising from
one share. No such purchase or retirement shall be made if the capital of the
Corporation would be impaired thereby.
If less than all the outstanding shares are to be redeemed, such
redemption may be made by lot or pro rata as may be prescribed by resolution of
the Board of Directors; provided, however, that the Board of Directors may
alternatively invite from shareholders offers to the Corporation of Preferred
Stock at less than an amount to be determined by a resolution of the Board of
Directors prior to issuance of such Preferred Stock, and when such offers are
invited, the Board of Directors shall then be required to buy at the lowest
price or prices offered, up to the amount to be purchased.
From and after the date fixed in any such notice as the date of
redemption (unless default shall be made by the Corporation in the payment of
the redemption price), all dividends on the Preferred Stock thereby called for
redemption shall cease to accrue and all rights of the holders
2
<PAGE> 5
thereof as stockholders of the Corporation, except the right to receive the
redemption price, shall cease and terminate.
Any purchase by the Corporation of the shares of its Preferred Stock
shall not be made at prices in excess of said redemption price.
4. Voting Rights; Cumulative Voting. Each outstanding share of Common
Stock shall be entitled to one vote and each fractional share of Common Stock
shall be entitled to a corresponding fractional vote on each matter submitted to
a vote of shareholders. A majority of the shares of Common Stock entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders. Except as otherwise provided by these Articles of Incorporation
or the Colorado Corporation Code, if a quorum is present, the affirmative vote
of a majority of the shares represented at the meeting and entitled to vote on
the subject matter shall be the act of the shareholders. When, with respect to
any action to be taken by shareholders of this Corporation, the laws of Colorado
require the vote or concurrence of the holders of two-thirds of the outstanding
shares, of the shares entitled to vote thereon, or of any class or series, such
action may be taken by the vote or concurrence of a majority of such shares or
class or series thereof. Cumulative voting shall not be allowed in the election
of directors of this Corporation.
Shares of Preferred Stock shall only be entitled to such vote as is
determined by the Board of Directors prior to the issuance of such stock, except
as required by law, in which case each share of Preferred Stock shall be
entitled to one vote.
5. Denial of Preemptive Rights. No holder of any shares of the
Corporation, whether now or hereafter authorized, shall have any preemptive or
preferential right to acquire any shares or securities of the Corporation,
including shares or securities held in the treasury of the Corporation.
6. Conversion Rights. Holders of shares of Preferred Stock may be
granted the right to convert such Preferred Stock to Common Stock of the
Corporation on such terms as may be determined by the Board of Directors prior
to issuance of such Preferred Stock.
ARTICLE V
TRANSACTIONS WITH INTERESTED DIRECTORS
No contract or other transaction between the Corporation and one or
more of its directors or any other corporation, firm, association, or entity in
which one or more of its directors are directors or officers or are financially
interested shall be either void or voidable solely because of such relationship
or interest or solely because such directors are present at the meeting of the
board of directors or a committee thereof which authorizes, approves, or
ratifies such contract or transaction or solely because their votes are counted
for such purpose if:
(a) The fact of such relationship or interest is disclosed or
known to the board of directors or committee which authorizes, approves or
ratifies the contract or transaction by a vote or consent sufficient for the
purpose without counting the votes or consents of such interested directors; or
(b) The fact of such relationship or interest is disclosed or
known to the shareholders entitled to vote and they authorize, approve, or
ratify such contract or transaction by vote or written consent; or
3
<PAGE> 6
(c) The contract or transaction is fair and reasonable to the
corporation.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or a committee
thereof which authorizes, approves, or ratifies such contract or transaction.
ARTICLE VI
CORPORATE OPPORTUNITY
The officers, directors and other members of management of this
Corporation shall be subject to the doctrine of "corporate opportunities" only
insofar as it applies to business opportunities in which this Corporation has
expressed an interest as determined from time to time by this Corporation's
board of directors as evidenced by resolutions appearing in the Corporation's
minutes. Once such areas of interest are delineated, all such business
opportunities within such areas of interest which come to the attention of the
officers, directors, and other members of management of this Corporation shall
be disclosed promptly to this Corporation and made available to it. The board of
directors may reject any business opportunity presented to it and thereafter any
officer, director or other member of management may avail himself of such
opportunity. Until such time as this Corporation, through its board of
directors, has designated an area of interest, the officers, directors and other
members of management of this Corporation shall be free to engage in such areas
of interest on their own and this doctrine shall not limit the rights of any
officer, director or other member of management of this Corporation to continue
a business existing prior to the time that such area of interest is designated
by the Corporation. This provision shall not be construed to release any
employee of this Corporation (other than an officer, director or member of
management) from any duties which he may have to this Corporation.
ARTICLE VII
INDEMNIFICATION
The Corporation may indemnify any director, officer, employee,
fiduciary, or agent of the Corporation to the full extent permitted by the
Colorado Corporation Code as in effect at the time of the conduct of such
person.
ARTICLE VIII
AMENDMENTS
The Corporation reserves the right to amend its Articles of
Incorporation from time to time in accordance with the Colorado Corporation
Code.
ARTICLE IX
ADOPTION AND AMENDMENT OF BYLAWS
The initial Bylaws of the Corporation shall be adopted by its board of
directors. Subject to repeal or change by action of the shareholders, the power
to alter, amend or repeal the Bylaws or adopt new Bylaws shall be vested in the
board of directors. The Bylaws may contain any provisions for the regulation and
management of the affairs of the Corporation not consistent with law or these
Articles of Incorporation.
4
<PAGE> 7
ARTICLE X
REGISTERED OFFICE AND REGISTERED AGENT
The address of the initial registered office of the Corporation is 325
Canyon Boulevard, Boulder, Colorado 80302, and the name of the initial
registered agent at such address is Allen R. Goldstone. Either the registered
office or the registered agent may be changed in the manner permitted by law.
ARTICLE XI
INITIAL BOARD OF DIRECTORS
The number of directors of the Corporation shall be fixed by the Bylaws
of the Corporation, with the provision that there need be only as many directors
as there are shareholders in the event that the outstanding shares are held of
record by fewer than three shareholders. The initial board of directors of the
Corporation shall consist of three (3) directors. The names and addresses of the
persons who shall serve as directors until the first annual meeting of
shareholders and until their successors are elected and qualify are as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Allen R. Goldstone 325 Canyon Boulevard
Boulder, CO 80302
Sanford L. Schwartz 1720 Fourteenth Street
Boulder, CO 80302
Robert M. Geller 1720 Fourteenth Street
Boulder, CO 80302
</TABLE>
ARTICLE XII
LIMITATION OF LIABILITY OF
DIRECTORS TO CORPORATIONS AND SHAREHOLDERS
No director shall be liable to the Corporation or any shareholder for
monetary damages for breach of fiduciary duty as a director, except for any
matter in respect of which such director (a) shall be liable under C.R.S.
Section 7-5-114 or any amendment thereto or successor provision thereto; (b)
shall have breached the director's duty of loyalty to the Corporation or its
shareholders; (c) shall have not acted in good faith or, in failing to act,
shall not have acted in good faith; (d) shall have acted or failed to act in a
manner involving intentional misconduct or a knowing violation of law; or (e)
shall have derived an improper personal benefit. Neither the amendment nor
repeal of this Article, nor the adoption of any provision in the Articles of
Incorporation inconsistent with this Article, shall eliminate or reduce the
effect of this Article in respect of any matter occurring prior to such
amendment, repeal or adoption of an inconsistent provision. This Article shall
apply to the full extent now permitted by Colorado law or as may be permitted in
the future by changes or enactments in Colorado law, including without
limitation C.R.S. Section 7-2-102 and/or C.R.S. Section 7-3-101.
5
<PAGE> 8
ARTICLE XIII
INCORPORATOR
The name and address of the incorporator is as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Jon D. Sawyer c/o Wills & Sawyer, P.C.
511 16th Street, Suite 400
Denver, Colorado 80202
</TABLE>
IN WITNESS WHEREOF, the above-named incorporator has signed these Articles of
Incorporation this 15th day of March, 1989.
/s/ Jon D. Sawyer
-----------------------------------
Jon D. Sawyer
6
<PAGE> 1
BYLAWS EXHIBIT 3.2
OF
INTERNATIONAL COMMODITY LOGISTICS, INC.
(RESTATED MAY 12, 1999)
ARTICLE I
OFFICES
Section 1.1 PRINCIPAL OFFICE. The principal office of the corporation
shall be located at 20085 - 100A Avenue, Unit #2A, Langley, British Columbia,
Canada V1M 3G4. The corporation may have such other offices, either within or
outside of the State of Colorado, as the Board of Directors may designate or as
the business of the corporation may require from time to time.
Section 1.2 REGISTERED OFFICE. The registered office of the
corporation, required by the Colorado Business Corporation Act to be maintained
in the State of Colorado, may be, but need not be, identical with the principal
office in the State of Colorado, and the address of the registered office may be
changed from time to time by the Board of Directors.
ARTICLE II
SHAREHOLDERS
Section 2.1 ANNUAL MEETING. The annual meeting of the shareholders
shall be held within six months of the end of the corporation's fiscal year, at
such place, on such date, and at such hour as the Board of Directors shall fix
by resolution for the purpose of electing directors and for the transaction of
such other business as may come before the meeting.
Any shareholder entitled to participate in an annual meeting may apply
to the district court in the county in Colorado where the corporation's
principal office is located or, if the corporation has no principal office in
Colorado, to the district court of the county in which the corporation's
registered office is located to seek an order that a shareholder meeting be held
if an annual meeting was not held within six months after the close of the
corporation's most recently ended fiscal year or fifteen months after its last
annual meeting, whichever is earlier. Any person who participated in a call of
or demand for a special meeting effective under C.R.S. ss. 7-107-102(1) may
apply to the district court in the county in Colorado where the corporation's
principal office is located or, if the corporation has no principal office in
Colorado, to the district court of the county in which the corporation's
registered office is located to seek an order that a shareholder meeting be held
if: (i) notice of the special meeting was not given within thirty days after the
date of the call or the date the last of the demands necessary to require
calling of the meeting was received by the corporation pursuant to C.R.S. ss.
7-107-102(1); or (ii) the special meeting was not held in accordance with the
notice.
Section 2.2 SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President, by a majority of the Board of Directors, or by the person or
persons authorized by resolution of the Board of Directors and shall be called
by the President upon the receipt of one or more written demands for a special
meeting, stating the purpose or purposes for which it is to be held, signed and
dated by the holders of shares representing at least ten percent of all the
votes entitled to be cast on any issue proposed to be considered at the meeting.
Section 2.3 PLACE OF MEETINGS. The Board of Directors may designate any
place, either within or outside of the State of Colorado, as the place of
meeting for any annual meeting or for any
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<PAGE> 2
special meeting. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the corporation in
the State of Colorado.
Section 2.4 NOTICE OF MEETING. Notice stating the place, day and hour
of each annual and special meeting of shareholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall, unless
otherwise prescribed by statute, be delivered not less than ten nor more than
sixty days before the date of the meeting, either personally or by mail, by or
at the direction of the President, or the Secretary, or the officer or other
persons calling the meeting, to the shareholders; provided, however, that if the
authorized shares is to be increased, at least thirty days' notice shall be
given. Unless otherwise required by statute, notice need be given only to
shareholders entitled to vote at such meeting.
Notice of a special meeting shall include a description of the purpose
or purposes of the meeting. Notice of an annual meeting need not include a
description of the purpose or purposes of the meeting except the purpose or
purposes shall be stated with respect to (i) an amendment to the Articles of
Incorporation of the corporation, (ii) a merger or share exchange in which the
corporation is a party, (iii) a sale, lease, exchange or other disposition,
other than in the usual and regular course of business, of all or substantially
all of the property of the corporation, with or without the goodwill, (iv) a
dissolution of the corporation, or (v) any other purpose for which a statement
of purpose is required by the Colorado Business Corporation Act.
Notice shall be given personally or by mail, private carrier,
telegraph, teletype, electronically transmitted facsimile or other form of wire
or wireless communication by or at the direction of the President, the
Secretary, or the officer or persons calling the meeting. If mailed and if in a
comprehensible form, such notice shall be deemed to be given and effective when
deposited in the United States mail, addressed to the shareholder at his or her
address as it appears in the corporation's current record of shareholders, with
postage prepaid. If written notice is given other than by mail, and provided
that such notice is in a comprehensible form, the notice is given and effective
at the earliest of: (i) the date received; (ii) five days after mailing; or
(iii) the date shown on the return receipt, if mailed by registered or certified
mail, return receipt requested, and the receipt is signed by or on behalf of the
addressee.
If requested by the person or persons lawfully calling such meeting,
the notice shall be given at corporate expense.
When a meeting is adjourned to another date, time or place, notice need
not be given of the new date, time or place if the new date, time or place of
such meeting is announced before adjournment at the meeting at which the
adjournment is taken. At the adjourned meeting the corporation may transact any
business which may have been transacted at the original meeting. If the
adjournment is for more than 120 days, or if a new record date is fixed for the
adjourned meeting, a new notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting as of the new record date.
A shareholder may waive notice of a meeting before or after the time
and date stated in the notice as the date or time when any action will occur or
has occurred by a writing signed by the shareholder entitled to the notice. Such
waiver shall be delivered to the corporation for filing with the corporate
records provided that such delivery and filing shall not be conditions of the
effectiveness of the waiver. Further, by attending a meeting either in person or
by proxy, a shareholder waives objection to lack of notice or defective notice
of the meeting unless the shareholder objects at the beginning of the meeting to
the holding of the meeting or the transaction of business at the meeting because
of lack of notice or defective notice. By attending the meeting, the shareholder
also waives any objection to consideration in
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<PAGE> 3
the meeting of a particular matter not within the purpose or purposes described
in the meeting notice unless the shareholder objects to considering the matter
when it is presented.
No notice need be sent to any shareholder if three successive notices
mailed to the last known address of such shareholder have been returned as
undeliverable until such time as another address for such shareholder is made
known to the corporation. In order to be entitled to receive notice of any
meeting, a shareholder shall advise the corporation in writing of any change in
such shareholder's mailing address as shown on the corporation's books and
records.
Section 2.5 FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to (i) be given notice of any meeting of shareholders or
any adjournment thereof, (ii) to vote at any meeting, (iii) take any other
action, (iv) receive distributions or share dividends, or (v) demand a special
meeting, or to make a determination of shareholders for any other proper
purpose, the Board of Directors may fix a future date as the record date for any
such determination of shareholders, such date in any case to be not more than
seventy days and, in the case of a meeting of shareholders, not less than ten
days, prior to the date of the meeting or the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed by the
directors, the record date shall be the day before the first notice of the
meeting is given to shareholders, or the date on which the Board of Directors
authorizes a distribution, as the case may be. When a determination of
shareholders entitled to vote at any meeting of shareholders is made as provided
in this Section, such determination shall apply to any adjournment thereof
unless the Board of Directors fixes a new record date, which it must do if the
meeting is adjourned to a date more than 120 days after the date fixed for the
original meeting. Unless otherwise specified when the record date is fixed, the
time of day for such determination shall be as of the corporation's close of
business on the record date.
Notwithstanding the above, the record date for determining the
shareholders entitled to take action without a meeting or entitled to be given
notice of action so taken shall be the date a writing upon which the action is
taken is first received by the corporation. The record date for determining
shareholders entitled to demand a special meeting shall be the date of the
earliest of any of the demands pursuant to which the meeting is called, or the
date that is 60 days before the date the first of such demands is received by
the corporation, whichever is later.
Section 2.6 VOTING LISTS. After a record date is fixed for a
shareholders' meeting, the Secretary shall make a complete list of the
shareholders entitled to be given notice of such meeting or any adjournment
thereof. The list shall be arranged by voting groups and within each voting
group by class or series of shares, shall be in alphabetical order within each
class or series, and shall show the address of and the number of shares of each
class or series held by each shareholder. For the period beginning the earlier
of ten days prior to the meeting or two business days after notice of the
meeting is given and continuing through the meeting and any adjournment thereof,
this list shall be kept on file at the principal office of the corporation or at
a place (which shall be identified in the notice of the meeting or any
adjournment thereof) in the city where the meeting will be held. Such list shall
be available for inspection on written demand by any shareholder (including for
the purpose of this Section 2.6 any holder of voting trust certificates) or his
or her agent or attorney during regular business hours and during the meeting or
adjournment thereof. The original stock transfer books shall be prima facie
evidence as to who are the shareholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders.
Any shareholder, his or her agent, or attorney may upon written demand
copy the list during regular business hours and during the period it is
available for inspection, provided (i) the shareholder has been a shareholder
for at least three months immediately preceding the demand or holds at least
five percent of all outstanding shares of any class of shares as of the date of
the demand, (ii) the demand is made in good faith and for a purpose reasonably
related to the demanding shareholder's interest as a shareholder, (iii) the
shareholder describes with reasonable particularity the purpose and the records
the
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<PAGE> 4
shareholder desires to inspect, (iv) the records are directly in connection with
the described purpose, and (v) the shareholder pays a reasonable charge covering
the costs of labor and material for such copies, not to exceed the estimated
cost of production and reproduction.
Section 2.7 QUORUM. A majority of the votes entitled to be cast on the
matter by a voting group, represented in person or by proxy, constitutes a
quorum of that voting group for action on that matter. If no specific voting
group is designated in the Articles of Incorporation or under the Colorado
Business Corporation Act for a particular matter, all outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a voting group. In the absence of a quorum at any such meeting, a
majority of the shares so represented may adjourn the meeting from time to time
for a period not to exceed one hundred twenty days for any one adjournment
without further notice. However, if the adjournment is for more than one hundred
twenty days or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting.
At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. The shareholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal during such meeting of that number of shareholders whose absence
would cause there to be less than a quorum.
Section 2.8 MANNER OF ACTING. If a quorum is present, an action on a
matter other than the election of directors by a voting group is approved if the
votes cast within the voting group favoring the action exceed the votes cast
within the voting group opposing the action, unless a greater number of
affirmative votes is otherwise required by the Colorado Business Corporation
Act, the Articles of Incorporation or these Bylaws.
Section 2.9 PROXIES. A shareholder may vote the shareholder's shares in
person or by proxy by signing an appointment form, either personally or by his
or her duly authorized attorney-in-fact. A shareholder may also appoint a proxy
by transmitting or authorizing the transmission of a telegram, teletype, or
other electronic transmission providing a written statement of the appointment
to the proxy, a proxy solicitor, proxy support service organization, or other
person duly authorized by the proxy to receive appointments as agent for the
proxy, or to the corporation. The transmitted appointment shall set forth or be
transmitted with written evidence from which it can be determined that the
shareholder transmitted or authorized the transmission of the appointment. The
proxy appointment form shall be filed with the Secretary of the corporation
before or at the time of the meeting. The appointment of a proxy is effective
when received by the corporation and is valid for eleven months unless a
different period is expressly provided in the appointment form or similar
writing.
Any complete copy, including an electronically transmitted facsimile,
of an appointment of a proxy may be substituted for or used in lieu of the
original appointment for any purpose for which the original appointment could be
used.
An appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the appointment
is coupled with an interest. An appointment made irrevocable is revoked when the
interest with which it is coupled is extinguished, but such revocation does not
affect the right of the corporation to accept the proxy's authority unless (i)
the corporation had notice that the appointment was coupled with an interest and
notice that such interest is extinguished is received by the Secretary or other
officer or agent authorized to tabulate votes before the proxy exercises his or
her authority under the appointment or (ii) other notice of the revocation of
the appointment is received by the Secretary or other officer or agent
authorized to tabulate votes before the proxy exercises his or her authority
under the appointment. Other notice of revocation, may, in the
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<PAGE> 5
discretion of the corporation, be deemed to include the appearance at a
shareholders meeting of the shareholder who granted the proxy and his or her
voting in person on any matter subject to a vote at such meeting.
The death or incapacity of the shareholder appointing a proxy does not
affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the Secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his or her
authority under the appointment.
The corporation shall not be required to recognize an appointment made
irrevocable if it has received a writing revoking the appointment signed by the
shareholder either personally or by the shareholder's attorney-in-fact,
notwithstanding that the revocation may be a breach of an obligation of the
shareholder to another person not to revoke the appointment.
A transferee for value of shares subject to an irrevocable appointment
may revoke the appointment if the transferee did not know of its existence when
he or she acquired the shares and the existence of the irrevocable appointment
was not noted on the certificate representing the shares or on the information
statement for shares without certificates.
Section 2.10 VOTING OF SHARES. Except as otherwise provided in this
Section or in the Articles of Incorporation, each outstanding share, regardless
of class, shall be entitled to one vote, except in the election of directors,
and each fractional share shall be entitled to a corresponding fractional vote
on each matter submitted to a vote at a meeting of shareholders. At each
election for directors, every shareholder entitled to vote at such election has
the right to vote, in person or proxy, all of the shareholder's votes for as
many persons as there are directors to be elected and for whose election the
shareholder has a right to vote unless the Articles of Incorporation provide
otherwise. Cumulative voting shall not be permitted in the election of directors
or for any other purpose. At each election of directors, that number of
candidates equaling the number of directors to be elected, having the highest
number of votes cast in favor of their election, shall be elected to the Board
of Directors.
Except as otherwise ordered by a court of competent jurisdiction upon a
finding that the purpose of this Section would not be violated in the
circumstances presented to the court, the shares of the corporation are not
entitled to be voted if they are owned, directly or indirectly, by a second
corporation, domestic or foreign, and the corporation owns, directly or
indirectly, a majority of the shares entitled to vote for directors of the
second corporation; provided, however, that this provision shall not limit the
power of the corporation to vote any shares, including the corporation's own
shares, held by it in a fiduciary capacity.
Redeemable shares are not entitled to be voted after notice of
redemption is mailed to the holders and a sum sufficient to redeem the shares
has been deposited with a bank, trust company, or other financial institution
under an irrevocable obligation to pay the holders the redemption price on
surrender of the shares.
Section 2.11 CORPORATION'S ACCEPTANCE OF VOTES. If the name signed on a
vote, consent, waiver, proxy appointment, or proxy appointment revocation
corresponds to the name of a shareholder, the corporation, if acting in good
faith, is entitled to accept the vote, consent, waiver, proxy appointment, or
proxy appointment revocation and give it effect as the act of the shareholder.
If the name signed on a vote, consent, waiver, proxy appointment or
proxy appointment revocation does not correspond to the name of a shareholder,
the corporation, if acting in good faith, is nevertheless entitled to accept the
vote, consent, waiver, proxy appointment or proxy appointment revocation and to
give it effect as the act of the shareholder if:
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<PAGE> 6
(a) the shareholder is an entity and the name signed purports
to be that of an officer or agent of the entity;
(b) the name signed purports to be that of an administrator,
executor, guardian, or conservator representing the shareholder and, if
the corporation requests, evidence of fiduciary status acceptable to
the corporation has been presented with respect to the vote, consent,
waiver, proxy appointment, or proxy appointment revocation;
(c) the name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the corporation
requests, evidence of this status acceptable to the corporation has
been presented with respect to the vote, consent, waiver, proxy
appointment, or proxy appointment revocation;
(d) the name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the shareholder and, if the
corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder has been presented
with respect to the vote, consent, waiver, proxy appointment, or proxy
appointment revocation;
(e) two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least one
of the co-tenants or fiduciaries and the person signing appears to be
acting on behalf of all the co-tenants or fiduciaries; or
(f) the acceptance of the vote, consent, waiver, proxy
appointment or proxy appointment revocation is otherwise proper under
rules established by the corporation that are not inconsistent with
this Section 2.11.
The corporation is entitled to reject a vote, consent, waiver, proxy
appointment or proxy appointment revocation if the Secretary or other officer or
agent authorized to tabulate votes, acting in good faith, has reasonable basis
for doubt about the validity of the signature on it or about the signatory's
authority to sign for the shareholder.
Neither the corporation nor any of its officers or agents who accepts
or rejects a vote, consent, waiver, proxy appointment, or proxy appointment
revocation in good faith and in accordance with the standards of this Section is
liable in damages for the consequences of the acceptance or rejection.
Section 2.12 ACTION BY SHAREHOLDERS WITHOUT A MEETING. Unless the
Articles of Incorporation require that such action be taken at a shareholders'
meeting any action required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if all of the shareholders entitled
to vote thereon consent to such action in writing. No action pursuant to this
Section shall be effective unless the corporation has received writings that
describe and consent to the action, signed by all of the shareholders entitled
to vote on the action. Any such writing may be received by the corporation by
electronically transmitted facsimile or other form of wire or wireless
communication providing the corporation with a complete copy thereof, including
a copy of the signature thereto. Action taken pursuant to this Section shall be
effective as of the date the corporation receives writings describing and
consenting to the action signed by all of the shareholders entitled to vote with
respect to the action, unless all of the writings specify another date as the
effective date of the action, in which case such other date shall be the
effective date of the action.
Any shareholder who has signed a writing describing and consenting to
action taken pursuant to this Section may revoke such consent by a writing
signed by the shareholder describing the action and
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<PAGE> 7
stating that the shareholder's prior consent thereto is revoked, if such writing
is received by the corporation prior to the date the last writing necessary to
effect the action is received by the corporation.
If any shareholder revokes his or her consent as provided for herein
prior to what would otherwise be the effective date, the action proposed in the
consent shall be invalid. The record date for determining shareholders entitled
to take action without a meeting is the date the corporation first receives a
writing upon which the action is taken.
Action taken under this Section has the same effect as action taken at
a meeting of the shareholders and may be described as such in any document.
Section 2.13 VOTING BY BALLOT. Voting on any question or in any
election may be by voice vote unless the presiding officer shall order or any
shareholder shall demand that voting be by ballot.
Section 2.14 MEETINGS BY TELECOMMUNICATION. Any or all of the
shareholders may participate in an annual or special shareholders' meeting by,
or the meeting may be conducted through the use of, any means of communication
by which all persons participating in the meeting may hear each other during the
meeting. A shareholder participating in a meeting by this means is deemed to be
present in person at the meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 GENERAL POWERS. All corporate powers shall be exercised by
or under the authority of, and the business affairs of the corporation shall be
managed under the direction of, the Board of Directors, except as otherwise
provided in the Colorado Business Corporation Act or the Articles of
Incorporation. Notwithstanding the foregoing, the Board of Directors shall make
all decisions regarding all managers' salaries, bonuses, corporate borrowings,
expansion, issuance of stock, and similar major corporate actions.
Section 3.2 PERFORMANCE OF DUTIES. A director of the corporation shall
discharge his or her duties as a director, including his or her duties as a
member of any committee of the board upon which he or she may serve, in good
faith, in a manner he or she reasonably believes to be in the best interests of
the corporation, and with the care an ordinarily prudent person in a like
position would use under similar circumstances. In discharging his or her
duties, a director shall be entitled to rely on information, opinions, reports,
or statements, including financial statements and other financial data, in each
case prepared or presented by persons and groups listed in paragraphs (a), (b),
and (c) of this Section 3.2; but he or she shall not be considered to be acting
in good faith if he or she has knowledge concerning the matter in question that
makes such reliance unwarranted. A director shall not be liable as such to the
corporation or its shareholders for any action he or she takes or omits to take
as a director if, in connection with such action or omission, he or she
performed the duties of the position in compliance with this Section. Those
persons and groups on whose information, opinions, reports, and statements a
director is entitled to rely are:
(a) one or more officers or employees of the corporation whom
the director reasonably believes to be reliable and competent in the
matters presented;
(b) legal counsel, public accountants, or other persons as to
matters which the director reasonably believes to be within such
person's professional or expert competence; or
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(c) a committee of the board of which the director is not a
member if the director reasonably believes the committee merits
confidence.
Section 3.3 NUMBER, TENURE, AND QUALIFICATIONS. The number of directors
of the corporation shall be fixed from time to time by resolution of the Board
of Directors, but in no instance shall there be less than one director nor more
than nine directors, and in no case shall a decrease in the number of directors
shorten an incumbent director's term. Each director shall hold office until the
next annual meeting of shareholders and thereafter until his or her successor
shall have been elected and qualified. Directors shall be natural persons who
are eighteen years of age or older but need not be residents of the State of
Colorado or shareholders of the corporation.
In the event that there is more than one director of the corporation,
there may be a Chairman of the Board, who has been elected from among the
directors. He or she shall preside at all meetings of the stockholders and of
the Board of Directors. He or she shall have such other powers and duties as may
be prescribed by the Board of Directors.
Section 3.4 REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without notice immediately after, and at the same place
as, the annual meeting of shareholders. 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 3.5 SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the President or, if there are
more than two directors, by any two directors. The person or persons authorized
to call special meetings of the Board of Directors may fix any place, either
within or without the State of Colorado, as the place for holding any special
meeting of the Board of Directors called by them.
Section 3.6 NOTICE. Notice of the date, time and place of any special
meeting shall be given to each director at least two days prior to the meeting.
Notice shall be given personally or by mail, private carrier, telegraph,
teletype, electronically transmitted facsimile or other form of wire or wireless
communication. If mailed and if in a comprehensible form, such notice shall be
deemed to be given and effective when deposited in the United States mail,
addressed to the director at his or her address as it appears in the
corporation's current records, with postage prepaid. If written notice is given
other than by mail, and provided that such notice is in a comprehensible form,
the notice is given and effective at the earliest of: (i) the date received;
(ii) five days after mailing; or (iii) the date shown on the return receipt, if
mailed by registered or certified mail, return receipt requested, and the
receipt is signed by or on behalf of the addressee.
A director entitled to notice of a meeting may waive notice of a
meeting before or after the time and date of the meeting stated in the notice by
a writing signed by such director. Such waiver shall be delivered to the
corporation for filing with the corporate records, but such delivery and filing
shall not be conditions to the effectiveness of the waiver. Further, a
director's attendance at or participation in a meeting waives any required
notice to him or her of the meeting unless at the beginning of the meeting or
promptly upon his or her later arrival, the director objects to holding the
meeting or transacting business at the meeting because of lack of notice or
defective notice and does not thereafter vote for or assent to action taken at
the meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
Section 3.7 QUORUM. A quorum for the transaction of business at any
meeting of the Board of Directors shall consist of one-half of the directors in
office immediately before the meeting begins.
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Section 3.8 MANNER OF ACTING. The affirmative vote of a majority of the
directors present shall be required for the taking of any action by the Board of
Directors.
Section 3.9 INFORMAL ACTION BY DIRECTORS OR COMMITTEE MEMBERS. Any
action required or permitted to be taken at a meeting of the directors or any
committee designated by the Board of Directors may be taken without a meeting if
a written consent (or counterparts thereof) that sets forth the action so taken
is signed by all of the directors or of the members of the committee, as the
case may be. Such consent shall have the same force and effect as a unanimous
vote of the directors or committee members and may be stated as such in any
document. Unless the consent specifies a different effective time or date,
action taken under this Section is effective at the time or date the last
director signs a writing describing the action taken, unless, before such time,
any director has revoked his or her consent by a writing signed by the director
and received by the President of the Secretary of the corporation.
Section 3.10 TELEPHONIC MEETINGS. The Board of Directors may permit any
director (or any member of a committee designated by the Board) to participate
in a regular or special meeting of the Board of Directors or a committee thereof
by, or conduct the meeting through the use of, any means of communication by
which all directors participating in the meeting may hear each other during the
meeting. A director participating in a meeting in this manner is deemed to be
present in person at the meeting.
Section 3.11 VACANCIES. Any vacancy on the Board of Directors,
including a vacancy resulting from an increase in the number of directors, may
be filled by the affirmative vote of a majority of the shareholders or the Board
of Directors. If the directors remaining in office constitute fewer than a
quorum of the board, the directors may fill the vacancy by the affirmative vote
of a majority of all the directors remaining in office.
If elected by the directors, the director shall hold office until the
next annual shareholders' meeting at which directors are elected. If elected by
the shareholders, the director shall hold office for the unexpired term of his
or her predecessor in office; except that, if the director's predecessor was
elected by the directors to fill a vacancy, the director elected by the
shareholders shall hold the office for the unexpired term of the last
predecessor elected by the shareholders.
If the vacant office was held by a director elected by a voting group
of shareholders, only the holders of shares of that voting group are entitled to
vote to fill the vacancy if it is filled by the shareholders, and, if one or
more of the remaining directors were elected by the same voting group, only such
directors are entitled to vote to fill the vacancy if it is filled by the
directors.
Section 3.12 RESIGNATION. Any director of the corporation may resign at
any time by giving written notice to the corporation. The resignation of any
director shall take effect upon receipt by the corporation of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. When one or more directors shall resign from the board,
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or resignations
shall become effective.
Section 3.13 REMOVAL. Subject to any limitations contained in the
Articles of Incorporation, any director or directors of the corporation may be
removed at any time, with or without cause, in the manner provided in the
Colorado Business Corporation Act. Any director may be removed by the
shareholders of the voting group that elected the director with or without
cause, only at a meeting called for that purpose. The notice of the meeting
shall state that the purpose of one or the purposes of the meeting is removal of
the director. A director may be removed only if the number of votes cast in
favor of removal exceeds the number of votes cast against removal.
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Section 3.14 COMMITTEES. By resolution adopted by a majority of the
Board of Directors in office at the time, the directors may designate one or
more directors to constitute a committee, any of which shall have such authority
in the management of the corporation as the Board of Directors shall designate
and as shall be prescribed by the Colorado Business Corporation Act and Article
XI of these Bylaws.
Section 3.15 COMPENSATION. By resolution of the Board of Directors and
irrespective of any personal interest of any of the members or the Board of
Directors, each director may be paid his or her expenses, if any, of attendance
at each meeting of the Board of Directors and may be paid a stated salary as
director or a fixed sum for attendance at each meeting of the Board of Directors
or both. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 3.16 PRESUMPTION OF ASSENT. A director of the corporation who
is present at a meeting of the Board of Directors or committee of the board when
action on any corporate matter is taken shall be presumed to have assented to
all action taken unless (i) the director objects at the beginning of the
meeting, or promptly upon his or her arrival, to the holding of the meeting or
the transaction of business at the meeting and does not thereafter vote for or
assent to any action taken at the meeting, (ii) the director contemporaneously
requests that his or her dissent or abstention as to any specific action taken
be entered in the minutes of the meeting, or (iii) the director causes written
notice of his or her dissent or abstention as to any specific action to be
received by the presiding officer of the meeting before its adjournment or by
the corporation promptly after the adjournment of the meeting. A director may
dissent to a specific action at a meeting, while assenting to others. The right
to dissent to a specific action taken at a meeting of the Board of Directors or
a committee of the board shall not be available to a director who voted in favor
of such action.
ARTICLE IV
OFFICERS
Section 4.1 NUMBER. The officers of the corporation shall be a
President, a Secretary, and a Treasurer, each of whom must be a natural person
who is eighteen years or older and shall be elected by the Board of Directors.
Such other officers and assistant officers as may be deemed necessary may be
appointed by the Board of Directors by resolution. Any two or more offices may
be held by the same person.
Section 4.2 ELECTION AND TERM OF OFFICE. The officers of the
corporation to be appointed by the Board of Directors shall be appointed
annually by the Board of Directors at the first meeting of the Board of
Directors held after the annual meeting of the shareholders. If the appointment
of officers shall not be held at such meeting, such appointment shall be held as
soon thereafter as practicable. Each officer shall hold office until his or her
successor shall have been duly appointed and shall have qualified or until his
or her death or until he or she shall resign or shall have been removed in the
manner hereinafter provided.
Section 4.3 REMOVAL AND RESIGNATION. Any officer or agent may be
removed by the Board of Directors at any time, with or without cause, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed or to the corporation. Appointment of an officer or agent shall not
of itself create contract rights.
An officer or agent may resign at any time by giving written notice of
resignation to the corporation. The resignation is effective when the notice is
received by the corporation unless the notice specifies a later effective date.
If a resignation is made effective at a later date, the Board of Directors
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may permit the officer to remain in office until the effective date and may fill
the pending vacancy before the effective date if the Board of Directors provides
that the successor does not take office until the effective date, or the Board
of Directors may remove the officer at any time before the effective date and
may fill the resulting vacancy. An officer's resignation does not affect the
corporation's contract rights, if any, with the officer.
Section 4.4 VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 4.5 PRESIDENT. The President shall be the chief executive
officer of the corporation and, subject to the control of the Board of
Directors, shall, in general, supervise and control all of the day-to-day
business and affairs of the corporation. He or she shall, when present, and in
the absence of a Chairman of the Board, preside at all meetings of the
shareholders and of the Board of Directors. He or she may sign, with the
Secretary or any other proper officer of the corporation thereunto authorized by
the Board of Directors, certificates for shares of the corporation and deeds,
mortgages, bonds, contracts, or other instruments which the Board of Directors
has authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the corporation or shall be required by
law to be otherwise signed or executed; and in general shall perform all duties
incident to the office of President and such other duties as may be prescribed
by the Board of Directors from time to time.
Section 4.6 VICE PRESIDENT. If appointed by the Board of Directors, the
Vice President (or in the event there be more than one Vice President, the Vice
Presidents in the order designated at the time of their appointment, or in the
absence of any designation, then in the order of their election) shall, in the
absence of the President or in the event of his or her death, inability or
refusal to act, perform all duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. Any Vice President may sign, with the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, certificates for shares of
the corporation; and shall perform such other duties as from time to time may be
assigned to him or her by the President or by the Board of Directors.
Section 4.7 SECRETARY. The Secretary shall: (a) prepare and maintain as
permanent records the minutes of the proceedings of the shareholders and the
Board of Directors, a record of all actions taken by the shareholders or Board
of Directors without a meeting, a record of all actions taken by a committee of
the Board of Directors in place of the Board of Directors on behalf of the
corporation, and a record of all waivers of notice and meetings of shareholders
and of the Board of Directors or any committee thereof, (b) ensure that all
notices are duly given in accordance with the provisions of these Bylaws and as
required by law, (c) serve as custodian of the corporate records and of the seal
of the corporation and affix the seal to all documents when authorized by the
Board of Directors, (d) keep at the corporation's registered office or principal
place of business a record containing the names and addresses of all
shareholders in a form that permits preparation of a list of shareholders
arranged by voting group and by class or series of shares within each voting
group, that is alphabetical within each class or series and that shows the
address of, and the number of shares of each class or series held by, each
shareholder, unless such a record shall be kept at the office of the
corporation's transfer agent or registrar, (e) maintain at the corporation's
principal office the originals or copies of the corporation's Articles of
Incorporation, Bylaws, minutes of all shareholders' meetings and records of all
action taken by shareholders without a meeting for the past three years, all
written communications within the past three years to shareholders as a group or
to the holders of any class or series of shares as a group, a list of the names
and business addresses of the current directors and officers, a copy of the
corporation's most recent corporate report filed with the Secretary of State,
and financial statements showing reasonable detail the corporation's assets and
liabilities and results of operations for the last three years, (f) have general
charge of the stock transfer books of the corporation, unless the corporation
has a transfer agent,
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(g) authenticate records of the corporation, and (h) in general, perform all
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him or her by the President or by the Board of
Directors. Assistant Secretaries, if any, shall have the same duties and powers,
subject to supervision by the Secretary. The directors and/or shareholders may
however respectively designate a person other than the Secretary or Assistant
Secretary to keep the minutes of their respective meetings.
Any books, records, or minutes of the corporation may be in written
form or in any form capable of being converted into written form within a
reasonable time.
Section 4.8 TREASURER. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the corporation; (b)
receive and give receipts for moneys due and payable to the corporation from any
source whatsoever and deposit all such moneys in the name of the corporation in
such banks, trust companies, or other depositories as shall be selected in
accordance with the provisions of Article V of these Bylaws; and (c) in general
perform all of the duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him or her by the President or by
the Board of Directors.
Section 4.9 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
Assistant Secretaries, when authorized by the Board of Directors, may sign with
the Chairman of the Board of Directors or the President or a Vice President
certificates for shares of the corporation the issuance of which shall have been
authorized by a resolution of the Board of Directors. The Assistant Secretaries
and Assistant Treasurers, in general, shall perform such duties as shall be
assigned to them by the Secretary or the Treasurer, respectively, or by the
President or the Board of Directors.
Section 4.10 BONDS. If the Board of Directors by resolution shall so
require, any officer or agent of the corporation shall give bond to the
corporation in such amount and with such surety as the Board of Directors may
deem sufficient, conditioned upon the faithful performance of their respective
duties and offices.
Section 4.11 SALARIES. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a director of
the corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS, AND DEPOSITS
Section 5.1 CONTRACTS. The Board of Directors may authorize any
officer, officers, agent, or agents to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation and such
authority may be general or confined to specific instances.
Section 5.2 LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 5.3 CHECKS, DRAFTS, ETC. All checks, drafts, or other orders
for the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation shall be signed by such officer, officers, agent, or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
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Section 5.4 DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies, or other depositories as the Board of Directors
may select.
ARTICLE VI
SHARES, CERTIFICATES FOR SHARES
AND TRANSFER OF SHARES
Section 6.1 REGULATION. The Board of Directors may make such rules and
regulations as it may deem appropriate concerning the issuance, transfer, and
registration of certificates for shares of the corporation, including the
appointment of transfer agents and registrars.
Section 6.2 SHARES WITHOUT CERTIFICATES. Unless otherwise provided by
the Articles of Incorporation or these Bylaws, the Board of Directors may
authorize the issuance of any of its classes or series of shares without
certificates. Such authorization shall not affect shares already represented by
certificates until they are surrendered to the corporation.
Within a reasonable time following the issue or transfer of shares
without certificates, the corporation shall send the shareholder a complete
written statement of the information required on certificates by the Colorado
Business Corporation Act.
Section 6.3 CERTIFICATES FOR SHARES. If shares of the corporation are
represented by certificates, the certificates shall be respectively numbered
serially for each class of shares or series thereof, as they are issued, shall
be impressed with the corporate seal or a facsimile thereof, and shall be signed
by the Chairman of the Board of Directors or by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or by the Secretary or
an Assistant Secretary; provided that such signatures may be in facsimile if the
certificate is countersigned by a transfer agent or registered by a registrar
other than the corporation itself or its employee. If the person who signed,
either manually or in facsimile, a share certificate no longer holds office when
the certificate is issued, the certificate is nevertheless valid. Each
certificate shall state on its face the name of the corporation, the fact that
the corporation is organized or incorporated under the laws of the State of
Colorado, the name of the person to whom issued, the date of issue, the class
(or series of any class), and the number and class of shares and the designation
of the series, if any, represented thereby. A statement of the designations,
preferences, qualifications, limitations, restrictions, and special or relative
rights of the shares of each class shall be set forth in full or summarized on
the face or back of the certificates which the corporation shall issue, or in
lieu thereof, the certificate may set forth that such a statement or summary
will be furnished to any shareholder upon request without charge. Each
certificate shall be otherwise in such form as may be prescribed by the Board of
Directors and as shall conform to the rules of any stock exchange on which the
shares may be listed.
The corporation shall not issue certificates representing fractional
shares and shall not be obligated to make any transfers creating a fractional
interest in a share of stock. The corporation may, but shall not be obligated
to, issue scrip in registered or bearer form in lieu of any fractional shares,
such scrip to have terms and conditions specified by the Board of Directors
consistent with the requirements of the Colorado Business Corporation Act.
Section 6.4 CANCELLATION OF CERTIFICATES. All certificates surrendered
to the corporation for transfer shall be canceled, and no new certificates shall
be issued in lieu thereof until the former certificate for a like number of
shares shall have been surrendered and canceled, except as herein provided with
respect to lost, stolen, or destroyed certificates.
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Section 6.5 LOST, STOLEN, OR DESTROYED CERTIFICATES. Any shareholder
claiming that his or her certificate for shares is lost, stolen, or destroyed
may make an affidavit or affirmation of that fact and lodge the same with the
Secretary of the corporation, accompanied by a signed application for a new
certificate. Thereupon, and upon the giving of a satisfactory bond of indemnity
to the corporation not exceeding an amount double the value of the shares as
represented by such certificate (the necessity for such bond and the amount
required to be determined by the President and Treasurer of the corporation), a
new certificate may be issued of the same tenor and representing the same
number, class and series of shares as were represented by the certificate
alleged to be lost, stolen, or destroyed.
Section 6.6 TRANSFER OF SHARES. Subject to the terms of any shareholder
agreement relating to the transfer of shares or other transfer restrictions
contained in the Articles of Incorporation or authorized therein, shares of the
corporation shall be transferable on the books of the corporation by the holder
thereof in person or by his or her duly authorized attorney, upon the surrender
and cancellation of a certificate or certificates for a like number of shares.
Upon presentation and surrender of a certificate for shares properly endorsed
and payment of all taxes therefor, the transferee shall be entitled to a new
certificate or certificates in lieu thereof. As against the corporation, a
transfer of shares can be made only on the books of the corporation and in the
manner hereinabove provided, and the corporation shall be entitled to treat the
holder of record of any share as the owner thereof and shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have express or other notice
thereof, save as expressly provided by the statutes of the State of Colorado.
Section 6.7 CONSIDERATION FOR SHARES. Certificated or uncertificated
shares shall not be issued until the shares represented thereby are fully paid.
The Board of Directors may authorize the issuance of shares for consideration
consisting of any tangible or intangible property or benefit to the corporation,
including cash, promissory notes, services performed, or other securities of the
corporation. Future services shall not constitute payment or partial payment for
shares of the corporation. The promissory note of a subscriber or an affiliate
of a subscriber shall not constitute payment or partial payment for shares of
the corporation unless the note is negotiable and is secured by collateral,
other than the shares being purchased, having a fair market value at least equal
to the principal amount of the note. For purposes of this Section "promissory
note" means a negotiable instrument on which there is an obligation to pay
independent of collateral and does not include a non-recourse note.
ARTICLE VII
FISCAL YEAR
The Board of Directors may, by resolution, adopt a fiscal year for this
Corporation.
ARTICLE VIII
DISTRIBUTIONS
The Board of Directors may from time to time declare, and the
corporation may pay, distributions on its outstanding shares in the manner and
upon the terms and conditions provided by the Colorado Business Corporation Act
and its Articles of Incorporation.
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ARTICLE IX
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words "CORPORATE SEAL."
ARTICLE X
AMENDMENTS
The Board of Directors shall have power, to the maximum extent
permitted by the Colorado Business Corporation Act, to make, amend, and repeal
the Bylaws of the corporation at any regular or special meeting of the board
unless the shareholders, in making, amending, or repealing a particular Bylaw,
expressly provide that the directors may not amend or repeal such Bylaw. The
shareholders also shall have the power to make, amend or repeal the Bylaws of
the corporation at any annual meeting or at any special meeting called for that
purpose.
ARTICLE XI
EXECUTIVE COMMITTEE
Section 11.1 APPOINTMENT. The Board of Directors by resolution adopted
by a majority of the full Board, may designate one or more of its members to
constitute an Executive Committee. The designation of such Committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors or any member thereof of any responsibility imposed by law.
Section 11.2 AUTHORITY. The Executive Committee, when the Board of
Directors is not in session, shall have and may exercise all of the authority of
the Board of Directors except to the extent, if any, that such authority shall
be limited by the resolution appointing the Executive Committee and except also
that the Executive Committee shall not:
(a) authorize distributions;
(b) approve or propose to shareholders action that the
Colorado Business Corporation Act requires to be approved by
shareholders;
(c) fill vacancies on the Board of Directors or on any
its committees;
(d) amend Articles of Incorporation;
(e) adopt, amend, or repeal bylaws;
(f) approve a plan of merger not requiring shareholder
approval;
(g) authorize or approve reacquisition of shares, except
according to a formula or method prescribed by the Board of Directors;
or
(h) authorize or approve the issuance or sale of shares
or a contract for the sale of shares or determine the designation and
relative rights, preferences, and limitations of a class or
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series of shares, unless authorized to do so within limits specifically
prescribed by the Board of Directors.
Section 11.3 TENURE AND QUALIFICATIONS. Each member of the Executive
Committee shall hold office until the next regular annual meeting of the Board
of Directors following his or her designation and until his or her successor is
designated as a member of the Executive Committee and is elected and qualified.
Section 11.4 MEETINGS. Regular meetings of the Executive Committee may
be held without notice at such time and places as the Executive Committee may
fix from time to time by resolution. Special meetings of the Executive Committee
may be called by any member thereof upon not less than one day's notice stating
the place, date and hour of the meeting. Notice shall be given personally or by
mail, private carrier, telegraph, teletype, electronically transmitted facsimile
or other form of wire or wireless communication. If mailed and if in a
comprehensible form, such notice shall be deemed to be given and effective when
deposited in the United States mail, addressed to the director at his or her
address as it appears in the corporation's current records, with postage
prepaid. If written notice is given other than by mail, and provided that such
notice is in a comprehensible form, the notice is given and effective at the
earliest of: (i) the date received; (ii) five days after mailing; or (iii) the
date shown on the return receipt, if mailed by registered or certified mail,
return receipt requested, and the receipt is signed by or on behalf of the
addressee. Any member of the Executive Committee may waive notice of any meeting
and no notice of any meeting need be given to any member thereof who attends in
person. The notice of a meeting of the Executive Committee need not state the
business proposed to be transacted at the meeting.
Section 11.5 QUORUM. A majority of the members of the Executive
Committee shall constitute a quorum for the transaction of business at any
meeting thereof, and action of the Executive Committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
Section 11.6 VACANCIES. Any vacancy in the Executive Committee may be
filled by a resolution adopted by a majority of the full Board of Directors.
Section 11.7 RESIGNATIONS AND REMOVAL. Any member of the Executive
Committee may be removed at any time with or without cause by resolution adopted
by a majority of the full Board of Directors. Any member of the Executive
Committee may resign from the Executive Committee at any time by giving written
notice to the President or Secretary of the corporation, and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 11.8 PROCEDURE. The Executive Committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these Bylaws. It shall keep regular minutes of its
proceedings and report the same to the Board of Directors for its information at
the meeting thereof held next after the proceedings shall have been taken.
ARTICLE XII
EMERGENCY BY-LAWS
The Emergency Bylaws provided in this Article XII shall be operative
during any emergency in the conduct of the business of the corporation resulting
from a catastrophic event that prevents the normal functioning of the offices of
the Corporation, notwithstanding any different provision in the preceding
articles of the Bylaws or in the Articles of Incorporation of the corporation or
in the Colorado Business Corporation Act. To the extent not inconsistent with
the provisions of this Article, the Bylaws provided in
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BYLAWS - INTERNATIONAL COMMODITY LOGISTICS, INC. Page 16 of 18
<PAGE> 17
the preceding articles shall remain in effect during such emergency and upon its
termination the Emergency Bylaws shall cease to be operative.
During any such emergency:
(a) A meeting of the Board of Directors may be called by any
officer or director of the corporation. Notice of the time and place of
the meeting shall be given by the person calling the meeting to such of
the directors as it may be feasible to reach by any available means of
communication. Such notice shall be given at such time in advance of
the meeting as circumstances permit in the judgment of the person
calling the meeting.
(b) At any such meeting of the Board of Directors, a quorum
shall consist of the number of directors in attendance at such meeting.
(c) The Board of Directors, either before or during any such
emergency, may, effective in the emergency, change the principal office
or designate several alternative principal offices or regional offices
or authorize the officers so to do.
(d) The Board of Directors, either before or during any such
emergency, may provide, and from time to time modify, lines of
succession in the event that during such an emergency any or all
officers or agents of the corporation shall for any reason be rendered
incapable of discharging their duties.
(e) No officer, director, or employee acting in accordance
with these Emergency Bylaws shall be liable except for willful
misconduct.
(f) These Emergency Bylaws shall be subject to repeal or
change by further action of the Board of Directors or by action of the
shareholders, but no such repeal or change shall modify the provisions
of the next preceding paragraph with regard to action taken prior to
the time of such repeal or change. Any amendment of these Emergency
Bylaws may make any further or different provision that may be
practical and necessary for the circumstances of the emergency.
[Certification Page Follows]
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BYLAWS - INTERNATIONAL COMMODITY LOGISTICS, INC. Page 17 of 18
<PAGE> 18
CERTIFICATE
I hereby certify that the foregoing Bylaws, consisting of eighteen (18)
pages, including this page, constitute the Bylaws of International Commodity
Logistics, Inc., adopted by the Board of Directors of the corporation as of May
12, 1999.
/s/ Roderick J. MacKenzie
---------------------------------
Roderick J. MacKenzie, Secretary
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BYLAWS - INTERNATIONAL COMMODITY LOGISTICS, INC. Page 18 of 18
<PAGE> 1
EXHIBIT 10.1
MANAGEMENT AGREEMENT
THIS AGREEMENT made as of the 11th day of December, 1998 AMONG:
RODERICK J. MACKENZIE, an individual residing in the City of
Calgary, in the Province of Alberta, Canada
(hereinafter called "MacKenzie")
OF THE FIRST PART
- AND -
GLOBAL HYDROCARBON CORPORATION LTD., a body corporate
incorporated under the laws of the Province of Alberta, with
head office in the City of Calgary, Province of Alberta,
Canada
(hereinafter called the "Manager")
OF THE SECOND PART
- AND -
SULPHUR CORPORATION OF CANADA LTD., a body corporate
incorporated under the laws of the Province of Alberta, with
head office in the City of Calgary, Province of Alberta,
Canada
(hereinafter called the "Corporation")
OF THE THIRD PART
- AND -
INTERNATIONAL HYDRO CARBON GROUP, INC, a body corporate
incorporated under the laws of the State of COLORADO, United
States of America.
(hereinafter called "IHC Group")
OF THE FOURTH PART
- AND -
SULPORT SERVICES INTERNATIONAL, INC, a body corporate
incorporated federally in Canada and registered in British
Columbia, Canada.
(hereinafter called the "SSI")
OF THE FIFTH PART
WITNESSES THAT:
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WHEREAS the Corporation is engaged in the business of
world-wide marketing and distribution of sulphur;
AND WHEREAS the Corporation wishes to retain the services of
the Manager to manage its business affairs and the Manager
wishes to provide such services upon the terms and conditions
hereinafter set forth;
AND WHEREAS MacKenzie is a director, officer and controlling
shareholder of the Manager;
AND WHEREAS IHC Group is the sole shareholder of the
Corporation;
AND WHEREAS IHC Group has agreed to guarantee the due and
timely performance of the obligations of the Corporation
hereunder;
AND WHEREAS this Agreement supercedes and replaces the
Management Agreement among the parties dated May 1, 1998.
IN CONSIDERATION of the premises and the mutual covenants and
agreements of the Parties hereinafter set forth, the Parties
covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement, in addition to any terms defined parenthetically
herein, the following terms shall have the following meanings:
(a) "Affiliate" of the Corporation means:
(i) a body corporate which is a subsidiary of the
Corporation;
(ii) a body corporate of which the Corporation is a
subsidiary; or
(iii) a body corporate which is controlled by the same
person as the Corporation, and for the purposes of
the foregoing, a body corporate is controlled by a
person if:
(A) securities of the body corporate to
which are attached more than 50% of the
votes that may be cast to elect directors of
the body corporate are held, other than by
way of security only, by or for the benefit
of that person; and
(B) the votes that attach to those securities
are sufficient, if exercised, to elect a
majority of the directors of the body
corporate.
(iv) a body corporate is a subsidiary of another body
corporate if it is controlled by that other body
corporate.
(b) "Bonus" means the bonus payable to the Manager subject to and
in accordance with the terms and conditions set forth in
Article III.
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(c) "Consumer Price Index" means the all-items Consumer Price
Index as determined by Statistics Canada for the City of
Calgary from time to time.
(d) "Management Services" means the management, supervision and
direction of the business of the Organizations in the broadest
sense, including without limitation the following services:
(i) negotiating, arranging, supervising or acting as a
broker or agent in connection with the purchase,
sale, processing, tolling, trading, or swapping of
sulphur or sulphur services by or on behalf of any of
the Organizations;
(ii) assistance in the development of business plans and
corporate strategies and policies;
(iii) assistance in the economic evaluation of business and
investment opportunities;
(iv) providing advice on corporate financing and financial
management;
(v) the preparation, prior to the commencement of each
calendar year, of a detailed budget and pro forma
financial statements for the Corporation for the
ensuing calendar year for approval by the Board of
Directors of the Corporation;
(vi) the preparation and maintenance, in accordance with
United States generally accepted accounting
principles, of full books of account which contain
accurate and complete records of all income,
expenses, assets, liabilities and transactions of the
Corporation;
(vii) the design and implementation of effective
management reporting and control systems; and
(viii) the management of the day-to-day operations of the
business affairs of the Organizations.
(e) "Organizations" means any one or more of the following, namely
the Corporation, or any other person to whom the Corporation
from time to time instructs the Manager to provide its
services hereunder.
(f) "Party" means a person who is a party to this Agreement.
(g) "Person" includes a natural person, a corporation, a
partnership, a limited partnership, or an unincorporated
organization.
(h) "Term" means the term of this Agreement, as defined in
paragraph 2.2.
(i) "Termination Date" means the date of the termination of this
Agreement.
(j) "Tonne" means a metric ton comprised of 1000 kilograms.
(k) "Port Agreement" means:
(i) Any written agreement among the Corporation, Prince
Rupert Port Corporation and Ridley Terminals Inc.,
relating to commodity processing at the Prince Rupert
site, beginning at the time of execution of such
document(s), as amended or supplemented from time to
time, together with any renewals or extensions
thereof.
1.2 Interpretation
For the purposes of this Agreement, except as expressly provided or
unless the context otherwise requires:
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(a) "this Agreement" means this Management Agreement as it may from time
to time be supplemented, amended, extended or renewed by one or more
agreements entered into pursuant to applicable provisions hereof;
(b) the headings used throughout this Agreement are solely for the
convenience of the Parties and are not to be used as an aid in the
interpretation of this agreement;
(c) the terms "Article", "paragraph" or "subparagraph" followed by a
number or letter or both means or refers to the specified Article,
paragraph or subparagraph of this Agreement, and "hereto",
"hereunder", "hereof", and "herein" and similar expressions refer to
this Agreement and not to any particular Article, paragraph or
subparagraph;
(d) all accounting terms shall have the meanings assigned to them in
accordance with United States generally accepted accounting
principles;
(e) all references contained herein to financial statements shall mean
audited financial statements which have been examined by a duly
qualified firm of Certified Public Accountants;
(f) all references to currency herein are deemed to mean United States
currency;
(g) any words or expressions contained in this Agreement which impart the
singular number include the plural number and vice versa; and
(h) any words or expressions contained in this Agreement which impart any
gender include all genders.
1.3 Proper Law and Consent to Jurisdiction
This Agreement and all matters arising hereunder shall be governed by
and construed and interpreted in accordance with the laws of the Province of
Alberta and the laws of Canada applicable therein. Each of the Parties hereby
submits exclusively to the jurisdiction of the courts of the Province of Alberta
for the interpretation and enforcement of this Agreement.
ARTICLE II
APPOINTMENT OF MANAGER
2.1 Agreement to Appoint Manager
The Corporation hereby appoints the Manager to provide the Management
Services to the Corporation and, if and when requested by the Corporation, to
one or more of the Organizations upon the following terms and conditions, which
the Manager hereby accepts.
2.2 Term of Appointment
Subject to earlier termination as hereinafter provided, the appointment
of the Manager hereunder shall be for a term which commences on the date hereof,
and which continues for a period of not less than ten (10) years, or for the
duration of the Port Agreement, as may be extended, whichever is longer
(hereinafter called the "Term").
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2.3 Duties of the Manager
As required by the Corporation, the Manager shall provide the Management
Services to the Corporation and, if any when requested by the Corporation, to
one or more of the Organizations, and in connection therewith the Manager shall:
(a) carry out all such lawful instructions as it may receive from the
Corporation from time to time;
(b) retain the full-time services of MacKenzie; and
(c) employ or retain the services of such other persons, with the prior
approval of the Corporation, which shall not be unreasonably withheld,
as may be reasonably required to perform its obligations hereunder.
2.4 Management Fee and Other Amounts Payable
For all Management Services provided by the Manager pursuant to this
Agreement, the Corporation agrees to pay to the Manager the following:
(a) a management fee (hereinafter called the "Management Fee") of One
Hundred and Twenty Thousand Dollars ($120,000) per calendar year, the
amount of such Management Fee to increase in each successive calendar
year commencing in 1999 by a percentage equal to the percentage
increase in the Consumer Price Index for the twelve month period
ending immediately prior to the start of the next calendar year of the
Term, to be paid in twenty-four (24) equal installments on the 15th
and 30th day of each and every calendar month of each year;
(b) an amount equal to the amount payable by the Manager to its employees
or contractors, excluding MacKenzie, whose services are devoted to the
performance of the Manager's duties and obligations under this
Agreement, for wages and salaries;
(c) an amount equal to the amount paid by the Manager to provide all of
its employees, including MacKenzie, whose services are devoted to the
performance of the Manager's and obligations under this Agreement
with:
(i) Alberta Health Care Insurance Plan coverage and Alberta Blue Cross coverage
in amounts set forth in Schedule "A" attached hereto; and
(ii) life insurance coverage and disability coverage in the amounts set forth in
Schedule "A" attached hereto;
(d) an amount equal to the amount paid by the Manager in respect of the
initiation fees and annual dues to maintain the Manager's or
MacKenzie's membership in those associations, groups and clubs
identified in Schedule "A" attached hereto, and any other association,
group or club that the Manager and the Corporation may agree is or
might be of benefit to the Organizations in the conduct of promotion
of their business affairs; and
(e) an amount equal to the lease installments payable by the Manager in
respect of one automobile which is to be leased by the Manager and
made available to MacKenzie for his use, plus all expenses relating to
such automobile.
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The amounts described in subparagraphs 2.4(b) to (e) inclusive shall be
estimated by the Manager for the purpose of preparing, and shall be included in,
the Corporation's annual budget, and shall be paid by the Corporation to the
Manager upon receipt of invoice.
2.5 Authority
The Manager shall have the authority to make the usual contracts
necessary for managing the business affairs of the Organizations in the ordinary
course, including the hiring and firing of all staff required, and including
authority to order goods and services required for such business affairs,
provided that no contract or investment shall be made by the Manager which might
involve an expenditure exceeding Twenty Thousand Dollars ($20,000) without first
obtaining the consent of the Board of Directors of the Corporation (except that
where (i) the directors of an Organization have passed a resolution which
authorizes the Manager to enter into contracts or make investments or execute
instruments which might involve an expenditure exceeding Twenty Thousand Dollars
($20,000) without first requiring the Organization's consent, or (ii) such
expenditure has been incurred pursuant to a budget previously approved by the
Corporation, or (iii) such expenditure has been approved by the Corporation, the
foregoing limitation on the Manager's authority shall not apply).
2.6 Commitment to Duties by MacKenzie
MacKenzie hereby agrees that during the Term he shall devote his full
professional and business time and attention to ensure that the Manager:
(a) performs its obligations hereunder in a due and timely manner;
(b) acts at all times as a fiduciary of the Organizations and exercises
the powers and discharge the duties imposed upon it or undertaken by
it honestly, in good faith and in the best interests of the
Organizations; and
(c) uses its best efforts to promote the goodwill and interests of the
Organizations;
and in connection therewith MacKenzie shall exercise the degree of care, skill
and diligence that a reasonably prudent person with comparable knowledge, skills
and experience would exercise in comparable circumstances.
MacKenzie hereby consents to his appointment as President and a
director of the Corporation, and agrees to serve as a director and an officer of
each of the Organizations, if and when requested to do so, and agrees to serve
as a director and/or officer of the Corporation and any of the Organizations
without compensation for the Term of this Agreement.
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<PAGE> 7
2.7 Confidentiality
During the Term and thereafter, neither the Manager nor MacKenzie shall
disclose or use for its or his own purposes any private or confidential
information possessed by or relating to the affairs of the Organizations, except
as directed by the Corporation or as required by law.
2.8 Travel Expenses
The Manager shall be promptly reimbursed for all reasonable and
necessary travelling and other expenses actually and properly incurred by it in
connection with its duties hereunder and for all such expenses the Manager shall
furnish statements and vouchers to the Corporation.
2.9 Liability of The Manager and the Manager's Representatives
Neither the Manager nor any of its directors, officers, agents,
employees or other representatives (hereinafter referred to collectively as "the
Manager's Representatives") shall be liable to the Corporation or any of the
Organizations for any mistake or error in judgment, for any act or omission
believed in good faith to be within the scope of authority conferred on it or
them by this Agreement, or for any loss or damage incurred by the Corporation or
any of the Organizations relative to any Management Services provided pursuant
to this Agreement. Without limiting the generality of the foregoing, neither the
Manager nor the Managers Representatives shall be liable for any loss or
liability arising out of or resulting from:
(a) force majeure, which shall, without restricting the meaning ordinarily
ascribed thereto, include acts of God or the Queen's enemies, riots,
civil commotion, public disturbances, labour or industrial disputes,
strikes, lockouts, defects of material, government laws, rules or
regulations, intervention of governmental authorities and any other
causes, whether similar or dissimilar to those enumerated in this
subparagraph, over which the Manager shall have no reasonable control;
(b) loss or destruction of any Organization's assets from fire, explosion
or any hazard, in excess of proceeds of insurance in force and effect
at the time of loss;
(c) loss or destruction of any Organization's assets from uninsurable
hazards;
(d) accounting, secretarial or clerical errors of any type; and
(e) failure to attain any specific financial objectives, written or
unwritten, during the Term;
provided, however, that the Manager shall be liable for any loss or damage to
the Corporation or any of the Organizations which result from the Manager's
breach of any of its fiduciary duties to the Corporation or any of the
Organizations, or when any loss or damage is caused by the Manager's or the
Manager's Representatives' gross negligence, recklessness or willful misconduct,
but no act or omission of the Manager or the Manager's Representatives shall of
itself be deemed gross negligence, recklessness or willful misconduct if it is
done or omitted with the concurrence of the Corporation or any of the
Organizations.
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<PAGE> 8
2.10 Indemnity of the Manager and the Manager's Representatives
The Corporation shall indemnify the Manager and the Manager's
Representatives against all costs, charges and expenses including any amount
paid to settle an action or satisfy a judgment, reasonably incurred by any of
them in respect of any civil, criminal or administrative action or proceeding to
which any of them is made a party by reason of any of the Manager's
Representatives being or having been a director or officer of any of the
Organizations, if:
(a) the Manager's Representative acted honestly and in good faith with a
view to the best interests of the Organization; and further
(b) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, he had reasonable grounds for
believing that his conduct was lawful.
ARTICLE III
BONUS PROVISIONS
3.1 Entitlement to Bonus
Subject to paragraph 3.2, the Manager shall, in respect of each
calendar year of the Term, in addition to the Management Fee and other amounts
referred to in paragraph 2.4, be entitled to receive a Bonus equal to $0.50 for
each Tonne of sulphur processed through the proposed sulphur facility at the
Ridley Island Terminal to be owned and operated by SSI, the subsidiary of IHC
Group, exceeding Four Hundred Thousand (400,000) Tonnes, which processing is
verified by SSI as directly attributable to Management Services provided to the
Corporation or SSI.
Any bonus payable to the Manager hereunder in respect of any calendar
year shall be paid to the Manager monthly, pro rata, over a six (6) month period
beginning thirty (30) days following the date on which the Manager delivers to
the Corporation a statement setting forth the amount of the bonus payable,
together with a calculation thereof and all relevant documentation in support
thereof, which shall be based upon the final audited financial statements of the
Corporation for the relevant calendar year which shall be based upon.
3.2 Notwithstanding paragraph 3.1, the Bonus payable to the Manager in
respect of any calendar year of the Term shall not exceed one-half the net
profits of the Corporation (as determined pursuant to paragraph 3.3) for such
calendar year.
3.3 For the purposes of paragraph 3.2 the net profits of the Corporation
for any calendar year of the Term shall be the amount, if any, before tax, by
which the gross revenue of the Corporation for such calendar year exceeds all
expenses of the Corporation (including depreciation) for such calendar year.
3.4 Termination of Agreement Prior to End of Calendar Year
If this Agreement is terminated effective on any date other than
December 31 of any calendar year then for the purpose of calculating the Bonus
payable to the Manager for the calendar year in which such termination occurs,
the Bonus threshold of 400,000 Tonnes per calendar year referred to in paragraph
3.1 shall be reduced by a fraction, the numerator of which
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<PAGE> 9
shall be the number of days remaining in such calendar year following the
Termination Date, and the denominator of which shall be the number of days in
such calendar year.
ARTICLE IV
NON COMPETITION
4.1 Agreement Not to Compete
The Manager and MacKenzie covenant and agree that during the Term
neither they nor any of their affiliates shall engage in or undertake, directly
or indirectly as a shareholder, director, officer, employee, consultant or
otherwise, any business or occupation either related to the sulphur industry
(except as provided herein) or which would adversely affect or detract from
their respective abilities to perform their full-time duties and obligations
hereunder. Notwithstanding the foregoing, the Manager and MacKenzie and their
affiliates shall be entitled to make investments of a passive nature in
businesses unrelated to the sulphur industry and to hold not more than five
percent (5%) of the outstanding shares of any publicly-traded company which is
not primarily engaged in the sulphur industry.
ARTICLE V
TERMINATION OF AGREEMENT
5.1 Events of Termination
Notwithstanding the provisions of paragraph 2.2, this Agreement shall
terminate:
(a) at the option of the Corporation:
(i) thirty (30) days after the death of MacKenzie; or
(ii) ninety (90) days from the date that MacKenzie becomes
physically or mentally incapable of substantially providing
the services required of him hereunder; or
(iii) immediately upon MacKenzie ceasing to own at least a
majority of the issued and outstanding voting shares of the
Manager; or
(b) immediately in the event that the Manager is discharged for cause
by the Corporation; or
(c) immediately in the event that the Manager is discharged without
cause by the Corporation; or
(d) at the option of the Manager:
(i) immediately if the Corporation is in default in the payment,
in whole or in part, of any undisputed amounts payable to
the Manager hereunder, and such default is not rectified
within thirty (30) days after receipt by the Corporation and
IHC Group of notice thereof from the Manager (unless any
such default is the result of (x) an accounting error or (y)
was based on a good-faith belief by the Corporation that the
correct amount was paid of (z) there is a good-faith
disagreement among the Parties concerning the amount that
may be due); or
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(ii) immediately if any resolution is passed or any proceeding is
commenced with respect to the liquidation, dissolution or
winding-up of the Corporation; or
(iii) immediately if any bankruptcy, insolvency, or creditors'
arrangement proceedings are commenced by the Corporation or
the Corporation is adjudged to be bankrupt by a court of
competent jurisdiction; or
(iv) immediately if any creditor shall seize all or substantially
all of the assets or shares of the Corporation, or a
receiver, manager or trustee of the assets of the
Corporation shall be appointed; or
(v) immediately if the Corporation ceases, or substantially
curtails, its business operations in Canada; or
(vi) immediately if the Corporation enters into an agreement for
the sale of all or substantially all of its assets in Canada
other than to an Affiliate of the Corporation; or
(vii) immediately if control of a majority of the outstanding
voting shares of the Corporation is transferred to any other
person other than an Affiliate of the Corporation; or
(f) immediately upon termination of the Port Agreement; or
(g) at the option of the Manager upon six (6) months' notice for any
reason other than the reasons set forth in subparagraphs
5.1(d)(i) to(vii) inclusive.
Each of the grounds for termination as set forth in subparagraphs 5.1(a) to (g)
inclusive shall be mutually exclusive of each other, so that if this Agreement
is terminated it shall be terminated upon only one, but not more than one, of
such grounds.
5.2 Payments Upon Termination Pursuant to Subparagraph 5.l(a), 5.1(c),
5.1(d)(i) to (vii) inclusive, 5.1(f) or 5.1(g)
If this Agreement is terminated at any time pursuant to any of the
events described in any of subparagraphs 5.1(a), 5.1(c), 5.1(d)(i) to (vii)
inclusive, 5.1(f) or 5.1(g), then the following amounts shall be payable to the
Manager within sixty (60) days of the Termination Date:
(a) all accrued but unpaid Management Fees and other amounts
described in paragraph 2.4 to the Termination Date; plus
(b) all accrued but unpaid Bonuses owing in respect of any prior
calendar years; plus
(c) any accrued but unpaid Bonus in respect of the then current
calendar year, calculated in the manner set forth in Article III
from the first day of the then current calendar year to the
Termination Date.
5.3 Termination Pursuant to Subparagraph 5.1(b)
If this Agreement is terminated at any time by the Corporation for
cause pursuant to subparagraph 5.1(b), then the Corporation shall have the right
to withhold any amounts that would otherwise be payable to the Manager in
accordance with paragraph 5.2 as a set-off against any damages the Corporation
has or may sustain as a result of the Manager's offenses.
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ARTICLE VI
COVENANTS OF IHC GROUP
6.1 Covenant to Guarantee
IHC Group hereby unconditionally guarantees the due and timely
performance by the Corporation of all of its obligations hereunder, and
covenants and agrees that the Manager shall not be bound to exhaust its recourse
against the Corporation or any other person before being entitled to require IHC
Group to honor its guarantee contained in this paragraph 6.1.
ARTICLE VII
TRANSFER OF ASSETS OR SHARES OF THE CORPORATION
7.1 Transfer to an Affiliate
Either the Corporation or IHC Group (or any of their successors or
permitted assigns) may at any time sell, transfer, or otherwise dispose of any
portion of the right, title and interest in and to the Port Agreement, or a
majority of the shares of the Corporation owned by it to any Affiliate. The
Manager and MacKenzie hereby consent to any such "Affiliate-related"
transactions by the Corporation or IHC Group, provided that such Affiliate
undertakes and agrees in writing with the other Parties to this Agreement to be
governed and bound by its terms in the same manner and to the same extent as the
transferor.
ARTICLE VIII
MISCELLANEOUS
8.1 Books and Records
All books of account and all papers, records or documents of the
Corporation, and all contracts to which the Corporation is a party shall, at all
reasonable times, be open to inspection and examination by the Manager and its
authorized representatives, with full power to make copies of any extracts from
the whole or any part thereof; and all books of account and all papers, records
or documents of the Manager, and all contracts to which the Manager is a party
shall, at all reasonable times, be open to inspection and examination by the
Corporation, IHC Group or their respective authorized representatives, with full
power to make copies of any extracts from the whole or any part thereof.
8.2 Further Assurances
Each of the Parties shall from time to time and at all times hereafter,
without further consideration, do and perform all such further acts and things,
and execute and deliver all such further agreements, assurances, deeds,
documents and instruments as may be reasonably necessary to carry out the intent
and purpose of this Agreement.
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8.3 Notices
All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be sufficiently given only if delivered
by hand or by prepaid courier service to the parties hereto at the following
addresses:
(a) in the case of MacKenzie or the Manager:
Suite 620 Alberta Stock Exchange Tower
300 Fifth Avenue S.W.
Calgary, Alberta
T2P 3C4
(b) in the case of the Corporation, IHC Group or SSI:
c/o International Hydro Carbon Group, Inc.
Unit 1
20085 100A Street
Langley, BC
J1M 3G4
and any such notice or other communications so delivered shall be hand delivered
and deemed to be received on the first business day following the date of
delivery. Any Party may change his or its address for service by giving written
notice thereof to the other Parties in accordance with this paragraph.
8.4 Entire Agreement
This Agreement constitutes the entire agreement among the Parties with
respect to the matters referred to herein, and supercedes the Management
Agreement among the Parties dated May 1, 1998, and all other prior agreements,
representations or warranties whatsoever with respect to such matters, whether
oral or in writing, if any. There shall not be any oral statements,
representations, warranties undertakings or agreements among the Parties with
respect to the subject matter of this Agreement.
8.5 Amendments in Writing
This Agreement may not be amended or modified in any respect except by
written instruments signed by the Parties.
8.6 Severability
Should any provision of this Agreement, in whole or in part, be or
become invalid, illegal or not capable of performance, the validity or legality
of the remaining provisions of this Agreement shall not thereby be affected; or
should this Agreement fail to provide for any relevant matter, the validity or
legality of this Agreement shall not thereby be affected; and in
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any such case in lieu of the invalid, illegal or inoperative provision or the
missing provision, this Agreement shall be applied or interpreted in a
reasonable manner which so far as is legally permissible comes as close as
possible to the application that the Parties intended or would have intended
according to the sense and purpose of this Agreement had they considered the
matter or known of the invalidity, illegality or inoperativeness at the time of
the execution of this Agreement.
8.7 No Merger
The Parties agree that any rights and obligations contained herein
shall not merge upon the termination of this Agreement, and that all such rights
and obligations shall survive the termination of this Agreement until they have
been satisfied or discharged.
8.8 Assignment and Enurement
(a) Except as provided in paragraph 7.1 hereof, no Party shall
assign or transfer any of his or its rights or obligations
hereunder to any other person without the prior written
consent of the other Parties.
(b) Except as provided in subparagraph 8.8(a) hereof, this
Agreement shall enure to the benefit of and be binding upon
the Parties and their respective heirs, executors,
administrators, permitted successors and permitted assigns.
8.9 Independent Contractor
It is understood and agreed among the Parties that the Manager for the
purposes of this Agreement is an independent contractor, and the obligations of
the Manager hereunder shall not be construed by implication or otherwise as a
contract of employment or agency by the Corporation, and MacKenzie shall not be
deemed to be an employee of the Corporation by virtue of this Agreement, except
to the extent that MacKenzie may, by operation of law, be deemed to be an
employee of any Organization by virtue of his status as an officer of any
Organization. The Parties also expressly disclaim any intention to create a
partnership among any of themselves, and nothing contained in this Agreement
shall constitute any Parties hereto as partners with one another.
8.10 No Deemed Consent or Waiver
No consent or waiver, express or implied, by any Party to or of any
breach or default by any other Party in the performance of any obligations
hereunder shall be deemed or construed to be a consent or waiver to or of any
other breach or default in the performance by such other Party of the same or
any other obligation of such Party hereunder. Failure on the part of any Party
to complain of any act or failure to act of any other Party or to declare any
other Party in default, irrespective of how long such failure continues, shall
not constitute a waiver by such Party of his or its rights hereunder.
-13-
<PAGE> 14
8.11 Arbitration
All disputes or disagreements regarding any matter referred to or
provided for herein shall be referred to the arbitration of a single duly
qualified professional arbitrator, if the Parties agree upon one, otherwise to
three duly qualified professional arbitrator, one to be appointed by the
Manager, one to be appointed by the Corporation, and the third to be chosen by
the first two named professional arbitrators before they enter upon the business
of arbitration. The award and determination of such arbitrator or arbitrators,
or any two of such three arbitrators, shall be binding upon the Parties and
their respective heirs, executors, administrators, permitted successors and
permitted assigns. All costs of such arbitration shall be paid in the manner
determined by the arbitrator(s).
8.12 Taxes and Remittances
The Manager shall be solely responsible for:
(a) the payments, as and when the same are due and payable, of any
all income taxes or assessments exigible, payable or imposed
at any time and from time to time as a result of or in respect
of this Agreement or the Management Fee, the Bonus or any
other amounts payable to the Manager hereunder; and
(b) the payments required under any applicable foreign, Canadian
federal or provincial legislation or regulations, for the
withholding of amounts from employees and the remittance of
all such amounts withheld to the appropriate authorities
within the prescribed times, and the Manager and MacKenzie
shall and do hereby indemnify and save harmless the
Corporation and IHC Group and their respective directors and
officers from and against any and all liabilities, claims,
expenses, costs or damages (collectively, the "Claims")
incurred by or asserted against the Corporation or IHC Group
and respective directors and in respect of the same. Without
limiting the generality of the foregoing, the Corporation
and IHC Group may set-off the amount of any such Claims
against any amounts whatsoever owing or payable by the
Corporation or IHC Group to the Manager, including without
limitation any amount referred to in paragraphs 2.4 and 3.1.
In the event that at any time hereafter any new form of tax or
assessment becomes exigible, payable or imposed in respect of this Agreement or
the Management Fee, the Bonus or any other amounts payable to the Manager
hereunder, the Parties shall use their best efforts to agree on how the burden
of such tax shall be shared among themselves, and in the event that the Parties
are unable to agree on how such tax is to be shared, then the burden of such
tax, net of any corresponding tax credit, shall be shared equally by the Manager
and the Corporation.
[SIGNATURE PAGE FOLLOWS]
-14-
<PAGE> 15
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as
of the 11th day of December, 1998.
/s/ Roderick J. MacKenzie
-----------------------------------
RODERICK J. MACKENZIE, individually
GLOBAL HYDRO CARBON
CORPORATION LTD.
Per: /s/ Roderick J. MacKenzie
-----------------------------
INTERNATIONAL HYDRO CARBON
GROUP, INC.
Per: /s/ James Yamada
------------------------------
SULPHUR CORPORATION OF CANADA, LTD.
Per: /s/ James Yamada
-----------------------------
SULPORT SERVICES INTERNATIONAL, INC.
Per: /s/ James Yamada
-----------------------------
-15-
<PAGE> 16
SCHEDULE A
1. Willow Park Golf & Country Club
2. Calgary Petroleum Club
3. Alberta Sulphur Research Institute
4. The Sulphur Institute
5. The Fertilizer Institute
6. Alberta Health Care
7. Blue Cross Insurance
8. Vehicle plus operating expenses
9. Life Insurance $500,000 Term Life
10. Income Replacement policy for disability $500/month
-16-
<PAGE> 17
AFFIDAVIT OF EXECUTION
CANADA )
PROVINCE OF ALBERTA )
TO WIT: )
I, W.E. Brower of the City of Calgary in the province of Alberta make oath and
say:
1. That I was personally present and did see Roderick J.
MacKenzie named in the annexed Management Agreement, who is
personally known to me to be the person named therein, duly
sign and execute the same for the purpose named therein.
2. That the said Management Agreement was executed at the City of
Calgary, in the Province of Alberta, and that I am the
subscribing witness thereto.
3. That I know the said Roderick J. MacKenzie and he is in my
belief of the full age of 18 years.
SWORN before me at the City of Calgary, in the Province of Alberta,
this 11th day of December, 1998
/s/ Wes Brower
----------------------------------------
A Commissioner for Oaths in and for the
Province of Alberta
Wes Brower Apr. 11, 2000
Commissioner for Oaths
-17-
<PAGE> 1
FORM OF
EXHIBIT 10.2
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
OF
INTERNATIONAL COMMODITY LOGISTICS, INC.
VOID AFTER MARCH 30, 2002
This Warrant is issued to _____________________________________, or his
permitted assigns ("Holder"), by International Commodity Logistics, Inc., a
Colorado corporation (the "Company"), on March 31, 1998 (the "Warrant Issue
Date").
1. Purchase Shares. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company up to
_________________________________ (_________) fully paid and nonassessable
shares of Common Stock of the Company, as constituted on the Warrant Issue Date
(the "Common Stock"). The number of shares of Common Stock issuable pursuant to
this Section 1 (the "Shares") shall be subject to adjustment pursuant to Section
7 hereof.
2. Exercise Price. The purchase price for the Shares shall be $____ per
share, as adjusted from time to time pursuant to Section 7 hereof (the "Exercise
Price"); provided, however, that the aggregate purchase price for the total
number of Shares purchasable under this Warrant (as may be adjusted) shall be
$_________.
3. Exercise Period. This Warrant shall be exercisable, in whole or in part,
during the term commencing on December 31, 1999 and ending at 5:00 p.m. MST on
March 30, 2002.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
1 of 6
<PAGE> 2
FORM OF
(a) the surrender of the Warrant, together with a duly executed copy
of the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Shares being purchased.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the subscription notice.
6. Issuance of Shares. The Company covenants that the Shares, when issued
pursuant to the exercise of this Warrant, will be duly and validly issued, fully
paid and nonassessable and free from all taxes, liens, and charges with respect
to the issuance thereof.
7. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant subdivide its Common
Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock as a dividend, the number of Shares
issuable on the exercise of this Warrant shall forthwith be proportionately
increased in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination. Appropriate adjustments shall also be
made to the purchase price payable per share, but the aggregate purchase price
payable for the total number of Shares purchasable under this Warrant (as
adjusted) shall remain the same. Any adjustment under this Section 7(a) shall
become effective at the close of business on the date the subdivision or
combination becomes effective, or as of the record date of such dividend, or in
the event that no record date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case of any
reclassification, capital reorganization, or change in the Common Stock of the
Company (other than as a result of a subdivision, combination, or stock dividend
provided for in Section 7(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior to
such reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate purchase price shall remain the
same.
2 of 6
<PAGE> 3
FORM OF
The Company shall provide notice to the Holder of any transaction within the
scope of this Section 7(b) if and to the same extent as the Company may be
required to provide notice to the Company's shareholders in accordance with the
Colorado Business Corporation Act.
(c) Notice of Adjustment. When any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of the Warrant, or in
the Warrant Price, the Company shall promptly notify the holder of such event
and of the number of shares of Common Stock or other securities or property
thereafter purchasable upon exercise of this Warrant.
8. Representations and Warranties of the Holder. The Holder hereby
represents and warrants that:
(a) Purchase Entirely for Own Account. This Warrant is made with the
Holder in reliance upon such Holder's representation to the Company that the
Warrant and the Common Stock issuable upon conversion thereof (collectively, the
"Securities") will be acquired for investment for such Holder's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that such Holder has no present intention of selling, granting
any participation in, or otherwise distributing the same. By executing this
Warrant, the Holder further represents that the Holder does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Securities.
(b) Disclosure of Information. The Holder believes it has received all
the information it considers necessary or appropriate in connection with this
Warrant. The Holder further represents that it has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of this Warrant and the business, properties, prospects and financial
condition of the Company.
(c) Investment Experience. The Holder is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the Warrant and investment in the Common Stock. If other
than an individual, the Holder also represents it has not been organized for the
purpose of acquiring the Securities.
(d) Accredited Holder. Such Holder is an "accredited investor" within
the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation
D, as presently in effect.
(e) Restricted Securities. Such Holder understands that the Securities
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances. In this connection, such Holder
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
3 of 6
<PAGE> 4
FORM OF
(f) Further Limitations on Disposition. Without in any way limiting the
representations set forth above, such Holder further agrees not to make any
disposition of all or any portion of the Securities except (i) in compliance
with Rule 144, or (ii) unless and until the transferee has agreed in writing for
the benefit of the Company to be bound by this Section 8 and all other terms and
conditions of this Warrant, and:
(1) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(2) (A) The Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (B) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the Act. It
is agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
(g) Legends. It is understood that the certificates evidencing the
Shares may bear the following legend:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 ("the Act") and are "restricted
securities" as that term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act or
pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company."
9. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.
10. No Stockholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a stockholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
stockholder meetings, and such holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company. However,
nothing in this Section 10 shall limit the right of the Holder to be provided
the Notices required under this Warrant.
11. Transfers of Warrant. Subject to compliance with applicable federal and
state securities laws by the Holder and any transferee, this Warrant and all
rights hereunder are transferable in whole by the Holder to any person or entity
upon written notice to the Company, provided that such transferee is bound by
the provisions of this Warrant, including without limitation the representations
and warranties set forth in Section 8 hereof. The Company may, in its
discretion, require the Holder to furnish the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such transfer will not
require registration under the Act. The transfer shall be recorded on the books
of the Company upon the surrender of this Warrant,
4 of 6
<PAGE> 5
FORM OF
properly endorsed, to the Company at its principal offices, and the payment to
the Company of all transfer taxes and other governmental charges imposed on such
transfer.
12. Successors and Assigns. The terms and provisions of this Warrant and
the Purchase Agreement shall inure to the benefit of, and be binding upon, the
Company and the Holders hereof and their respective successors and assigns.
13. Amendments and Waivers. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the written
consent of the Company and the Holder or any future holder. Any waiver or
amendment effected in accordance with this Section shall be binding upon each
holder of any Shares purchased under this Warrant at the time outstanding
(including securities into which such Shares have been converted), each future
holder of all such Shares, and the Company. The Holder acknowledges that by the
operation of Section 13 hereof, the Holder and the Company will have the right
and power to diminish or eliminate all rights of such holder under this Warrant.
14. Notices. Unless otherwise provided, all notices, requests, payments,
instructions or other documents to be given hereunder shall be in writing or by
written telecommunication, and shall be deemed to have been duly given if (i)
delivered personally (effective upon delivery), (ii) mailed by certified mail,
return receipt requested, postage prepaid (effective five (5) business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed to the party to be notified. Notices to the Holder shall be
sent to the address of the Holder on the books of the Company (or at such other
place as the Holder shall notify the Company hereof in writing).
15. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
16. Governing Law. This Warrant shall be governed by the laws of the State
of Colorado as applied to agreements among Colorado residents made and to be
performed entirely within the State of Colorado.
[SIGNATURE PAGE FOLLOWS]
5 of 6
<PAGE> 6
FORM OF
IN WITNESS WHEREOF, International Commodity Logistics, Inc. caused this
Warrant to be executed by an officer thereunto duly authorized.
INTERNATIONAL COMMODITY LOGISTICS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Accepted and Agreed:
[NAME]
- ------------------------------
6 of 6
<PAGE> 7
NOTICE OF EXERCISE
To: INTERNATIONAL COMMODITY LOGISTICS, INC.
The undersigned hereby elects to purchase _________________ shares of
Common Stock of International Commodity Logistics, Inc., pursuant to the terms
of the attached Warrant and payment of the Exercise Price per share required
under such Warrant accompanies this notice.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
[NAME]
------------------------------
Address:
------------------------------
------------------------------
------------------------------
Date:
----------------------
Notice of Exercise
<PAGE> 1
EXHIBIT 10.3
INTERNATIONAL HYDRO CARBON GROUP, INC.
EMPLOYEE BENEFIT AND CONSULTING SERVICES
COMPENSATION PLAN
SECTION 1. INTRODUCTION
1.1 Establishment. Effective as provided in Section 17, International
Hydro Carbon Group, Inc., a Colorado corporation (the "Company"), hereby
establishes a plan of long-term stock-based compensation incentives for selected
Eligible Participants of the Company and its affiliated corporations, effective
this 30th day of March, 1998. The plan shall be known as the International Hydro
Carbon Group, Inc. Employee Benefit and Consulting Services Compensation Plan
(the "Plan").
1.2 Purpose. The purpose of the Plan is to promote the best interest of
the Company, and its stockholders by providing a means of non-cash remuneration
to selected Eligible Participants who contribute most to the operating progress
and earning power of the Company.
SECTION 2. DEFINITIONS
The following definitions shall be applicable to the terms used in the
Plan:
2.1 "Affiliated Corporation" means any corporation that is either a
parent corporation with respect to the Company or a subsidiary corporation with
respect to the Company (within the meaning of Sections 424(e) and (f),
respectively, of the Internal Revenue Code).
2.2 "Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
2.3 "Committee" means a committee designated by the Board of Directors
to administer the Plan or, if no committee is so designated, the Board of
Directors. Any Committee Member who is also an Eligible Participant may receive
a grant only if he abstains from voting in favor of a grant to himself, and the
grant is determined and approved by the remaining Committee Members. The Board
of Directors, in its sole discretion, may at any time remove any member of the
Committee and appoint another Director to fill any vacancy on the Committee.
2.4 "Common Stock" means the Company's no par value voting common
stock.
2.5 "Company" means International Hydro Carbon Group, Inc., a Colorado
corporation and its subsidiaries.
2.6 "Effective Date" means the effective date of the Plan, as set
forth in Section 17 hereof.
2.7 "Eligible Participant" or "Participant" means any employee,
director, officer, consultant, or advisor of the Company who is determined (in
accordance with the provisions of Section 4 hereof) to be eligible to receive
stock and exercise stock options hereunder.
2.8 "Fair Market Value" means with respect to Common Stock, as of any
date, the closing price of a share of Common Stock as reported on such exchange
on which the Company's Common Stock may be listed.
2.9 "Option" means the grant to an Eligible Participant of a right to
acquire shares of Common Stock of the Company pursuant to a Grant of Option
approved by the Committee and executed and delivered by the Company.
- --------------------------------------------------------------------------------
INTERNATIONAL HYDRO CARBON GROUP, INC. PAGE 1 OF 6
EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLAN
<PAGE> 2
2.10 "Plan" means this International Hydro Carbon Group, Inc.
Employee Benefit and Consulting Services Compensation Plan dated March 30, 1998.
2.11 "Unrestricted Stock" means shares of Common Stock of the Company
underlying an Option which, if specified in the written Option are, upon
issuance, freely tradable by virtue of having been registered with the
Securities and Exchange Commission ("SEC") under cover of Form S-8, or another
appropriate registration statement, or become freely tradable by virtue of Rule
701 of the Securities Act of 1933, as amended,, and which shares have been
issued subject to the "blue sky" provisions of any appropriate state
jurisdiction. Special resale restrictions may, however, apply to officers,
directors, control shareholders and affiliates of the Company and such persons
will be required to obtain an opinion of counsel as regards their ability to
resell shares received pursuant to this Plan. The Company is not obligated by
this Plan to obtain any required opinions of counsel, or to file any type of
registration statement with the SEC on any state of other jurisdiction.
2.12 "Stock" or "Restricted Stock" means shares of Common Stock of the
Company issuable directly under the Plan or underlying an Option, which shall,
upon issuance, be subject to the restrictions set forth in Section 11 hereof.
Wherever appropriate, words used in the Plan in the singular may mean
the plural, the plural may mean the singular, and the masculine may mean the
feminine.
SECTION 3. ADOPTION AND ADMINISTRATION OF THE PLAN
Upon adoption by the Company's Board of Directors, the Plan became
effective as of March 30, 1998. In the absence of contrary action by the Board
of Directors, and except for action taken by the Committee pursuant to Section 4
in connection with the determination of Eligible Participants, any action taken
by the Committee or by the Board of Directors with respect to the
implementation, interpretation or administration of the Plan shall be final,
conclusive and binding.
SECTION 4. ELIGIBILITY AND AWARDS
The Committee shall determine at any time and from time to time after
the effective date of the Plan: (i) the Eligible Participants; (ii) the number
of shares of Common Stock issuable directly or to be granted pursuant to the
Option which an Eligible Participant may exercise; (iii) the price per share at
which each option may be exercised, in cash or cancellation of fees for services
for which the Company is liable, if applicable, or the value per share if a
direct issue of stock; and (iv) the terms on which each option may be granted.
Such determination, as may from time to time be amended or altered at the sole
discretion of the Committee. Notwithstanding the provisions of Section 3 hereof,
no such determination by the Committee shall be final, conclusive and binding
upon the Company unless and until the Board of Directors has approved the same;
provided, however, that if the Committee is composed of a majority of the
persons then comprising the Board of Directors of the Company, such approval by
the Board of Directors shall not be necessary.
SECTION 5. GRANT OF OPTION
Subject to the terms and provisions of this Plan, the terms and
conditions under which the Option may be granted to an Eligible Participant
shall be set forth in a written agreement (i.e., a Consulting Agreement,
Services Agreement, Fee Agreement, or Employment Agreement) or a written Grant
of Option in the form attached hereto as Exhibit A and made a part hereof and
containing such modifications thereto and such other provisions as the
Committee, in its sole discretion, may determine. Notwithstanding the foregoing
provisions of this Section 5, each Grant of Option shall incorporate the
provisions of this Plan by reference.
- --------------------------------------------------------------------------------
INTERNATIONAL HYDRO CARBON GROUP, INC. PAGE 2 OF 6
EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLAN
<PAGE> 3
SECTION 6. TOTAL NUMBER OF SHARES OF COMMON STOCK
The total number of shares of Common Stock reserved for issuance by the
Company either directly or underlying Options granted under this Plan shall not,
initially, be more than 1,400,000. The total number of shares of Common Stock
reserved for such issuance may be increased only by a resolution adopted by the
Board of Directors and amendment of the Plan. Such Common Stock may be
authorized and unissued or reacquired common stock of the Company.
SECTION 7. PURCHASE OF SHARES OF COMMON STOCK
7.1 As soon as practicable after the determination by the Committee and
approval by the Board of Directors (if necessary, pursuant to Section 4 hereof)
of the Eligible Participants and the number of shares an Eligible Participant
may be issued directly or granted pursuant to an Option, the Committee shall
give notice (written or oral) thereof to each Eligible Participant, which notice
may be accompanied by the Grant of Option, if appropriate, to be executed by
such Eligible Participant. Upon receipt, an Eligible Participant may exercise
his right to an Option to purchase Common Stock by providing written notice as
specified in the Grant of Option.
7.2 The negotiated cost basis of stock issued directly or the exercise
price for each option to purchase shares of Common Stock pursuant to paragraph
7.1 shall be as determined by the Committee, it being understood that the price
so determined by the Committee may vary from one Eligible Participant to
another. In computing the negotiated direct issue price or the Option exercise
price of a share of Common Stock, the Committee shall take into consideration,
among other factors, the restrictions set forth in Section 11 hereof.
SECTION 8. PAYMENT UPON EXERCISE OF OPTION OR DIRECT ISSUANCE
The Committee shall determine the terms of the Grant of Option and the
exercise price or direct issue price for payment by each Participant for his
shares of Common Stock granted thereunder. Such terms shall be set forth or
referred to in the Grant of Option or Board Resolution authorizing the share
issuance. The terms and/or exercise price so set by the Committee may vary from
one Participant to another. In the event that all the Committee approves an
Option grant permitting deferred payments, the Participant's obligation to pay
for such Common Stock shall be evidenced by a Promissory Note executed by such
Participant and containing such modifications thereto and such other provisions
as the Committee, in its sole discretion, may determine.
SECTION 9. DELIVERY OF SHARES OF COMMON STOCK UPON EXERCISE
The Company shall deliver to or on behalf of each Participant such
number of shares of Common Stock as such Participant elects to purchase upon
direct issuance or upon exercise of the Option. Such shares, which shall be
fully paid and nonassessable upon the issuance thereof (unless a portion or all
of the purchase price shall be paid on a deferred basis) shall be represented by
a certificate or certificates registered in the name of the Participant and
stamped with an appropriate legend referring to the restrictions thereon, if
any, as may be set forth in the Grant of Option. Subject to the terms and
provisions of the Colorado Business Corporation Act and the Grant of Option to
which he is a party, a Participant shall have all the rights of a stockholder
with respect to such shares, including the right to vote the shares and to
receive all dividends or other distributions paid or made with respect thereto
(except to the extent such Participant defaults under the promissory note, if
any, evidencing the deferred purchase price for such shares), provided that such
shares shall be subject to the restrictions hereinafter set forth. In the event
of a merger or consolidation to which the Company is a party, or of any other
acquisition of a majority of the issued and outstanding shares of common stock
of the Company involving an exchange or a substitution of stock of an acquiring
corporation for common stock of the Company, or of any transfer of all or
substantially all of the assets of the Company in exchange for stock of an
acquiring corporation, a determination as to whether the stock of the acquiring
corporation so received shall be subject to the restrictions set forth in
Section 11 shall be made solely by the acquiring corporation.
- --------------------------------------------------------------------------------
INTERNATIONAL HYDRO CARBON GROUP, INC. PAGE 3 OF 6
EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLAN
<PAGE> 4
SECTION 10. RIGHTS OF EMPLOYEES; PARTICIPANTS
10.1 Employment. Nothing contained in the Plan or in any Stock Option,
Restricted Stock award or other Common Stock award granted under the Plan shall
confer upon any Participant any right with respect to the continuation of his or
her employment by the Company or any Affiliated Corporation, or interfere in any
way with the right of the Company or any Affiliated Corporation, subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of a Stock
Option or other Common Stock award. Whether an authorized leave of absence, or
absence in military or government service, shall constitute termination of
employment shall be determined by the Committee at the time.
10.2 Non-transferability. No right or interest of any Participant in a
Stock Option award shall be assignable or transferable during the lifetime of
the Participant, either voluntarily or involuntarily, or subjected to any lien,
directly or indirectly, by operation of law, or otherwise, including execution,
levy, garnishment, attachment, pledge or bankruptcy. In the event of a
Participant's death, a Participant's rights and interest in Stock Option awards
shall be transferable by testamentary will or the laws of descent and
distribution, and payment of any amounts due under the Plan shall be made to,
and exercise of any Stock Options may be made by, the Participant's legal
representatives, heirs or legatees. If in the opinion of the Committee a person
entitled to payments or to exercise rights with respect to the Plan is unable to
care for his or her affairs because of mental condition, physical condition, or
age, payment due such person may be made to, and such rights shall be exercised
by, such person's guardian, conservator or other legal personal representative
upon furnishing the Committee with evidence satisfactory to the Committee of
such status.
SECTION 11. GENERAL RESTRICTIONS
11.1 Restrictive Legend. All shares of Common Stock issued or issuable
under this Plan, unless qualified as Unrestricted Stock as defined in Section 2
hereinabove, shall be restricted, and certificates representing the shares shall
bear the following restrictive legend:
The shares represented by this certificate have not been registered
under the Securities Act of 1933 ("the Act") and are "restricted
securities" as that term is defined in Rule 144 under the Act. the
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act or
pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company.
11.2 Investment Representations. The Company may require any person to
whom a Stock Option, Restricted Stock award, or other Common Stock award is
granted, as a condition of exercising such Stock Option, or receiving such
Restricted Stock award, or other Common Stock award, to give written assurances
in substance and form satisfactory to the Company and its counsel to the effect
that such person is acquiring the Common Stock subject to the Stock Option,
Restricted Stock award, or other Common Stock award for his or her own account
for investment and not with any present intention of selling or otherwise
distributing the same, and to such other effects as the Company deems necessary
or appropriate in order to comply with federal and applicable state securities
laws.
11.3 Compliance with Securities Laws. Each Stock Option shall be
subject to the requirement that if at any time counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
to such Stock Option upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental or regulatory body, is
necessary as a condition of, or in connection with, the issuance or purchase of
shares thereunder, such Stock Option may not be accepted or exercised in whole
or in part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained on conditions acceptable to the Committee.
Nothing herein shall be deemed to require the Company to apply for or to obtain
such listing, registration or qualification.
11.4 Changes in Accounting Rules. Notwithstanding any other provision
of the Plan to the contrary, if, during the term of the Plan, any changes in the
financial or tax accounting rules applicable to
- --------------------------------------------------------------------------------
INTERNATIONAL HYDRO CARBON GROUP, INC. PAGE 4 OF 6
EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLAN
<PAGE> 5
Stock Options, Restricted Stock awards or other Common Stock awards shall occur
that, in the sole judgment of the Committee, may have a material adverse effect
on the reported earnings, assets or liabilities of the Company, the Committee
shall have the right and power to modify as necessary, or cancel, any then
outstanding and unexercised Stock Options, any then outstanding Restricted Stock
awards as to which the applicable employment restriction has not been satisfied
and any other Common Stock awards.
SECTION 12. WITHHOLDING REQUIREMENT
The Company's obligations to deliver shares of Common Stock upon the
exercise of any Stock Option granted under the Plan or pursuant to any other
Common Stock award, shall be subject to the Participant's satisfaction of all
applicable federal, state and local income and other tax withholding
requirements. The Company may, in its sole discretion, withhold the appropriate
number of shares of Common Stock from Participant's option exercise to satisfy
such tax requirements.
SECTION 13. PLAN BINDING UPON ASSIGNS OR TRANSFEREES
In the event that, at any time or from time to time, any shares of
Common Stock are sold, exchanged, assigned or transferred to any party (other
than the Company) pursuant to the provisions of Section 10.2 hereof, such party
shall take such shares of Common Stock pursuant to all provisions and conditions
of this Plan, and, as a condition precedent to the transfer of such shares of
Common Stock, such party shall agree (for and on behalf of himself or itself,
his or its legal representatives and his or its transferees and assigns) in
writing to be bound by all provisions of this Plan.
SECTION 14. COSTS AND EXPENSES
All costs and expenses with respect to the adoption, implementation,
interpretation and administration of the Plan shall be borne by the Company.
SECTION 15. CHANGES IN CAPITAL STRUCTURE OF THE COMPANY
The shares of Common Stock issuable upon exercise of an Option shall
not, except in the sole and absolute discretion of the Company or as required by
law, be adjusted in any manner for: (i) a subdivision or combination of any of
the shares of capital stock of the Company; (ii) a dividend payable in shares of
capital stock of the Company; (iii) a reclassification of any shares of capital
stock of the Company; or (iv) any other change in the capital structure of the
Company.
SECTION 16. PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board, upon recommendation of the Committee or at its own
initiative, at any time may terminate and at any time and from time to time and
in any respect, may amend or modify the Plan, including:
(a) Increase the total amount of Common Stock that may be
awarded under the Plan, except as provided in Section 15 of the Plan;
(b) Change the classes of Eligible Employees from which
Participants may be selected or materially modify the requirements as
to eligibility for participation in the Plan;
(c) Increase the benefits accruing to Participants; or
(d) Extend the duration of the Plan.
Any Stock Option or other Common Stock award granted to a Participant
prior to the date the Plan is amended, modified or terminated will remain in
effect according to its terms unless otherwise agreed upon by the Participant;
provided, however, that this sentence shall not impair the right of the
- --------------------------------------------------------------------------------
INTERNATIONAL HYDRO CARBON GROUP, INC. PAGE 5 OF 6
EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLAN
<PAGE> 6
Committee to take whatever action it deems appropriate under Section 11 or
Section 15. The termination or any modification or amendment of the Plan shall
not, without the consent of a Participant, affect his rights under a Stock
Option, Restricted Stock Award or other Common Stock award previously granted to
him. With the consent of the Participant, the Committee may amend outstanding
option agreements in a manner not inconsistent with the Plan. The Board shall
have the right to amend or modify the terms and provisions of the Plan and of
any outstanding Stock Options granted under the Plan.
SECTION 17. EFFECTIVE DATE OF THE PLAN
17.1 Effective Date. The Plan is effective as of March 30, 1998.
17.2 Duration of the Plan. The Plan shall terminate at midnight on
March 29, 2002, which is the day before the fifth anniversary of the original
Effective Date, and may be extended thereafter or terminated prior thereto by
action of the Board of Directors; and no Stock Option, Restricted Stock Award or
other Common Stock award shall be granted after such termination. Stock Options,
Restricted Stock Awards and other Common Stock awards outstanding at the time of
the Plan termination may continue to be exercised, or become free of
restrictions, in accordance with their terms.
SECTION 18. BURDEN AND BENEFIT
The terms and provisions of this Plan shall be binding upon, and shall
inure to the benefit of, each Participant, his executives or administrators,
heirs, and personal and legal representatives.
Executed as a sealed instrument as of the 30th day of March, 1998.
INTERNATIONAL HYDRO CARBON GROUP, INC.
By: /s/ James Yamada
----------------------------------
James Yamada, President/CEO
ATTEST:
/s/ Roderick J. MacKenzie
- ---------------------------------
Roderick J. MacKenzie, Secretary
- --------------------------------------------------------------------------------
INTERNATIONAL HYDRO CARBON GROUP, INC. PAGE 6 OF 6
EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLAN
<PAGE> 7
EXHIBIT A
FORM OF
GRANT OF OPTION PURSUANT TO THE
INTERNATIONAL HYDRO CARBON GROUP, INC.
EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLAN
International Hydro Carbon Group, Inc., a Colorado corporation (the
"Company"), hereby grants to ________________________________ ("Optionee") an
option to purchase _________ shares of common stock, no par value (the "Shares")
of the Company at the purchase price of US$______ per share (the "Purchase
Price") in accordance with and subject to the terms and conditions of the
Company's Employee Benefit and Consulting Services Compensation Plan. This Grant
of Option is exercisable in whole or in part, and upon payment in cash or
cancellation of fees, or other form of payment acceptable to the Company, to the
offices of the Company at 2A - 20085 101A Avenue, Langley, British Columbia,
Canada V1M 3G4.
In the event that Optionee's employee or consultant status with the
Company or any of its subsidiaries ceases or terminates for any reason
whatsoever, including, but not limited to, death, disability, or voluntary or
involuntary cessation or termination, this Grant of Option shall terminate with
respect to any portion of this Grant of Option that has not vested prior to the
date of cessation or termination of employee or consultant status, as determined
in the sole discretion of the Company. Vested options must be exercised within
thirty (30) days after the date of termination, other than termination for
cause. In the event of termination for cause, this Grant of Option shall
immediately terminate in full with respect to any un-exercised options, and any
vested but un-exercised options shall immediately expire and may not be
exercised.
Subject to the preceding paragraph, this Grant of Option, or any
portion hereof, may be exercised only to the extent vested per the attached
schedule, and must be exercised by Optionee no later than
____________________________ (the "Expiration Date") by (i) notice in writing,
sent by facsimile copy to the Company at its address set forth above; and (ii)
payment of the Purchase Price of a minimum of $1,000 (unless the Purchase Price
for the exercise of all vested options available to be exercised totals less
than $1,000) pursuant to the terms of this Grant of Option and the Company's
Employee Benefit and Consulting Services Compensation Plan. Any portion of this
Grant of Option that is not exercised on or before to the Expiration Date shall
lapse. The notice must refer to this Grant of Option, and it must specify the
number of shares being purchased, and recite the consideration being paid
therefor. Notice shall be deemed given on the date on which the notice is
delivered to the Company by facsimile transmission bearing an authorized
signature of Optionee.
This Grant of Option shall be considered validly exercised once payment
therefor has cleared the banking system or the Company has issued a credit memo
for services in the appropriate amount, or receives a duly executed acceptable
promissory note, if this Grant of Option is granted with deferred payment, and
the Company has received written notice of such exercise.
If Optionee fails to exercise this Grant of Option in accordance with
this Agreement, then this Agreement shall terminate and have no force and
effect, in which event Optionor and Optionee shall have no liability to each
other with respect to this Grant of Option.
This Grant of Option may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Execution and delivery of
this Grant of Option by exchange of facsimile copies bearing the facsimile
signature of a party hereto shall constitute a valid and binding execution and
delivery of this Grant of Option by such party. Such facsimile copies shall
constitute enforceable original documents.
- --------------------------------------------------------------------------------
INTERNATIONAL HYDRO CARBON GROUP, INC. PAGE A-1
EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLAN
<PAGE> 8
The validity, construction and enforceability of this Grant of Option
shall be construed under and governed by the laws of the State of Colorado,
without regard to its rules concerning conflicts of laws, and any action brought
to enforce this Grant of Option or resolve any controversy, breach or
disagreement relative hereto shall be brought only in a court of competent
jurisdiction in Vancouver, British Columbia, Canada.
The number of Shares issuable upon exercise of this Grant of Option
(the "Underlying Shares") and/or the Purchase Price per share shall be equitably
adjusted in the event of any stock split, combination, stock dividend or
recapitalization, or conversion or exchange for other securities or property as
a result of a merger, sale, liquidation or reorganization of the Company, or
other similar change in capital structure of the Company affecting the common
stock; provided, however, that the aggregate Purchase Price shall not be
altered.
Further, the Underlying Shares may not be sold, exchanged, assigned,
transferred or permitted to be transferred, whether voluntarily, involuntarily
or by operation of law, delivered, encumbered, discounted, pledged, hypothecated
or otherwise disposed of until (i) the Underlying Shares have been registered
with the Securities and Exchange Commission pursuant to an effective
registration statement on Form S-8, or such other form as may be appropriate, in
the discretion of the Company; or (ii) an Opinion of Counsel, satisfactory to
the Company, has been received, which opinion sets forth the basis and
availability of any exemption for resale or transfer from Federal and/or State
securities registration requirements, such as Federal Rules 144 or 701.
IN WITNESS WHEREOF, this Grant of Option has been executed effective as
of ____________________, 19___.
INTERNATIONAL HYDRO CARBON GROUP, INC.
BY THE BOARD OF DIRECTORS
OR A SPECIAL COMMITTEE THEREOF
By: NOT FOR EXECUTION
----------------------------------
By: NOT FOR EXECUTION
----------------------------------
OPTIONEE:
NOT FOR EXECUTION
- -------------------------------
- --------------------------------------------------------------------------------
INTERNATIONAL HYDRO CARBON GROUP, INC. PAGE A-2
EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLAN
<PAGE> 9
GRANT OF OPTION PURSUANT TO THE INTERNATIONAL HYDRO CARBON GROUP, INC.
EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLAN, DATED MARCH
30, 1998
OPTIONEE:
-------------------
OPTION GRANTED: Shares
------------
PURCHASE PRICE: US$ per Share
------
DATE OF GRANT:
-------------------
EXPIRATION DATE:
-------------------
<TABLE>
<CAPTION>
VESTING SCHEDULE: OPTION ON
#SHARES DATE VESTED (ASSUMING CONTINUED EMPLOYEE OR
--------- ----------- CONSULTANT STATUS, ETC.)
<S> <C> <C> <C>
--------- -----------
--------- -----------
--------- -----------
--------- -----------
--------- -----------
VESTED OPTIONS EXERCISED TO DATE: (INCLUDING THIS EXERCISE)
-----------
BALANCE OF VESTED OPTIONS TO BE EXERCISED:
-----------
</TABLE>
================================================================================
NOTICE OF EXERCISE
(TO BE SIGNED ONLY UPON EXERCISE OF THE OPTION)
TO: International Hydro Carbon Group, Inc. ("Optionor")
The undersigned, the holder of the Option described above, hereby
irrevocably elects to exercise the purchase rights represented by such Option
for, and to purchase thereunder, _________ shares of the Common Stock of
International Hydro Carbon Group, Inc., and herewith makes payment of
_______________________ therefor. Optionee requests that the certificates for
such shares be issued in the name of Optionee and be delivered to Optionee at
the address of __________________________________________________, and if such
shares shall not be all of the shares purchasable hereunder, represents that a
new Subscription of like tenor for the appropriate balance of the shares, or a
portion thereof, purchasable under the Grant of Option pursuant to the
International Hydro Carbon Group, Inc. Employee Benefit and Consulting Services
Compensation Plan dated March 30, 1998, be delivered to Optionor when and as
appropriate.
OPTIONEE:
Dated: NOT FOR EXECUTION
------------------------- ----------------------------------
- --------------------------------------------------------------------------------
INTERNATIONAL HYDRO CARBON GROUP, INC. PAGE A-3
EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLAN
<PAGE> 1
EXHIBIT 10.4
SULPHUR HANDLING FACILITY PROJECT AGREEMENT
BETWEEN
RIDLEY TERMINALS INC.
AND
SULPHUR CORPORATION OF CANADA LTD.
DATED AS OF JANUARY 1, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS ....................................................................2
1.1 Definitions ................................................................2
1.2 Canadian Dollars ...........................................................3
1.3 Schedules ..................................................................3
2. SUBLEASES.......................................................................4
3. OPERATING AGREEMENT ............................................................4
4. PROJECT CONDITIONS .............................................................4
4.1 Mutual Conditions ..........................................................4
4.2 RTI Conditions .............................................................5
4.3 Agreement to Co-operate ....................................................5
4.4 Mutual Consideration regarding Conditions ..................................6
4.5 Waiver of Conditions .......................................................6
5. PROJECT PLANNING AND IMPLEMENTATION.............................................6
5.1 Site Information ...........................................................6
5.2 General Design Parameters ..................................................6
5.3 Project Plans and Specifications ...........................................7
5.4 Project Timetable ..........................................................8
5.5 Regulatory Approvals and Permits ...........................................8
5.6 Engineers and Contractors ..................................................8
5.7 Approvals ..................................................................8
6. CONSTRUCTION OF THE PROJECT.....................................................8
6.1 Commencement of Construction ...............................................8
6.2 Construction Contracts .....................................................9
6.3 Performance/Security Bonds .................................................9
6.4 Letter of Credit ...........................................................9
6.5 Insurance .................................................................10
6.6 Builders' Liens ...........................................................10
6.7 Site Safety Rules and Regulations .........................................10
6.8 No Interference with RTI Operations .......................................10
6.9 Indemnification ...........................................................11
7. OWNERSHIP AND MAINTENANCE OF IMPROVEMENTS .....................................11
7.1 Ownership of SCC Improvements .............................................11
7.2 Ownership of RTI Improvements .............................................11
7.3 Maintenance of Improvements ...............................................11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
8. ASSIGNMENT.....................................................................11
8.1 Assignment by SCC ........................................................11
8.2 Assignment by RTI ........................................................12
8.3 Change of Control of SCC .................................................12
9. LABOUR MATTERS ................................................................12
9.1 Open Site ................................................................12
9.2 Collective Agreement .....................................................12
10. DEFAULT AND TERMINATION .......................................................12
10.1 Events of Default .......................................................12
10.2 Remedies ................................................................13
10.3 Right of Termination if Subleases Terminated ............................14
10.4 Force Majeure Termination ...............................................14
10.5 Remedies Cumulative and Waivers .........................................14
11. FORCE MAJEURE .................................................................14
11.1 Definition of "Force Majeure ............................................14
11.2 Effect of Force Majeure .................................................15
12. ENUREMENT .....................................................................15
13. ENTIRE AGREEMENT ..............................................................15
14. CONFIDENTIALITY ...............................................................15
14.1 Definition of Confidential Information ...................................15
14.2 Treatment of Confidential Information ....................................16
14.3 Release of Confidential Information ......................................16
15. NOTICES .......................................................................16
16. APPLICABLE LAW AND INTERPRETATION .............................................17
17. PUBLIC ANNOUNCEMENTS ..........................................................17
18. COUNTERPARTS ..................................................................18
19. DISPUTE RESOLUTION ............................................................18
19.1 Arbitration ..............................................................18
19.2 Venue.....................................................................19
</TABLE>
<PAGE> 4
SCHEDULES:
Schedule "A" - Intentionally Deleted
Schedule "B" - Development Plan
Schedule "C" - Subleases
Schedule "D" - Operating Agreement
Schedule "E" - Letter of Credit
Schedule "F" - Site Safety Rules and Regulations
Schedule "G" - Project Timetable
<PAGE> 5
SULPHUR HANDLING FACILITY PROJECT AGREEMENT
This Agreement is dated for reference as of the 1st day of
January, 1999,
AMONG:
RIDLEY TERMINALS INC., a body corporate pursuant to the laws
of Canada, having an office at Ridley Island, Port of Prince
Rupert, Prince Rupert, British Columbia
("RTI")
AND:
SULPHUR CORPORATION OF CANADA LTD., an Alberta company
extra-provincially registered in British Columbia under No.
A48453 having its head office at Suite 620, Alberta Stock
Exchange Tower, 300 - 5th Avenue, S.W., Calgary, Alberta, T2P
3C4
("SCC")
WHEREAS:
A. SCC has expressed to PRPC and RTI interest in developing, constructing and
operating a sulphur handling facility (the "Sulphur Terminal") on lands situate
on and adjacent to the lands currently leased by RTI from PRPC pursuant to a
lease dated December 18, 1981 (which lease as amended from time to time is
referred to as the "Phase I Head Lease") and on which RTI currently operates a
bulk cargo handling terminal at Ridley Island, Port of Prince Rupert.
B. The costs of financing, development, design and construction of the Sulphur
Terminal will be for the account of SCC which shall undertake those activities
at its sole expense.
C. RTI wishes to sublease the lands identified in the Subleases (the "Subleased
Lands") to SCC for the purpose of permitting SCC to construct the Sulphur
Terminal on the terms and conditions as provided in this Agreement. To allow RTI
to sublease all of the Subleased Lands to SCC RTI has entered into a further
lease agreement with PRPC dated as of January 1, 1999 (which lease as amended
from time to time is referred to as the "Phase 11 Head Lease") pursuant to which
RTI has leased those additional Subleased Lands which were not leased under the
Phase I Head Lease;
D. Pursuant to the terms and conditions set forth in this Agreement, RTI and SCC
will enter into Subleases for the site of the Sulphur Terminal in accordance
with the terms
<PAGE> 6
-2-
and conditions contained in Schedule "C" attached hereto and RTI and SCC will
enter into the Operating Agreement for the delivery and handling of sulphur
pursuant to the terms set forth in Schedule "D" attached hereto which, together
with the Subleases, will govern the relationship between the Coal Terminal and
the Sulphur Terminal; and
E. In order to provide a framework for design, development, construction and
operation of the Sulphur Terminal, the parties have entered into this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT:
1. DEFINITIONS
1.1 Definitions - In this Agreement, except where the context otherwise
requires:
(a) "Approved Plans" means the plans and specifications for the
Project approved by SCC, RTI and PRPC pursuant to Subsection
5.3.
(b) "Coal Terminal" means the Ridley Island Coal Terminal.
(c) "Development Plan" means that certain Development Plan dated
as at March 5, 1999 prepared by SCC, a copy of which is
attached hereto as Schedule "B" hereto.
(d) "Operating Agreement" has the meaning given to it in
Subsection 3. 1.
(e) "Phase I Head Lease" has the meaning given to it in Recital A.
(f) "Phase 11 Head Lease" has the meaning given to it in
Recital C.
(g) "Project" means the financing, development, design and
construction of the Sulphur Terminal, including the completion
of the RTI Improvements.
(h) "Project Conditions" means the conditions set forth in
Section 4 hereof.
(i) "Project Timetable" has the meaning given to it in
Section 5.4.
(j) "PRPC" means Prince Rupert Port Corporation and includes all
entities which hereafter become the head lessor under the
Phase I Head Lease or the Phase 11 Head Lease.
(k) "RTI" means Ridley Terminals Inc.
<PAGE> 7
-3-
(l) "RTI Improvements" means the expansion of RTI's pipe and
conveyor delivery systems, the modification of RTI's
existing south ship loader, dock fenders and railyards,
which improvements are to be made by SCC on the RTI Lands
and which are generally described in the Development Plan.
For greater certainty, RTI Improvements includes all
improvements made by SCC on RTI Lands pursuant to the
Approved Plans and includes those portions of the conveyor
and pipe delivery systems which are located on or above the
RTI Lands.
(m) "RTI Lands" means those lands currently leased by RTI under
the Phase I Head Lease other than the portion of those lands
which forms part of the Subleased Lands.
(n) "SCC" means Sulphur Corporation of Canada Ltd.
(o) "SCC Improvements" means all of the leasehold improvements to
be made by SCC to the Subleased Lands including without
limitation the Project, but excluding the RTI Improvements.
(p) "Subleases" has the meaning given to it in Subsection 2. 1.
(q) "Subleased Lands" has the meaning given to it in Recital C.
(r) "Sulphur Terminal" means the sulphur handling facility
proposed to be financed, developed, designed and constructed
by SCC pursuant to this Agreement and which is generally
described in the Development Plan.
(s) "Year 2000 Compliant" means functional without error,
interruption or breakdown after December 31, 1999 and able to
manage and manipulate data involving dates properly and
without error or interruption, whether such dates are in the
20th or 21st century and whether entered or stored by 2 or 4
digit codes.
1.2 Canadian Dollars - All amounts referred to herein, in the Subleases and in
the Operating Agreement are expressed in Canadian dollars, unless otherwise
specified.
1.3 Schedules - The following are the Schedules to this Agreement and are
incorporated by reference and deemed to be part hereof:
Schedule "A" - Intentionally Deleted
Schedule "B" - Development Plan
Schedule "C" - Subleases
Schedule "D" - Operating Agreement
<PAGE> 8
-4-
Schedule "E" - Letter of Credit
Schedule "F" - Site Safety Rules and Regulations
Schedule "G" - Project Timetable
2. SUBLEASES
2.1 Concurrently with the execution of this Agreement RTI and SCC shall enter
into the Subleases (which Subleases as amended from time to time are referred to
as the "Subleases") in the forms attached hereto as Schedule "C".
3. OPERATING AGREEMENT
3.1 Concurrently with the execution of this Agreement RTI and SCC shall enter
into an operating and throughput agreement dated as of January 1, 1999 (which
agreement as amended from time to time is referred to as the "Operating
Agreement") in the form attached hereto as Schedule "D".
4. PROJECT CONDITIONS
4.1 Mutual Conditions - The respective obligations of RTI and SCC to proceed
with and complete the Project are and shall be subject to fulfillment of each of
the following conditions within the time specified therefor, namely:
(a) that on or before June 15, 1999 RTI, PRPC and SCC shall have
agreed upon the final plans and specifications for the Project
pursuant to Subsection 5.3; and
(b) the receipt by SCC on or before June 15, 1999 of all
governmental approvals in accordance with Subsection 5.5
hereof.
The foregoing conditions above are for the benefit of each of RTI and SCC and
may only be waived or altered by written agreement executed by RTI and SCC. If
any of the conditions in this Subsection 4.1 shall be neither fulfilled nor
waived within the time provided (as same may be extended), this Agreement, the
Subleases and the Operating Agreement shall be terminated at the option of
either party by notice in writing to the other party and, except as provided in
Section 14, no party hereto shall upon such termination have any further right
or obligation under this Agreement, the Subleases and the Operating Agreement
except for the payment of those obligations which arose prior to the date of
termination.
<PAGE> 9
-5-
4.2 RTI Conditions - The obligation of RTI to proceed with and complete the
Project is and shall be subject to fulfillment of each of the following
conditions within the time specified therefor, namely:
(a) that within 30 days of the execution of this Agreement by
both parties SCC shall have provided to RTI:
(i) audited financial statements of SCC for its most
recently completed fiscal year;
(ii) evidence of financing commitments specifically
dedicated to the Project sufficient to ensure that
the Project can be constructed in accordance with the
Development Plan and within the Project Timetable and
that normal commercial operations of the business to
be conducted at the Subleased Lands can be commenced
and carried on forthwith on completion of
construction; and
(iii) evidence of sulphur supply and sales commitments
specifically dedicated to the Project sufficient to
ensure that SCC is reasonably likely to be able to
comply with the minimum throughput commitments
specified in the Operating Agreement;
all of which information shall be in form and substance
reasonably acceptable to RTI; and
(b) that on or before June 15, 1999 SCC shall have commenced
construction of the Project and shall have delivered to RTI
the letter of credit required by Subsection 6.4(a).
The foregoing conditions are for the sole benefit of RTI and each may be waived
by RTI by notice in writing to SCC at any time prior to the time for fulfillment
thereof. If any of the conditions in this Subsection 4.2 shall be neither
fulfilled nor waived within the time provided (as same may be extended), this
Agreement, the Subleases and the Operating Agreement shall be terminated at the
option of RTI by notice in writing to SCC and, except as provided in Section 14,
no party hereto shall upon such termination have any further right or obligation
under this Agreement, the Subleases and the Operating Agreement except for the
payment of those obligations which arose prior to the date of termination.
4.3 Agreement to Co-operate - The parties agree to cooperate and to act in good
faith and to use all reasonable efforts to obtain fulfillment of the conditions
contained in Subsections 4.1 and 4.2 within the time or times required therefor
(as same may be extended).
<PAGE> 10
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4.4 Mutual Consideration regarding Conditions - Notwithstanding that the
conditions precedent aforesaid may leave some discretion in RTI and SCC, the
parties hereto agree, in consideration of the sum of $10.00 paid by each of RTI
and SCC to each other and for other good and valuable consideration (receipt and
sufficiency of which the parties hereby acknowledge), the parties shall be bound
by the agreements formed upon the entering into of this Agreement, the Subleases
and the Operating Agreement unless and until the agreements formed by entering
into this Agreement, the Subleases and the Operating Agreement shall terminate
in accordance with their terms or by agreement of the parties.
4.5 Waiver of Conditions - If any party hereto elects to waive fulfillment of a
condition precedent in its favour, such waiver shall be without prejudice to any
other covenants, representations or warranties set forth in this Agreement, the
Subleases or the Operating Agreement in respect of the same subject matter. The
party waiving the condition shall retain all of its other rights and remedies
pursuant to these agreements.
5. PROJECT PLANNING AND IMPLEMENTATION
5.1 Site Information, - RTI shall provide to SCC, without cost to SCC, such
information as may from time to time be reasonably requested by SCC to assist
SCC to properly plan and design the Project in keeping with the terms of this
Agreement and good industrial construction industry practice prevailing in
British Columbia, provided that RTI shall only be required to provide that
information which is in its possession. Such information reasonably requested
may pertain to, but is not limited to:
(a) the Subleased Lands, including any existing soils and engineering
data, and utilities and infrastructure on or adjacent to the
Subleased Lands;
(b) Coal Terminal operating criteria and procedures sufficient to
permit SCC to effectively plan the proposed business operations
for the Sulphur Terminal;
(c) the physical structure, services, utilities and access to the
Coal Terminal; and
(d) the existence and location approximately within a few feet of
underground utilities and structures located in or under the
Subleased Lands.
Where such available information is not sufficient to be relied upon in the
ordinary course of prudent development and construction practice, SCC shall
obtain such further or other information as would be necessary.
5.2 General Design Parameters - The following criteria shall apply to the design
and planning of the Project by SCC:
<PAGE> 11
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(a) the Sulphur Terminal will be designed and constructed to:
(i) receive and store molten sulphur;
(ii) process and store formed sulphur;
(iii) deliver molten sulphur by pipe to ocean-going
vessels; and
(iv) deliver formed sulphur by conveyor to ocean-going
vessels;
in accordance with the Approved Plans and will be fit for the
intended purpose;
(b) the Sulphur Terminal will include free-standing structures
connecting to and integrating with the pipe and conveyor
delivery systems of the Coal Terminal, complete with necessary
modifications to the existing south ship loader and dock
fenders to facilitate the ship loading of sulphur;
(c) the Sulphur Terminal will be designed and constructed of such
quantity and quality so as to provide an economic life
expectancy of the Sulphur Terminal of a minimum of 20 years.
The structure and substructure design and construction shall
be in keeping with first class industrial construction
industry standards and, without limitation, all components
thereof shall be fully Year 2000 Compliant;
(d) unless otherwise agreed by the parties in writing, utilities,
including without limitation water, sewer, gas, hydro, and
telecommunications services, may be connected to utilities on
RTI Lands but shall be separately metered and paid for by SCC,
and the connection or utilization of such utilities shall not,
in any event, disrupt RTI's operations; and
(e) the Sulphur Terminal will be designed and constructed in
accordance with all applicable federal, provincial and
municipal laws, Codes, by-laws, regulations, permits,
standards and, without limiting the generality of the
foregoing, in compliance with any and all requirements of
the Ministry of Environment, Department of Fisheries and
Oceans, Environment Canada, Workers Compensation, Employment
Standards and Canadian Coast Guard, and all drawings for the
Sulphur Terminal shall be under seal of a Professional
Engineer licensed in British Columbia.
5.3 Project Plans and Specifications - SCC will consult with RTI and PRPC in
preparation of the plans and specifications for the Project. The Project plans
and specifications shall be consistent with the Development Plan and shall be
subject to the
<PAGE> 12
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written approval of RTI and PIRPC. The plans and specifications approved
pursuant to this Subsection as they may be modified from time to time are
referred to in this Agreement as the "Approved Plans". Any modifications to the
Approved Plans shall also require the written approval of RTI and PRPC.
5.4 Project Timetable - SCC covenants to fully satisfy each of the Project
milestones described in the project timetable (the "Project Timetable") set out
in Schedule "G" within the time allowed therefore in such Schedule. The Project
Timetable may be amended with the written approval of RTI (which approval may be
granted or withheld in RTI's sole discretion). It is acknowledged by SCC that
the completion of each of these milestones within the time allowed in the
Project Timetable is of utmost importance to RTI and that the failure of SCC to
complete any one of the milestones within the time allowed will allow RTI to
terminate this Agreement, together with the Subleases and the Operating
Agreement, pursuant to Section 10.
5.5 Regulatory Approvals and Permits - SCC shall be responsible for obtaining
any and all approvals, permits and authorities of any and all public bodies
having jurisdiction which are necessary or desirable for construction of the
Project, including without limitation all required environmental approvals. RTI
shall use commercially reasonable efforts to assist SCC in that regard, but it
shall not be obligated to incur any material out-of-pocket cost or expense in
doing so.
5.6 Engineers and Contractors - SCC shall be solely responsible for engaging any
and all engineers and contractors necessary or desirable to permit the Project
to be executed in accordance with the Approved Plans and the Project Timetable.
SCC undertakes to maximize, subject to availability, price and quality, on
competitive terms, the use of Canadian goods and services in the construction of
the Project. RTI shall have the right to appoint a project coordinator at its
expense to monitor the course of construction of the Project. During the course
of construction SCC shall provide to RTI such information as may reasonably be
requested by RTI from time to time regarding the construction.
5.7 Approval - All approvals or consents required to be made by either party
hereto under the terms of this Agreement and not specifically stated to be in
their sole or absolute discretion, shall not be unreasonably withheld or
delayed.
6. CONSTRUCTION OF THE PROJECT
6.1 Commencement of Construction - SCC shall not commence construction of the
Project or undertake any other activity on the Subleased Lands until such time
as each of the Project Conditions have been fully satisfied or waived, except
with the prior written approval of RTI (which approval may be granted or
withheld in RTI's sole discretion).
<PAGE> 13
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6.2 Construction Contracts - SCC shall enter into written construction contracts
with one or more contractors providing for the construction of the Project
pursuant to the Approved Plans and the Project Timetable. Prior to entering into
any construction contract which provides for the construction of improvements or
any other work to be undertaken on the RTI Lands, SCC shall obtain the approval
of RTI to the terms of such contract. Furthermore, any such contract shall not
be amended in any material respect, nor cancelled by SCC, other than for default
by RTI, without the prior written consent of RTI.
6.3 Performance/Security Bonds - SCC will ensure that all contractors and
subcontractors who are to perform work on the RTI Lands provide a
performance/security bond based upon a minimum of 50% of the completed value of
the work to be performed, plus a labour and materials payment bond based upon a
minimum of 50% of the completed value of the work to be performed, issued by a
surety authorized to carry on business of suretyship in British Columbia. SCC
shall ensure that RTI is named as an insured party under such bonds and shall
also ensure that no contractor or subcontractor commences work on the RTI Lands
unless and until the required bonds are in place and RTI has been provided with
satisfactory evidence of such placement. With respect to work to be performed on
the Subleased Lands, SCC shall comply with all of the terms of the Subleases.
6.4 Letter of Credit
(a) As security for its obligation to construct the Project in
accordance with the terms of this Agreement and its other
obligations hereunder, SCC shall, on or before the earlier of
June 15, 1999 or commencement of construction of the Sulphur
Terminal, deliver to RTI an irrevocable letter of credit in the
amount of $250,000 which shall be substantially in the form set
forth in Schedule "E". The letter of credit shall have an initial
expiry date of March 15, 2000, however, SCC agrees to renew or
replace the letter of credit from time to time with a letter of
credit(s) on substantially the same terms and conditions until
such time as:
(i) construction of the liquid sulphur ship loading system
(including train unloading and liquid storage) forming part
of the Sulphur Terminal has been completed, and
(ii) the first commercial shipment of sulphur from the Sulphur
Terminal has occurred,
to the satisfaction of RTI, acting reasonably.
(b) If SCC is required under Subsection 6.4(a) to renew or replace a
letter of credit it shall do so at least 20 days prior to the
expiry of such letter of credit and shall immediately deliver to
RTI the renewed or replacement letter of
<PAGE> 14
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credit. If RTI has not received a renewal or replacement letter
of credit at least 20 days prior to the expiry of the letter of
credit then in effect and RTI is of the opinion, acting
reasonably, that one or both of the events referred to in
Subsections 6.4(a)(i) and (ii) will not be completed to the
satisfaction of RTI, acting reasonably, prior to the expiry of
the letter of credit then in effect, RTI shall be entitled to
drawn down in full the letter of credit then in effect prior to
its expiry and to then hold the proceeds of the letter of credit
as security for SCC's obligations under this Agreement.
(c) Upon completion of both of the events referred to in Subsection
6.4(a)(i) and (ii) to the satisfaction of RTI, acting reasonably,
RTI will upon request by SCC take such actions as may be
reasonably requested to cause any then existing letter of credit
issued by SCC to be cancelled.
6.5 Insurance - SCC shall provide, maintain and pay for insurance on the terms
and conditions set forth in the Subleases.
6.6 Builders' Liens - SCC shall at all times keep the RTI Lands and the
Subleased Lands free and clear of all liens, charges and encumbrances whatsoever
including, without limitation, claims of builders' lien which may be filed by
any contractor, subcontractor, supplier or other party in any way contributing
to the Project; SCC shall post, or cause to be posted, on the Subleased Lands at
all times notices satisfactory to RTI and PRPC identifying the site as having
been leased and stipulating that no claim of builders' lien may in any way be
filed against any interest of RTI or SCC in or to such lands. SCC shall
indemnify, defend and save harmless RTI and PRPC from any and all such claims of
builders' lien and the costs, expense and damages in any way deriving therefrom,
whether direct or indirect. SCC shall comply at all times with the requirements
of the Builders' Lien Act with respect to the establishment and maintenance of
holdback accounts and the timing and amount of payments under the construction
contract and shall ensure that its contractor or contractors similarly complies.
RTI and PRPC shall be entitled to post such signs as they reasonably deem
appropriate from time to time so as to alert third parties that they are not
responsible for the cost of any improvements being constructed on the Subleased
Lands. The Sulphur Terminal is not being constructed by SCC at the request of
either RTI or PRPC.
6.7 Site Safety Rules and Regulations - During the course of construction of the
Project SCC shall comply, and will use all reasonable efforts to ensure
compliance by its respective contractors, agents, employees, licensees and
invitees, with the site safety protocols attached hereto as Schedule "F", as
amended from time to time by RTI in its discretion.
6.8 No Interference with RTI Operations. SCC will arrange for all work to be
performed by it or on its behalf in a manner that will not disrupt or interfere
with the ongoing operations of RTI on the RTI Lands.
<PAGE> 15
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6.9 Indemnification- SCC will indemnify and save harmless RTI, its employees and
agents, from and against any and all losses, claims, damages, actions, causes of
action, costs and expenses (including without limitation, legal costs on a
solicitor and his own client basis) that RTI may sustain, incur, suffer or be
put to at any time either before or after the expiration or termination of this
Agreement, where the same or any of them are based upon, arise out of or occur,
directly or indirectly, by reason of any act or omission in whole or in part of
SCC, or of any agent, employee, officer, director, contractor or subcontractor
of SCC, or of any other person for whom SCC is responsible in law, excepting
always liability arising out of the independent acts or omissions of RTI.
7. OWNERSHIP AND MAINTENANCE OF IMPROVEMENTS
7.1 Ownership of SCC Improvements - The ownership of the SCC Improvements shall
be governed by the Subleases.
7.2 Ownership of RTI Improvements - In consideration of $1.00 paid by RTI to
SCC, the grant of rights set forth in Subsection 22.2 of the Operating Agreement
and other valuable consideration (the receipt and sufficiency of which is hereby
acknowledged by SCC), SCC and RTI agree that the RTI Improvements are and shall
be fixtures to the RTI Lands and are intended to be and become the absolute
property of RTI immediately upon their accession to or installation upon the RTI
Lands. To the extent assignable, SCC shall assign to RTI the benefit of any
manufacturers' or other warranties relating to those parts and components which
comprise the RTI Improvements.
7.3 Maintenance of Improvements - In accordance with the terms of the Subleases
SCC shall be responsible for the maintenance of and repair of the SCC
Improvements. At the request of SCC RTI will perform any normal maintenance and
repair in accordance with Section 20 of the Operating Agreement.
8. ASSIGNMENT
8.1 Assignment by SCC. The rights of SCC under this Agreement shall not be
transferred, assigned, sold, mortgaged, sublicensed, sublet or disposed of in
any other manner, in whole or in part, to any other party without in any case
first obtaining the prior written consent of RTI which consent may he withheld
in RTI's sole discretion and there shall be no obligation upon the party
withholding such consent, under any circumstances, to justify the withholding of
its consent. Notwithstanding any such consent being given by RTI and such
transfer, assignment, sale, mortgage, subletting, sublicensing or disposition
being effected, SCC shall remain bound to RTI for the fulfillment of all of its
obligations under this Agreement.
<PAGE> 16
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8.2 Assignment by RTI. RTI may assign its rights and obligations under this
Agreement without the consent of SCC and upon such assignment and the assignee's
agreement to assume all the obligations on the part of RTI under this Agreement,
RTI shall have no liability for any subsequent breach of any obligation on the
part of RTI by the assignee.
8.3 Change of Control of SCC. If SCC is a corporation, the shares of which are
not publicly traded on a stock exchange and if, by the sale or other disposition
of its shares or securities, the control or beneficial ownership of such
corporation is changed at any time after the execution of this Agreement without
the prior written consent of RTI, RTI may, at its option, terminate this
Agreement, the Subleases and the Operating Agreement upon giving fifty (50)
days' notice to SCC of its intention to terminate.
9. LABOUR MATTERS
9.1 Open Site - SCC acknowledges and agrees that the Project is and will be an
"open site" project and that some or all contractors (whether engaged by SCC or
others) and subcontractors working on the RTI Lands or the Subleased Lands may
be union or non-union. SCC shall use all commercially reasonable efforts to
cause its contractors to ensure that labour peace is maintained at all times on
the RTI Lands and the Subleased Lands by its forces and anyone employed by or
through its contractors, and that the Project is carried out without labour
problems, work stoppages or other labour disputes which might affect the Project
or the Coal Terminal.
9.2 Collective Agreement - SCC shall use all commercially reasonable efforts to
ensure that no collective agreement between its contractors and its contractors'
workers, or between subcontractors and their workers, will affect the
contractors' performance under the construction contracts, and further that the
expiry or termination of any such agreement will also not affect the performance
of such construction contracts.
10. DEFAULT AND TERMINATION
10.1 Events of Default - Each of the following will be an event of default by
SCC (an "Event of Default") under this Agreement:
(a) the Project is not completed and fully operational by the required
completion date set out in the Project Timetable or if SCC fails to
satisfy any of the other Project milestones within the time allowed
therefore in the Project Timetable;
(b) SCC commits a material default in the performance of any of its other
obligations under this Agreement and fails to remedy such default
within 30
<PAGE> 17
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days after notice of such default has been given to SCC by RTI of such
default;
(c) an event of default by SCC occurs under either of the Subleases or the
Operating Agreement; or
(d) SCC commits or becomes subject to any one or more of the following
events:
(i) if SCC files a petition in bankruptcy or for re-organization or
for an arrangement pursuant to any applicable bankruptcy law or
under any similar law, now or hereafter in effect, or is adjudged
by a Court of competent jurisdiction a bankrupt or becomes
insolvent or makes an assignment for the benefit of its creditors
or admits in writing its inability to pay its debts generally as
they become due or is dissolved or suspends payments generally of
its obligations;
(ii) if a petition is filed proposing the adjudication of SCC as a
bankrupt or its re-organization pursuant to any applicable
bankruptcy law or any similar law, now or hereafter in effect,
and:
(A) SCC consents to the filing thereof; or
(B) the petition is not discharged or denied within sixty (60)
days after the filing thereof or the petition is not
diligently defended;
(iii) if a receiver, receiver-manager, trustee or liquidator (or other
similar official) is appointed to take charge of SCC or of all
or substantially all of the business or assets of SCC, and:
(A) SCC consents to such appointment; or
(B) the appointment is not discharged or withdrawn or action is
not diligently taken by SCC to secure the discharge of that
official within sixty (60) days after the appointment.
10.2 Remedies - Upon the occurrence of an Event of Default and at any time
thereafter, RTI may:
(a) terminate this Agreement, the Subleases and the Operating Agreement by
written notice to SCC to that effect, effective on a date specified in
such notice, which date shall be not earlier than the date on which
such notice is given;
<PAGE> 18
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(b) call upon the bonds to be delivered by contractors and subcontractors
pursuant to Subsection 6.3 and/or the letter of credit(s) to be
delivered by SCC pursuant to Subsection 6.4; may enter upon the
Subleased Lands and assume control of the execution of the work as
agent of and for the account of SCC; RTI may cause all work to be
undertaken to remedy any delay and to complete the Project, and SCC
shall forthwith on request pay to RTI any and all reasonable direct
costs, charges and expenses of such work undertaken by it;
(c) exercise any other right or remedy available to it, at law or in
equity.
10.3 Right of Termination if Subleases Terminated. If either the Phase I Head
Lease or the Phase I Sublease or the Phase II Head Lease or the Phase II
Sublease is terminated or cancelled or the term of the Phase I Head Lease or the
Phase I Sublease or the Phase II Head Lease or the Phase II Sublease expires and
is not extended, replaced or renewed, RTI may, upon 14 days' written notice to
SCC terminate this Agreement in which case SCC shall not be entitled to any
compensation from RTI.
10.4 Force Majeure Termination - If a party is prevented by a Force Majeure
event from substantially performing its obligations under this Agreement for a
period of 12 or more consecutive months, then the other party shall be entitled
to terminate this Agreement by written notice to that effect to the party so
prevented from performing its obligations.
10.5 Remedies Cumulative and Waivers - No remedy conferred on RTI under this
Agreement is intended to be exclusive. Each and every remedy shall be cumulative
and shall be in addition to every other remedy given under this Agreement or now
or hereafter existing at law or equity or by statute or otherwise. The exercise
of any one or more remedies shall not preclude the simultaneous or later
exercise by RTI of any or all other such remedies. RTI may by written instrument
waive any breach by SCC of the terms of this Agreement. No course of dealing
between the parties nor any delay in exercising any rights hereunder shall
operate as a waiver of RTI's rights.
11. FORCE MAJEURE
11.1 Definition of "Force Majeure" - In this Agreement "Force Majeure" means an
act of God or the public enemy, acts or refusals to act of any government or
governmental agency in either its sovereign or contractual capacity,
governmental restrictions or control on imports, exports or foreign exchange,
freight embargoes, non-availability or mechanical breakdown or destruction of
equipment vital to loading, forming, storage, transporting or unloading
operations not caused by inadequate maintenance, fire, floods, tidal waves,
earthquake, storm, slides, epidemics, quarantine restrictions, war declared or
undeclared, revolution, riots, insurrections, hostilities, civil disturbances,
strikes, walk-outs, work stoppages, lockouts, railroad obstructions or
obstruction of ocean navigation, stoppages of
<PAGE> 19
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labour, deliberate work slow downs, other labour difficulties, the taking of the
Coal Terminal or Sulphur Terminal by lawful expropriation, other lawful ouster
of RTI or SCC from the Sulphur Terminal or Coal Terminal or other lawful denial
of rights of RTI or SCC or any other cause beyond the reasonable control of a
party, but force majeure shall not include a lack of funds. The non-availability
of labour (other than by reason of strikes and lock-outs) or materials and
hindering subsurface conditions shall not be a cause beyond the control of SCC
or RTI. A party when aware of an event of Force Majeure shall promptly notify
the other party and within 10 days shall notify such other party in writing of
particulars of the relevant event with any supporting evidence. The party
affected by an event of Force Majeure shall use its best efforts to contain or
remove the Force Majeure condition and to resume, with least possible delay,
compliance with its obligations.
11.2 Effect of Force Majeure - If at any time a party hereto is unable to fulfil
its obligations under this Agreement due to an event of Force Majeure, such
party shall be relieved from its obligations for the duration of such event of
Force Majeure.
12. ENUREMENT
12.1 This Agreement and the agreement formed by its acceptance shall enure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
13. ENTIRE AGREEMENT
13.1 There are no covenants, agreements, conditions or representations relating
to the Project, the Subleased Lands or the subject matter of this Agreement
subsisting between the parties hereto, except as expressly set forth or
incorporated in, or contemplated by, this Agreement, the Subleases and the
Operating Agreement or as concurrently or subsequently agreed in writing. All
prior communications, discussions, representations, expressions of interest and,
without limitation, the two letters of intent exchanged between SCC and RTI
dated May 29, 1998 and June 1, 1998 are hereby superseded, cancelled and of no
force or effect whatsoever.
14. CONFIDENTIALITY
14.1 Definition of Confidential Information - In this Agreement "Confidential
Information" means collectively (i) information concerning the business or
affairs of any party, (ii) information concerning the Project or the
transactions contemplated by this Agreement, (iii) negotiations and
communications between the parties or their representatives, (iv) this Agreement
and the agreement formed by their acceptance, and (v)
<PAGE> 20
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all documents, materials, copies and adaptations relating to the foregoing,
excluding in all cases information that is of public record or available to the
public by reason other than disclosure involving breach of confidence or breach
of confidentiality.
14.2 Treatment of Confidential Information - The parties agree as follows:
(a) to use Confidential Information solely for the purpose of carrying out
the purpose and intent of this Agreement and for no other purpose;
(b) to keep all Confidential Information strictly confidential except as
may be required by law, and provided that the parties may disclose
Confidential Information, on a strictly confidential basis, to their
respective officers, agents, employees, consultants, professional
advisors and lenders and, with the consent of the other party hereto,
to third parties, to the extent such disclosure is necessary to carry
out the purpose and intent of this Agreement;
(c) to take all reasonable precautions necessary to prevent any
unauthorized access to or use, disclosure or reproduction of
Confidential Information; and
(d) that all Confidential Information shall, as among the parties hereto,
remain property of the party providing same, and upon termination of
the agreement formed by acceptance of this Agreement and the Subleases
and Operating Agreement (if executed and delivered), each party agrees
to return on request all Confidential Information and all documents
and materials containing Confidential Information provided by any
other parties.
14.3 Release of Confidential Information - If at any time, notwithstanding the
other provisions of this Section 14, either party is obliged by law to release
Confidential Information to third parties then the other party shall be released
from its obligations of confidentiality with respect to that same information
and to the same extent of the disclosure by the party who is obliged by law to
disclose.
15. NOTICES
15.1 All notices and other communications required or permitted hereunder shall
be in writing and either physically delivered or sent by facsimile transmission
(receipt confirmed) to the intended recipient as follows:
<PAGE> 21
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if to RTI: Post Office Bag 8000
Prince Rupert, British Columbia
V8J 4H3
Attention: General Manager and Chief Operating Officer
Fax No.: 250-624-2389
if to SCC: Suite 620, Alberta Stock Exchange Tower
300 - 5th Avenue S.W.
Calgary, Alberta
T2P 3C4
Attention: Mr. Rod J. MacKenzie, President
Fax No.: 403-234-7706
or at such other addresses of which either party may from time to time notify
the other in writing. Any notice, approval or other communication so given shall
he deemed to have been given and received on the date on which it is delivered
if delivered and on the day transmitted if confirmed by facsimile.
16. APPLICABLE LAW AND INTERPRETATION
16.1 This Agreement shall be governed by and construed under the laws of the
Province of British Columbia and the laws of Canada applicable therein and the
parties hereto hereby irrevocably attorn to the non-exclusive jurisdiction of
the courts of the Province of British Columbia. The provisions of this Agreement
shall be construed as a whole according to their common meaning and not strictly
for or against RTI or SCC. The plural shall include the singular. The masculine
gender shall include the feminine. The definitions contained in this Agreement
shall also apply to all schedules referred to herein and attached unless
otherwise indicated. Time is of the essence of this Agreement and each of its
provisions. Headings are included for convenience only, and shall have no effect
upon the construction or interpretation of this Agreement or any of the
schedules hereto.
17. PUBLIC ANNOUNCEMENTS
17.1 The parties acknowledge their mutual intention to make one or more public
announcements regarding this Agreement and the proposed Project, notwithstanding
that various details of the Project and its implementation remain to be
developed through the Project Condition removal period. The parties shall use
all reasonable efforts to cooperate and agree upon joint announcements for that
purpose and no party shall make any announcement independently of the others
without first notifying them at least 48 hours in advance.
<PAGE> 22
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18. COUNTERPARTS
18.1 This Agreement may be executed in any number of counterparts and delivered
by facsimile, each of which counterparts shall together, for all purposes,
constitute one and the same instrument, binding on the parties, and each of
which shall together be deemed to be an original, notwithstanding that all of
the parties are not signatory to the same counterpart or facsimile.
19. DISPUTE RESOLUTION
19.1 Arbitration - If any dispute arising out of or in connection with this
Agreement cannot be resolved through negotiation between the parties, the
dispute shall be submitted to arbitration in accordance with this Subsection. If
within 30 days after either party gives notice to the other of a dispute the
parties agree upon a single arbitrator, the arbitration will be held before such
arbitrator; otherwise, the arbitration shall be before a board of three
arbitrators comprising one appointed by RTT, one appointed by SCC, and one
appointed by the two arbitrators so appointed. If RT1 and SCC shall, after 14
days' notice, fail to appoint such arbitrator, or if the two arbitrators fail to
appoint a third arbitrator within 14 days' from their own appointment, then upon
application by either party, the arbitrator or third arbitrator, as the case may
be, shall be selected in the manner provided in the Commercial Arbitration Act
(Canada). 'Me provisions of this Subsection 19.1 shall be deemed to be a
"submission" to arbitration within the provisions of the Commercial Arbitration
Act (Canada). The parties to this Agreement agree that the rules of the British
Columbia International Commercial Arbitration Centre for the conduct of domestic
commercial Arbitrations shall not apply to such arbitration. The decision of the
arbitrator (where a single arbitrator has been agreed upon) or a majority of the
arbitrators (where three arbitrators have been appointed) shall be final and
binding on the parties. The arbitrator(s) shall be required to render his, her
or their decision within 60 days of the conclusion of the arbitration
proceedings.
<PAGE> 23
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19.2 Venue - Any arbitrations shall be conducted in Vancouver, British Columbia
unless otherwise agreed to.
IN WITNESS WHEREOF the parties have executed this Agreement as
of the date set out on the first page of this Agreement.
RIDLEY TERMINALS INC.
By:
----------------------------------
Authorized Signatory
By:
----------------------------------
Authorized Signatory
SULPHUR CORPORATION OF CANADA LTD.
By:
----------------------------------
Authorized Signatory
By:
----------------------------------
Authorized Signatory
<PAGE> 1
EXHIBIT 10.5
OPERATING AND THROUGHPUT AGREEMENT
BETWEEN
RIDLEY TERMINALS INC.
AND
SULPHUR CORPORATION OF CANADA LTD.
DATED AS OF JANUARY 1, 1999
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TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Interpretation ................................................................................2
2. Services to be Provided by RTI ................................................................6
3. Scheduling Train Arrivals .....................................................................6
4. Estimated Time of Arrival of Trains ...........................................................6
5. Pre-Unloading for Trains ......................................................................7
6. Unloading Procedure for Trains ................................................................7
7. Receipt and Acceptance of Sulphur from Trains .................................................8
8. Specifications of Unit Trains .................................................................9
9. Rail Delayed Arrival Charges ..................................................................9
10. Scheduling Vessel Arrivals ....................................................................9
11. Notice of Readiness...........................................................................10
12. Laydays.......................................................................................10
13. Loading and Hatch Covers......................................................................11
14. Loading Facilities for Vessels................................................................11
15. Demurrage and Despatch and Loading Rate.......................................................12
16. Calculation of Tonnes Loaded..................................................................13
17. Partially Loaded Vessels......................................................................13
18. Combined Loading..............................................................................14
19. Deliveries to and from the Sulphur Terminal...................................................14
20. Sulphur Terminal Personnel ...................................................................14
21. Extra Services ...............................................................................15
22. Throughput Rates and Exclusivity .............................................................15
23. Method of Payment ............................................................................16
24. Throughput Guarantee and Mutual Commitment....................................................17
25. Indemnification...............................................................................18
26. Force Majeure.................................................................................19
27. Insurance.....................................................................................21
28. Limitation of Liability and Immunity..........................................................21
29. Option to Renew...............................................................................21
30. Default and Termination.......................................................................22
31. Arbitration...................................................................................24
32. Taxes.........................................................................................24
33. Confidentiality...............................................................................25
34. Severability..................................................................................26
35. Assignment....................................................................................26
36. Applicable Law and Interpretation.............................................................26
37. Method of Notice..............................................................................27
38. Entire Agreement..............................................................................27
39. Review of Agreement Terms.....................................................................27
40. Counterparts .................................................................................28
</TABLE>
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SCHEDULES:
Schedule "A" - Rates
Schedule "B" - Services For The Sulphur Terminal
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OPERATING AND THROUGHPUT AGREEMENT
THIS AGREEMENT is dated for reference the lst day of January, 1999
BETWEEN:
RIDLEY TERMINALS INC., a body corporate duly incorporated
under the laws of Canada, having an office at Prince Rupert,
British Columbia;
("RTI")
AND:
SULPHUR CORPORATION OF CANADA LTD., an Alberta company
extra-provincially registered in British Columbia under No.
A48453 having its head office at Suite 620, Alberta Stock
Exchange Tower, 300 - 5th Avenue, S.W., Calgary, Alberta, T2P
3C4;
("SCC')
WHEREAS:
A. RTI owns and operates a bulk cargo handling facility at Ridley Island, Port
of Prince Rupert;
B. SCC intends to develop, construct and operate a sulphur handling facility and
related works at Ridley Island, Port of Price Rupert;
C. SCC has entered or will enter into contracts to store and process sulphur at
the Facility (as defined herein) and to deliver sulphur to and transport sulphur
from the Facility;
D. SCC desires to engage the services of RTI to provide terminal, storage,
processing and shipping services for the Sulphur Terminal, subject to the terms
and conditions contained herein; and
E. SCC and RTI wish to enter into this Agreement for the operation of the
Sulphur Terminal on the terms and conditions hereinafter set out.
NOW THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties agree as follows:
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INTERPRETATION
In and for the purpose of this Agreement, unless there is
something in the subject or context inconsistent therewith:
(a) "Adjustment Date" has the meaning set forth in Section 24.3
of this Agreement.
(b) "Approved Plans" means the plans and specifications for the
Project approved by SCC, RTI and PRPC pursuant to Subsection
5.3 of the Project Agreement.
(c) "Buyers" means the purchasers of sulphur with whom SCC has
contracted to deliver such sulphur.
(d) "Coal Terminal" means the existing bulk coal handling facility
operated by RTI at Ridley Island, Prince Rupert.
(e) "Commencement Date" means the date that sulphur is first
delivered to the Facility from a Unit Train.
(f) "Contract Year" means January I to December 3 1.
(g) "CPI" means the All-Items Canadian Consumer Price Index as
published by Statistics Canada or such successor Index as may
replace same, or, in the event no such Index or successor
Index exists, then the most comparable Index appropriately
adjusted.
(h) "Customs" means the customs office designated by the Minister
of National Revenue for business relating to customs at Port
of Prince Rupert at Ridley Island.
(i) "Delivery Periods" has the meaning set forth in Section 24.3
of this Agreement.
"dwt" means deadweight tonnes of 1,000 kilograms.
(k) "ETA" means estimated time of arrival of a Unit Train or
Vessel, as the case may be.
(1) "Event of Default" has the meaning set forth in Section 30.1
of this Agreement.
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(m) "Exclusivity Period" means the period commencing from the
date of this Agreement and ending on that date which is five
years following the earlier of: (i) the date that sulphur is
first delivered to an ocean-going vessel at the Facility, and
(ii) February 15, 2000.
(n) "Facility" means the Coal Terminal and Sulphur Terminal
together.
(0) "Final Notice" has the meaning set forth in Section 26,5 of
this Agreement.
(p) "Force Majeure Event" has the meaning set forth in Section
26.4 of this Agreement.
(q) "Formed Sulphur" means sulphur pellets in a consistent and
standardized format, convenient to store and handle, with a
minimum of dust creation both in storage and in loading and
able to retain product integrity through the bulk handling
process.
(r) "Liquid Sulphur" means liquid sulphur at a minimum
temperature of 280 degrees Fahrenheit.
(s) "Maximum Annual Throughput" has the meaning set forth in
Section 24.6 of this Agreement.
(t) "Minimum Shipment Requirement" has the meaning set forth in
Section 24.2 of this Agreement.
(u) "Notice" has the meaning set forth in Section 26.4 of this
Agreement.
(v) "Notice of Readiness" has the meaning set forth in Section
11. 1 of this Agreement.
(O) "Phase I Head Lease" has the meaning given to that term in
the Project Agreement.
W Phase I Sublease" means the sublease entered into between
RTI and SCC which is entitled "Phase I Sublease" and which
is dated as of January 1, 1999, as amended from time to
time.
(Y) "Phase II Head Lease" has the meaning given to that term in
the Project Agreement.
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W "Phase 11 Sublease" means the sublease entered into between
RTI and SCC which is entitled "Phase II Sublease" and which
is dated as of January 1, 1999, as amended from time to time.
(aa) "Port" means the Port of Prince Rupert on Ridley Island in
the Province of British Columbia.
(ab) "Prime Rate" means the floating annual rate of interest
announced by RTI's principal banker as its reference rate
then in effect for determining interest rates on Canadian
dollar commercial loans made in Canada by such bank and
commonly known as its "Prime Rate".
(ac) "PRPC" means Prince Rupert Port Corporation and includes all
entities which hereafter become the head lessor under the
Phase I Head Lease or the Phase 11 Head Lease.
(ad) "Project" means the financing, development, design and
construction of the Sulphur Terminal.
(ae) "Project Agreement" means the Sulphur Handling Facility
Project Agreement entered into between RTI and SCC dated
January 1, 1999 governing the development and construction of
the Sulphur Terminal, as amended from time to time.
(af) "Prorated Tonnage" has the meaning set forth in Section 24.3
of this Agreement.
(ag) "Quarterly Adjustment" has the meaning set forth in Section
(ah) "Railway" means CN Rail.
(ai) "Second Period" means the period of the Term commencing upon
the expiry of the Exclusivity Period and ending upon the
expiry of the Term, excluding any extensions of the Term
pursuant to Section 29.2.
(aj) "Services" has the meaning set forth in Section 2.1 of this
Agreement.
(ak) "Statutory Holidays" means New Year's Day (from noon on
December 31 to 8:00 a.m. on January 2), Good Friday, Easter
Monday, Victoria Day (Monday before May 25), Canada Day (the
first day of July), B.C. Day (the first Monday of August),
Labour Day (the first Monday of September), Thanksgiving Day
(the second Monday of October), Remembrance Day
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(November 11), from noon on December 24, Christmas Day
(December 25), and Boxing Day (December 26), and any other
statutory holiday or holidays which may be declared by the
federal or provincial governments and, for greater certainty,
means in respect of each such holiday the declared hours set
out above or otherwise agreed to between RTI and its
employees from time to time.
(al) "Subleased Lands" means those lands subleased to SCC
pursuant to the Subleases.
(am) "Subleases" means the Phase I Sublease and the Phase Il
Sublease;
(an) "Sulphur Terminal" means the sulphur handling facility
proposed to be financed, developed, designed and constructed
by SCC at Ridley Island, Port of Prince Rupert pursuant to
the Project Agreement and operated by RTI under the terms of
this Agreement.
(ao) "Suppliers" means the suppliers with whom SCC has contracted
for the purchase of sulphur.
(ap) "Tern" has the meaning set forth in Section 2.1 of this
Agreement.
(aq) "Transition Period" means that period, if any, which
commences upon the expiry of the Exclusivity Period and
terminates at the commencement of the first full Contract
Year following such expiry.
(at) "Unit Trains" means unit trains as described in the Approved
Plans.
(as) "Vessels" means the ships on which sulphur is to be loaded
under this Agreement and which shall meet the specifications
set forth in Subsections 14.1 and 14.2 of this Agreement.
1.2 All dollar amounts referred to in this Agreement are expressed in Canadian
dollars, unless otherwise specified.
1.3 The following are the Schedules annexed hereto and incorporated by reference
and deemed to be part thereof:
Schedule "A" - Rates
Schedule "B" - Services for the Sulphur Terminal
1.4 The terms of Schedule "B" to this Agreement shall be agreed to no later than
August 31, 1999. Upon agreement, such terms shall be inserted into Schedule "B"
and shall
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form part of this Agreement, to the same extent as if such terms had been
included in Schedule "B" at the date hereof.
2. SERVICES TO BE PROVIDED BY RTI
2.1 RTI shall provide the following services (the "Services") to SCC with effect
from the Commencement Date until the expiry of the Contract Year ending December
31, 2008 (the "Term"):
(a) Receive Liquid Sulphur destined for the Sulphur Terminal from
Unit Trains;
(b) Within the Sulphur Terminal, transport Liquid Sulphur to and from
storage and to the forming plant, and transport Formed Sulphur
from the forming plant to storage, less such quantities lost in
reasonable and prudent handling operations;
(c) Transport Liquid Sulphur and Formed Sulphur from the Sulphur
Terminal to Vessels, less such quantities lost in reasonable and
prudent handling operations;
(d) Generally perform in connection with the services enumerated in
clauses (a) through (c) above the services necessarily performed
by bulk cargo terminal operators subject to all applicable laws
and regulations and the provisions of this Agreement; and
(e) Furnish personnel for the operation and maintenance of the
Sulphur Terminal in accordance with the terms of Schedule "B".
2.2 SCC hereby grants to RTI an irrevocable license to occupy the Subleased
Lands and the Sulphur Terminal for the purpose of enabling RTI to furnish the
services to be provided by it under this Agreement.
3. SCHEDULING TRAIN ARRIVALS
3.1 At least 15 days before the beginning of each month, SCC will notify RTI of
SCC's planned schedule for the delivery of sulphur by Unit Trains to the
Facility during that month. Sulphur will be so delivered on a reasonably uniform
basis throughout each Contract Year.
4. ESTIMATED TIME OF ARRIVAL OF TRAINS
4.1 SCC shall cause the Railway to notify RTI of the ETA of each Unit Train at
the Facility at least four hours prior to such ETA.
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4.2 If a Unit Train arrives at the Facility prior to its ETA, unloading may be
commenced at any time prior to ETA at RTI's option.
5. PRE-UNLOADING FOR TRAINS
5.1 SCC shall cause the Railway to place, at its expense, each Unit Train on the
trackage provided at the Facility with all rail cars properly coupled, all air
hoses properly connected and the train line completely charged.
5.2 Following the arrival of the Unit Train, RTI may inspect the Unit Train to
determine that it is in a safe and undamaged condition. The time required to
perform such inspection shall be included in the computation of unloading time.
5.3 If on such inspection or subsequent inspection or handling any rolling stock
is found to be damaged or the Unit Train is in any other respect found to be
unsafe, RTI will immediately notify SCC. SCC shall repair or remove any damaged
rolling stock as soon as possible thereafter and ensure that the Unit Train is
in a safe condition for unloading. The time taken to do so will not be included
in the computation of unloading time.
6. UNLOADING PROCEDURE FOR TRAINS
6.1 RTI shall make commercially reasonable efforts to move each Unit Train
through the Facility using a maximum unloading time of 24 hours from the time of
arrival of such Unit Train. Any delay during the course of unloading caused by
the Railway, due to the unavailability of crew to move Unit Trains or otherwise,
or caused by insufficient storage space for Liquid Sulphur at the Facility shall
not be included in unloading time.
6.2 SCC shall furnish or ensure that the Railway furnishes the locomotive power
necessary to move Unit Trains during unloading operations.
6.3 RTI will handle any rail car or locomotive in its possession in accordance
with proper and safe operating procedures. RTI will declare each Unit Train
ready for movement from the Facility with all couplers properly coupled, all air
hoses properly connected, and the train line completely charged. The Railway may
then inspect the Unit Train, and the time taken for such inspection shall not be
included in unloading time. If in any such inspection it is ascertained that a
rail car or locomotive has been damaged or that any coupler is not properly
coupled, any air hose is not properly connected, or the train line not
completely charged, SCC shall cause the Railway to notify RTI prior to the
departure of the Unit Train from the Facility. Any deficiency in the coupling,
connection or charging of any Unit Train shall be corrected by RTI and the time
required for such correction will be included in the unloading time. If the
Railway moves a Unit Train from the Facility, the said inspection will be deemed
to have been made. RTI shall not be responsible for, and SCC shall fully
indemnify RTI from liability for and all direct and indirect costs associated
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with, any claim by the Railway or any other third party arising from or in
connection with any damage to a rail car or locomotive or any deficiency in the
coupling, connection or charging of any Unit Train, unless RTI has been notified
of such damage or deficiency prior to the time that the Unit Train is moved from
the Facility.
6.4 RTI will use all reasonable efforts to ensure that each rail car is
completely unloaded. SCC and RTI shall co-operate, and SCC shall cause the
Railway to co-operate, in establishing monitoring systems to ensure that
unloading is complete.
6.5 If any locomotives or rail cars are damaged or destroyed by RTI while in the
possession or under the control of RTI, such rail equipment shall be switched or
removed and, subject to Section 6.3, repaired or replaced at the expense of RTI.
RTI shall be deemed to be in possession of locomotives and rail cars so damaged
or destroyed while they are at the Facility.
6.6 RTI and SCC agree that the Facility and associated trackage will be
available for the acceptance of Unit Trains 24 hours per day, every day
including Saturdays, Sundays and holidays but excluding Statutory Holidays,
provided that if the Facility and associated trackage are made available on
Statutory Holidays, SCC shall pay all overtime and other costs arising from the
performance of work on a Statutory Holiday.
7. RECEIPT AND ACCEPTANCE OF SULPHUR FROM TRAINS
7.1 If RTI is unable to receive a Unit Train at or deliver it from the Facility
for any reason, RTI shall forthwith notify the Railway and SCC at the earliest
time possible, recognizing that delays caused by inability to receive or deliver
a Unit Train for any reason may in turn cause additional delays because of the
necessity to operate such train at a different time.
7.2 Each Unit Train shall carry Liquid Sulphur. Any cars carrying anything other
than Liquid Sulphur may be set aside by RTI for later dumping at the earliest
opportunity, or RTI may refuse to unload such cars provided RTI so notifies SCC
and the Railway.
7.3 RTI shall not be liable for delay in dumping a Unit Train if the delay is
caused by mechanical or inherent defects in the Unit Train or because the
sulphur is of such a nature that normal discharge is not possible in RTI's
estimation.
7.4 If and when RTI incurs damages (including economic loss and consequential
damage) or extra costs resulting from dumping cars carrying anything other than
Liquid Sulphur (no matter who caused such non-qualification provided that it was
not RTI), SCC shall pay such damages and extra costs. RTI shall provide notice
by telephone within 24 hours, Saturdays, Sundays and Statutory Holidays
excepted, indicating non-qualification.
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8. SPECIFICATIONS OF UNIT TRAINS
8.1 The specifications for Unit Train loads and dimensions shall be as agreed to
in the Approved Plans. Railcars which do not meet specifications outlined in the
Approved Plans shall be set aside while SCC and the Railway rectify the
situation, and, if corrective action is not taken within 15 days, SCC shall
cause the Railway to remove the railcars from the Facility.
9. RAIL DELAYED ARRIVAL CHARGES
9.1 SCC agrees that commencing with the Unit Train Arrival Date, if a Unit Train
arrives at the Facility more than two hours after the ETA stated by the Railway,
SCC will pay to RTI for each such hour after two hours to a maximum of eight
hours for each occurrence an amount equal to $345. SCC shall pay such amounts to
RTI within 15 days of its receipt of an invoice from RTI detailing such amounts.
For the purposes of this Subsection "Unit Train Arrival Date" means the first
date of arrival at the Facility of a Unit Train which meets in length the
specified number of cars agreed to by the parties in the Approved Plans.
10. SCHEDULING VESSEL ARRIVALS
10.1 Prior to the Commencement Date and thereafter prior to each Contract Year,
SCC shall provide RTI with a written schedule of the proposed shipping schedule
for the period from the Commencement Date until the commencement of the
following full Contract Year or for the forthcoming Contract Year, as the case
may be.
10.2 To allow RTI to coordinate deliveries to Vessels of sulphur with other
cargo handled at the Coal Terminal, SCC shall provide RTI with written schedules
as follows:
(a) At least 13 days prior to the commencement of each month, SCC
shall submit to RTI a proposed shipping schedule for the
following month which includes the names of the Vessels slated
for loading during such month, evenly spaced, their ETA at the
Port and the approximate tonnage to be loaded. RTI shall notify
SCC of either its proposed revision or approval of such schedule
within three days after receipt of the schedule. The actual
schedule, as approved by RTI and SCC, shall specify the tonnage
to be loaded on board each Vessel, with a 10% allowance, the name
and approximate tonnage in dwt of each Vessel and the ETA at the
Port for each Vessel scheduled for such month.
(b) SCC shall notify RTI at least 14 days in advance of the arrival
of each Vessel of its ETA and the declared quantity of sulphur to
be loaded on board the Vessel. Where such ETA or tonnage differs
significantly from the ETA or tonnage set out in the schedule
approved under Subsection 10.2(a), SCC, RTI
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and the relevant Buyer will negotiate together in good faith to
arrive at a mutually satisfactory solution of any problems
thereby occasioned. If no such solution can be agreed upon, the
acceptance of such Vessel shall be subject to SCC's approval. SCC
shall arrange that the master of the arriving Vessel advises by
radio to RTI the Vessel's ETA at each of seven days, 48 hours and
24 hours before it is expected to arrive at the Port.
(c) At the time of submission of the monthly shipping schedule
provided for in Subsection 10.2(a), SCC shall have used its best
efforts to schedule successive arrivals of the Vessels of its
Buyers for loading sulphur at the Port two clear days apart.
11. NOTICE OF READINESS
11.1 Notice of readiness ("Notice of Readiness") may be tendered by the Vessel
after its arrival at the Port during or outside of usual business hours, and
will be accepted at any time of day or night, Saturdays, Sundays and holidays
included, but excluding Statutory Holidays, provided the Vessel is cleared by
Customs and is in free pratique. Notice of Readiness shall be given in writing
to RTI at the Coal Terminal.
11.2 If the Vessel is ordered to await berth at a place where free pratique is
not normally granted, Notice of Readiness may be tendered by radio subject to
free pratique being granted subsequently. In the event that free pratique is not
granted, the previous Notice of Readiness shall be considered null and void, and
the Vessel shall tender a new Notice of Readiness when in free pratique and
ready to load. Vessels shall give Notice of Readiness and be loaded in order of
actual arrival at the Port.
12. LAYDAYS
12.1 Laydays shall commence 24 hours after tender of Notice of Readiness,
provided the Vessel is in every respect ready to load sulphur, in free pratique
and is cleared by Customs, whether the Vessel is in berth or not, unless sooner
worked. Notwithstanding the foregoing, unless the Vessel is sooner worked,
laytime will not start to count before the "Allowed Time" for the "Previously
Loaded Vessel" has elapsed, where (i) "Allowed Time" means 24 hours, plus one
hour for (A) each 10,000 dwt or part thereof of cargo over 150,000 dwt actually
loaded in the case of Vessels loading coal or petroleum coke or (B) each 2,000
dwt or part thereof of cargo over 30,000 dwt actually loaded in the case of
Vessels loading sulphur, after laytime commences for such Vessel, and (ii)
"Previously Loaded Vessel" means, in relation to a Vessel which has given Notice
of Readiness (the "Vessel's Notice"), the Vessel which immediately prior to the
giving of the Vessel's Notice has given Notice of Readiness under this
Agreement, is ready to load sulphur, is in free pratique and is cleared by
Customs.
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12.2 After laytime commences, any time lost due to the berth not being available
to the Vessel shall count as laytime unless such non-availability is caused by
SCC or Vessel. The time from the time the Vessel is ordered by RTI to proceed to
berth until the Vessel is alongside the berth and is ready in all respects to
load sulphur shall not count as laytime. Any delays caused by Vessel are not to
count as laytime used. Time lost for reasons beyond RTI's control as set forth
in Part 26 shall not count as laytime used, provided RTI gives SCC notice
thereof in accordance with Part 26. Laytime shall terminate upon completion of
loading.
12.3 Laytime shall include the time taken for the final draught survey provided
that same has been completed with reasonable dispatch. Laytime shall not include
the time taken for any intermediate draught survey requested by a Vessel's
master. Laydays at the Coal Terminal shall be weather working days of 24
consecutive hours, including Saturdays, Sundays and holidays, but excluding,
unless used in which case the time actually used shall be counted, the Statutory
Holidays. Each Vessel shall only proceed to berth for loading after receiving
instructions from RTI.
13. LOADING AND HATCH COVERS
13.1 SCC shall cause each Vessel to provide all necessary lights for night
loading and to remove and replace hatch covers at the expense of the Vessel.
14. LOADING FACILITIES FOR VESSELS
14.1 The maximum size of Vessels permitted to berth without special
authorization from the manager of RTI is as follows:
<TABLE>
<CAPTION>
Maximum
-------
<S> <C>
LOA 325 meters
Beam 50 meters
Draught 20 meters
</TABLE>
Vessels on which Formed Sulphur is to be loaded shall not be less than 20,000
dwt and shall not exceed 75,000 dwt. Vessels on which Liquid Sulphur is to be
loaded shall not be less than the minimum size agreed to in the Approved Plans
and shall not exceed 75,000 dwt.
14.2 The distance from the forward end of number one hatch to the aft end of the
hatch furthest aft must not exceed 240 metres. Vessels to be furnished for
shipment of Formed Sulphur pursuant to this Agreement will be modern, single
deck bulk carriers
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commonly used in the sulphur trade and suitable in every respect for loading
cargo in the usual way at the Coal Terminal. No tween deck Vessels will be used.
14.3 Vessels not conforming to the specifications in Section 14.1 and 14.2 above
may be accepted from time to time, subject to the written consent of RTI.
15. DEMURRAGE AND DESPATCH AND LOADING RATE
15.1 If, for reasons other than the Vessel's default, RTI shall fail to load a
Vessel within the laytime allowed calculated from the average rates of loading
in tonnes per weather working day below, then demurrage shall be paid by RTI for
all time lost after allowable laytime and, if the Vessel is sooner loaded than
required as aforesaid, then despatch shall be paid by SCC for laytime saved.
Unless otherwise mutually agreed pursuant to the review process provided for in
Section 15.2, the rates are as follows:
<TABLE>
<CAPTION>
Demurrage for Loading Per
Vessel Size Loading Rate 24-Hour Day' (Pro Rata for
(dwt) Tonnes/Day Part) (U.S.$)
<S> <C> <C>
Minimum dwt (as set out
in Subsection 14. 1) to and 10,000
including 30,000 dwt.
Over 30,000 dwt.
15,000
</TABLE>
0)The above is predicated upon use of self trimming bulk carriers. Dispatch
rates are one half demurrage rates.
15.2 At the written request of EITHER party made within three months of the
commencement of any Contract Year, and no more frequently than once annually,
demurrage and despatch rates will be reviewed in good faith by the parties in
light of then prevailing circumstances so as to maintain the rates at reasonable
commercial levels. If the parties fail to agree on the rates within one month of
the date of delivery of the written request, the matter may be submitted by
either party to arbitration pursuant to Part 3 1. The arbitrator so appointed
shall determine commercially reasonable rates, which shall be retroactive to the
beginning of the applicable Contract Year.
15.3 In the event of a Vessel subject to demurrage being prevented from being
loaded or sailing because of anything described in Part 26, so that RTI believes
a Vessel will be delayed for more than seven days, RTI shall advise SCC and the
parties will try and
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resolve the matter; otherwise, after the seven day period has expired, at the
request of RTI, SCC shall arrange for the Vessel to sail with less than a full
load.
16. CALCULATION OF TONNES LOADED
16.1 The tonnages loaded shall be determined by a survey of Vessel's draught and
utilizing vessel immersion scale weights to the nearest tonne by a marine
surveyor designated by SCC and satisfactory to RTI. The Certificate of Weight
prepared by the aforementioned marine surveyor shall be conclusive and shall
constitute the basis for use in determining final settlement between the
parties. Such weighing shall be for SCC's account.
16.2 RTI may have a representative of its own choosing present at all times when
the weights are being computed or calculated. SCC shall cause such surveyor to
deliver a copy of such survey to SCC and RTI forthwith following such survey.
17. PARTIALLY LOADED VESSELS
17A In this paragraph, "partially loaded vessels" means a Vessel that either
arrives at the Coal Terminal with some of its holds loaded with cargo, or
following the loading of sulphur thereon, departs the Coal Terminal with some of
its holds empty. From time to time RTI shall accept partially loaded vessels,
but only on the following terms and conditions:
(a) RTI shall be obliged to load only into holds that are
completely empty and that have hatch openings sufficient to
permit the cargo loading devices at the Coal Terminal to
operate at normal speed;
(b) for the purpose of determining the average rate of loading of
Cargo on board a partially loaded Vessel, the dwt shall be
deemed conclusively to be equal to the number of tonnes of
sulphur loaded thereon rather than the actual dwt of that
Vessel; and
(C) any demurrage or dispatch money payable hereunder in respect
of a partially loaded vessel shall be determined on the basis
of the dwt size of the partially loaded vessel.
17.2 Both parties agree that the nomination of Vessels for partial loading of
small quantities of cargo is undesirable and will only be done by SCC in very
exceptional circumstances.
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18. COMBINED LOADING
18.1 In this paragraph, "combined loading" means the loading on board a Vessel
at the Coal Terminal of both SCC's sulphur and cargo belonging to one or more
other persons. RTI will from time to time accept Vessels for combined loading on
the condition that the combined quantity of SCC's sulphur to be loaded and the
other intending shipper(s)' stockpile(s) at the Coal Terminal are together
adequate to fully load the Vessel, and on the further condition that such
combined loading is acceptable to RTI.
18.2 The average rate of loading in case of combined loading shall be determined
on the basis of the dwt size of the combined loaded Vessel. If there is no
established custom for determining laytime or paying demurrage or dispatch money
for combined loading at the Coal Terminal, these matters will be agreed by RTI,
SCC and the Buyers of such cargo prior to such loading. The time take for
draught survey for combined loading shall not count as laytime.
19. DELIVERIES TO AND FROM THE SULPHUR TERMINAL
19.1 RTI shall transport sulphur to the Sulphur Terminal from Unit Trains and
from the Sulphur Terminal to Vessels.
19.2 SCC shall make commercially reasonable efforts to ensure that deliveries of
Liquid Sulphur to Vessels during each month are not less than 50% of all sulphur
loaded onto Vessels.
20. SULPHUR TERMINAL PERSONNEL
20.1 RTI shall famish the necessary personnel to operate the Sulphur Terminal in
accordance with the operating procedures set forth in Schedule "B" and to
perform routine and minor maintenance and repairs to liquid and dry storage
facilities, forming plant and boiler comprising the Sulphur Terminal. In
addition, RTI shall furnish first aid, security and office and administration
services for the Sulphur Terminal in accordance with Schedule "B" hereto or as
otherwise agreed by the parties from time to time. The throughput rates payable
by SCC pursuant to Section 22.1 are inclusive of the foregoing services and
facilities but do not include labour and out-of-pocket costs for maintenance and
repair services performed by RTI. Other than the two front-end loaders which RTI
has agreed to purchase at its own cost, all equipment and other items required
by RTI to operate the Sulphur Terminal shall be provided by SCC at its sole cost
and expense.
20.2 At the end of each month during the Term, RTI will provide SCC with a
statement setting forth in detail the maintenance and repair costs reasonably
incurred by RTI in connection with the Sulphur Terminal and showing the amount
(which amount shall
<PAGE> 18
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include a 10% profit allowance) which SCC is required to pay therefor. Within 15
days after receipt of the statement, SCC will pay the amount required to be paid
by it hereunder.
20.3 The provision of maintenance and repairs to the Sulphur Terminal deemed, in
RTI's reasonable estimation, to be major or non-routine shall be excluded from
this Agreement. RTI may perform such maintenance and repairs, subject to the
prior agreement of the parties hereto as to rates for personnel and profit
allowance for the same.
21. EXTRA SERVICES
21.1 Any additional or extraordinary services of RTI not contemplated by this
Agreement shall be provided subject to such extra charges as shall be agreed
upon by the parties acting reasonably.
21.2 Ordinary services to be provided by RTI consist of one handling of sulphur
by discharging Unit Trains, transporting sulphur to the Facility and
transporting sulphur from the Facility to Vessels. Ordinary services to be
provided by RTI do not include mechanical trimming, blending of cargo, supplying
labour to work in abnormal conditions, rehandling, resorting or shifting of
sulphur at instruction of Vessel or Vessel's officer or otherwise through no
fault of RTI. If RTI is required by a Vessel's master to fill holds abnormally
full in such a way that cargo is accumulated on the deck of the Vessel, the
sweeping and/or cleaning of the Vessel's decks shall not be for the account of
RTI.
22. THROUGHPUT RATES AND EXCLUSIVITY
22.1 SCC shall pay to RTI the following throughput rates in the manner set forth
in Part 23 for the discharge of the Unit Train, the handling of sulphur to the
Facility, and the handling of sulphur from the Facility to the Vessel:
(a) during the Exclusivity Period, the throughput rates set forth
in Schedule "A"; and
(b) during the Second Period, the throughput rates agreed upon by
the parties hereto at or about the end of the Exclusivity
Period, and failing such agreement the throughput rates
arbitrated in the manner set out below in Section 31 and
Schedule 'A".
22.2 RTI hereby grants to SCC the exclusive right to handle and throughput
sulphur at the Facility during the Exclusivity Period. After the expiry of the
Exclusivity Period, RTI shall be free to handle and throughput sulphur other
than SCC's sulphur at the Facility, subject if applicable to the prior agreement
of the parties hereto as to rates for the use of the Sulphur Terminal storage
and processing facilities.
<PAGE> 19
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22.3 RTI shall pay to SCC a fee of $ /tonne for each tonne of products, other
than sulphur, which are delivered to Buyers through the Coal Terminal during the
Exclusivity Period using that portion of RTI's pipe and conveyor delivery
systems constructed by SCC under the Project Agreement, provided that this
charge shall only apply in the event that the delivery of such products exceeds
a cumulative amount of 500,000 tonnes and then the charge shall only apply in
respect of the tonnage delivered in excess of 500,000. If such fee becomes
payable at any time during the Exclusivity Period, RTI shall within 30 days of
the end of each calendar quarter during such period make payment to SCC of the
amount payable to it. RTI will take into consideration its commitment to
providing the best quality service in a cost effective way when evaluating a
decision to effect any such deliveries if the same may result in a material
adverse impact on the throughput of sulphur under this Agreement.
22.4 The parties agree that in the event that the operation of the Sulphur
Terminal does not achieve the minimum specifications set out in the Approved
Plans the parties shall at the request of RTI renegotiate the applicable
throughput rates and other charges of RTI under this Agreement and, failing
agreement, shall arbitrate such rates and charges in the manner set out in
Section 31 and, if applicable, Schedule "A" to this Agreement.
23. METHOD OF PAYMENT
23.1 RTI shall invoice SCC upon receipt of the sulphur at the Facility a charge
of one-half of an amount equal to the throughput rates then in force for sulphur
multiplied by the weight measurement provided by SCC, provided that if RTI
disputes such measurement it may provide its own measurement, and the actual
measurement shall be settled by the parties acting reasonably.
23.2 RTI shall invoice on the loading of the sulphur onto Vessels and after RTI
and SCC have received a copy of the draught survey of the Vessel a charge of
one-half of an amount equal to the throughput rate then in force multiplied by
the weight measurement as determined by such draught survey.
23.3 Should the weather be such that an accurate draught survey is impossible in
the opinion of the surveyor, RTI shall upon loading invoice SCC in respect of
90% of the tonnage determined by RTI, in the case of Formed Sulphur, from the
conveyor belt scales used to load sulphur into the Vessel or, in the case of
Liquid Sulphur, from the pipeline flow meter or by such other means agreed to by
the parties and any necessary further payment or refund will be invoiced on
receipt of an "out turn" weight certificate or a survey by a surveyor selected
by SCC and acceptable to RTI at the port of discharge. SCC shall deliver such
certificate or survey to RTI not later than 30 days from the date of sailing
from the Coal Terminal.
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23.4 All invoices are payable upon presentation to SCC or its representative.
The amount of any invoice not paid by SCC within 15 days of presentment shall
bear interest from the date of presentment to the date of payment at a rate
equal to the Prime Rate plus 2%.
24. THROUGHPUT GUARANTEE AND MUTUAL COMMITMENT
24.1 SCC hereby guarantees that a cumulative minimum of 1,000,000 tonnes of
sulphur shall be loaded onto Vessels during the Exclusivity Period. If, at the
end of the Exclusivity Period, SCC shall have caused to be loaded less than the
foregoing amount, SCC shall, within 30 days of the expiry of the Exclusivity
Period, pay to RTI an amount equal to the shortfall in volume multiplied by the
throughput rate then in force pursuant to Schedule "A" for annual shipments up
to and including 300,000 tonnes (which rate is currently $!!! per tonne, subject
to CPI adjustments).
24.2 SCC hereby guarantees that a minimum of 200,000 tonnes of sulphur shall be
loaded onto Vessels in each of the Contract Years for the balance of the Term
(the "Minimum Shipment Requirement") from and after the expiry of the
Exclusivity Period, provided that the Minimum Shipment Requirement shall be
prorated for the Transition Period, by multiplying the Minimum Shipment
Requirement by the same proportion that the Transition Period bears to a full
Contract Year.
24.3 In this Subsection 24.3:
(a) "Delivery Periods" means each period of three, six, nine and
twelve months in a Contract Year commencing on January 1 of that
Contract Year and ending March 31, June 30, September 30 and
December 31, respectively; and
(b) "Adjustment Dates" means the last days of each of the Delivery
Periods.
Subject to Sections 24.4 and 24.5 commencing with the first Contract Year
following the expiry of the Exclusivity Period, if at the end of a Delivery
Period in a Contract Year SCC shall have caused to be loaded onto Vessels less
than the portion ("Prorated Tonnage") of the relevant year's Minimum Shipment
Requirement which is in the same ratio to the Minimum Shipment Requirement as
the relevant Delivery Period is to the Contract Year, SCC shall, within 30 days
after each Adjustment Date, pay to RTI an amount (the "Quarterly Adjustment")
equal to:
(c) the Prorated Tonnage minus the tonnage actually loaded multiplied
by the Throughput Rate then in effect
less
<PAGE> 21
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(d) the aggregate of all previous Quarterly Adjustments paid by SCC
in respect of any prior Delivery Period in the same Contract
Year.
If, in respect of any Delivery Period, the amount described in clause (d) above
exceeds the amount described in clause (c) above, the amount of such excess
shall be repaid by RTI to SCC within 30 days after the relevant Adjustment Date,
together with interest from the date of receipt of such excess by RTI to the
date of repayment thereof to SCC calculated at Prime Rate as from time to time
varied during such period.
24.4 The Quarterly Adjustment provision in Section 24.3 will not apply if the
variation from the Prorated Tonnage is equal to or less than 5% of the Prorated
Tonnage, notwithstanding any provision of Section 24.3, nor will it apply to the
Transition Period. For greater certainty, the Minimum Shipment Requirement must
be met at the end of each Contract Year, whether or not the variation from that
year's Minimum Shipment Requirement is equal to or less than 5% of such Minimum
Shipment Requirement, and at the end of the Transition Period.
24.5 If a shortfall from the Prorated Tonnage is greater than an amount equal to
15% of one-quarter of the Minimum Shipment Requirement for the Contract Year,
the Quarterly Adjustment provision in Section 24.3 will not apply if:
(a) SCC has given Notice of a Force Majeure Event in accordance with
the provisions of Part 26; and
(b) RTI has agreed that a failure of SCC to meet the Prorated Tonnage
will result from the Force Majeure Event.
24.6 SCC shall have the right to ship through the Coal Terminal up to 1,000,000
tonnes of sulphur (the "Maximum Annual Throughput") during each Contract Year of
the Term.
25. INDEMNIFICATION
25.1 RTI will indemnify and save harmless SCC from any losses, costs, expenses,
damages and liabilities which SCC may suffer or incur as a result of any
negligent or wilful act or omission of RTI or the servants, employees,
independent contractors or agents of RTI.
25.2 SCC will indemnify and save harmless RTI from any losses, costs, expenses,
damages and liabilities which RTI may suffer or incur as a result of any
negligent or wilful act or omission of SCC, the Railway, a Vessel which is to be
transporting SCC's sulphur or any of the servants, employees, independent
contractors of any one of such parties.
<PAGE> 22
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25.3 RTI is providing handling, storage and other services as specifically
provided for in this Agreement. However SCC shall retain ultimate legal
responsibility for the sulphur as its owner. SCC shall comply with all
applicable laws, including the Waste Management Act, Transport of Dangerous
Goods Act, Canadian Environmental Protection Act and all other applicable
environmental laws and requirements of environmental agencies, with regard to
the sulphur. SCC shall be responsible, as owner, for all environmental damage or
impacts that may be caused by its sulphur, whether to the Facility or elsewhere.
SCC shall indemnify and save harmless RTI from any losses, costs, cleanup orders
or expenses, fines, penalties, damages and liabilities which may be caused to
the Facility or suffered or incurred by RTI by or from SCC's sulphur.
26. FORCE MAJEURE
26.1 Neither party shall be liable to the other for any delay in or failure to
perform its obligations hereunder (other than non-payment of money) if any such
delay or failure is due to force majeure. In this Agreement "force majeure"
means an act of God or the public enemy, acts or refusals to act of any
governments or governmental agency in either its sovereign or contractual
capacity, governmental restrictions or control on imports, exports or foreign
exchange, freight embargoes, non-availability or mechanical breakdown or
destruction of equipment vital to loading, forming, storage, transporting or
unloading operations not caused by inadequate maintenance, fire, floods, tidal
waves, earthquake, storm, slides, epidemics, quarantine restrictions, war
declared or undeclared, revolution, riots, insurrections, hostilities, civil
disturbances, strikes, walk-outs, work stoppages, lockouts, railroad
obstructions or obstruction of ocean navigation, stoppages of labour, deliberate
work slow downs, other labour difficulties, the taking of the Coal Terminal or
Sulphur Terminal by lawful expropriation, other lawful ouster of RTI or SCC from
the Sulphur Terminal or Coal Terminal or other lawful denial of rights of RTI or
SCC or any other cause beyond the reasonable control of a party, but force
majeure shall not include a lack of funds. The non-availability of labour (other
than by reason of strikes and lock-outs) or materials and hindering subsurface
conditions shall not be a cause beyond the control of SCC or RTI.
26.2 Each party shall have complete discretion in respect of the terms and
conditions of labour contracts and in respect of settlement of labour disputes
and the exercise of its discretion shall in no way prevent such party from being
excused from performance by virtue of Section 26.1 nor cause an event specified
in Section 26.1 to be deemed within such party's control.
26.3 SCC reserves the right that should RTI during any period of time be unable
to perform its obligations due to one or more of the above occurrences, the
sulphur shipped during such period of time may be loaded or unloaded through
other terminal facilities and such tonnage so loaded shall be deducted from the
Minimum Shipment Requirement.
<PAGE> 23
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26.4 If either party becomes aware of an event of force majeure ("Force Majeure
Event"), it shall promptly notify the other party and within 10 days of the
occurrence of a Force Majeure Event shall give written notice ("Notice") thereof
to the other party:
(a) describing the Force Majeure Event in reasonable detail and
stating, to the extent reasonably practicable at such time,
its estimate of the duration of the Force Majeure Event;
(b) setting out in reasonable detail the obligations under this
Agreement which cannot be performed as a result of the
occurrence of the Force Majeure Event; and
(c) containing particulars of the circumstances causing the party
to be unable to perform its obligations under this Agreement
as a direct result of the Force Majeure Event.
26.5 Within thirty (30) days after the end of each Contract Year, commencing in
the Contract Year ending December 31, 2000 SCC may, if it shall have given
Notice of one or more Force Majeure Events during such Contract Year, give a
final notice ("Final Notice") to RTI that due to such Force Majeure Event or
Events it has failed to ship the Minimum Shipment Requirement for such Contract
Year.
26.6 The party which is prevented from performing its obligations under this
Agreement by a Force Majeure Event shall use all reasonable commercial efforts
to curtail, contain or remove the force majeure condition and to resume, with
the least possible delay, compliance with its obligations under this Agreement.
26.7 If either party gives a Notice under Section 26.4 or if RTI receives a
Final Notice from SCC under Section 26.5, and either party wishes to dispute the
claim made in such Notice or Final Notice, as the case may be, that party shall,
within 30 days of such receipt, refer the matter in dispute to a single
arbitrator pursuant to Section 31 of this Agreement. The arbitrator so appointed
shall decide whether the Force Majeure Event occurred and the extent, if any, to
which the delay or failure on the part of the party giving Notice or Final
Notice of the Force Majeure Event has been due to such Force Majeure Event.
26.8 If a party fails to give Notice or Final Notice as required under this Part
26, such party shall not be entitled to rely on this Part 26 to relieve it of
its obligations to perform.
<PAGE> 24
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26.9 In the event SCC claims that its inability to deliver the Minimum Shipment
Requirement is the result of a Force Majeure Event, and its claim is upheld by
the arbitrator or otherwise agreed upon by RTI, any amounts paid by SCC in
excess of the amounts otherwise payable shall be promptly refunded by RTI to
SCC, with or without interest as determined by the arbitrator or agreed between
the parties.
26.10 Each of RTI and SCC will designate, and if applicable SCC will cause the
Railway to designate, senior operations personnel to a joint committee with a
mandate to meet as soon as practicable following the giving of Notice of a Force
Majeure Event and from time to time thereafter as such committee may consider
desirable, for the purposes of reviewing any information relative to such Force
Majeure Event made available to the committee by any party and assessing the
circumstances of the Force Majeure Event. Such committee shall keep a written
record of its meetings which shall be available to all parties in any subsequent
arbitration proceedings.
27. INSURANCE
27.1 RTI shall carry and include in the throughput rate specified in Schedule
"A" workers' compensation insurance for the protection of its employees and
public liability insurance for the protection of third parties, as well as
insurance for RTI's legal liability for damage to the Vessel and its equipment
and for loss of or damage to sulphur. The public liability insurance shall be in
an amount of not less than $10 million.
28. LIMITATION OF LIABILITY AND IMMUNITY
28.1 If SCC obtains a limitation of its liability or an immunity from damages
from its Buyers or Suppliers or the persons engaged to ship its sulphur with
respect to matters which in turn are the responsibility of RTI under this
Agreement, SCC will include RTI as an express beneficiary as its interest
appears.
28.2 To the extent permitted by applicable law, SCC shall provide RTI with a
waiver of liability satisfactory in content to RTI and executed by each testing
company utilizing the sampling plant and such testing company's employees in
respect of damages while on the Facility. If such waivers are not provided for
any reason other than illegality, SCC shall indemnify RTI against any and all
claims, actions and proceedings in respect of such damages.
29. OPTION TO RENEW
29.1 The right of renewal granted by Subsection 29.2 may only be exercised in
writing from SCC to RTI given by a date not later than 18 months before the
expiry of the Term and provided that this Agreement has not been earlier
terminated by any other
<PAGE> 25
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provision hereof. Any renewal under Subsection 29.2 shall only be effective if
and shall be conditional upon:
(a) the Phase I Sublease being renewed for the corresponding term;
and
(b) the Phase 11 Head Lease and the Phase II Sublease each being
extended, replaced or renewed for a corresponding term both on
terms satisfactory to RTI, in its sole discretion.
Subject to the foregoing, the giving of such notice shall without further act
renew this Agreement for the period specified in Subsection 29.2.
29.2 Subject to Subsection 29. 1, SCC shall have the option to extend the Term
for a period of ten years. The applicable throughput rate for the period of
extension will be agreed by SCC and RTI at or about the time of exercise of the
option and, failing agreement, will be arbitrated in the manner set out in
Section 31 and Schedule "A". The rates so determined will apply for the first
five years of the period of extension. At the end of such five year period the
parties shall agree upon the rates to apply to the second five year period of
the extension period and failing such agreement the throughput rates for such
period shall be arbitrated in the manner set out below in Section 31 and
Schedule "A".
30. DEFAULT AND TERMINATION
30.1 Each of the following will be an event of default ("Event of Default")
under this Agreement:
(a) either party commits a material default in the performance of
its obligations hereunder, notice has been given to such party
by the other party specifying the default and such default
remains unremedied, and:
(i) in respect of a failure to make a payment required
under this Agreement, more than three business days
has elapsed since the date that the notice of default
is delivered to such party;
(ii) in any other case, more than 30 days have elapsed
since the date that the notice of default is
delivered to such party;
(b) an event of default by either party occurs under either of the
Subleases or under the Project Agreement; or
(c) either party commits or becomes subject to any one or more of
the following:
<PAGE> 26
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(i) if a party files of a petition in bankruptcy or for
re-organization or for an arrangement pursuant to any
applicable bankruptcy law or under any similar law,
now or hereafter in effect, or is adjudged by a Court
of competent jurisdiction a bankrupt or becomes
insolvent or makes an assignment for the benefit of
its creditors or admits in writing its inability to
pay its debts generally as they become due or is
dissolved or suspends payments generally of its
obligations;
(ii) if a petition is filed proposing the adjudication of
a party as a bankrupt or its re-organization pursuant
to any applicable bankruptcy law or any similar law,
now or hereafter in effect, and:
(A) the party affected consents to the filing
thereof; or
(B) the petition is not discharged or denied within
60 days after the filing thereof or the petition
is not diligently defended;
(iii) if a receiver, receiver-manager, trustee or
liquidator (or other similar official) is appointed
to take charge of a party or of all or substantially
all of the business or assets of a party, and:
(A) the party affected consents to such
appointment; or
(B) the appointment is not discharged or
withdrawn or action is not diligently taken
by that party to secure the discharge of
that official within 60 days after the
appointment.
30.2 Upon the occurrence of an Event of Default and at any time thereafter, the
party who has not committed such Event of Default may:
(a) terminate this Agreement, the Subleases and the Project
Agreement by written notice to the other party to that effect,
effective on a date specified in such notice, which date shall
be not earlier than the date on which such notice is given; or
(b) exercise any other right or remedy available to it, at law or
in equity.
30.3 If either the Phase I Head Lease or the Phase I Sublease or the Phase 11
Head Lease or the Phase 11 Sublease is terminated or cancelled or the term of
the Phase I Head Lease or the Phase I Sublease or the Phase 11 Head Lease or the
Phase II Sublease expires and is not extended, replaced or renewed, RTI may,
upon 14 days' written notice to SCC terminate this Agreement in which case SCC
shall not be entitled to any compensation from RTI.
<PAGE> 27
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30.4 No remedy conferred on a party under this Agreement is intended to be
exclusive. Each and every remedy shall be cumulative and shall be in addition to
every other remedy given under this Agreement or now or hereafter existing at
law or equity or by statute or otherwise. The exercise of any one or more
remedies shall not preclude the simultaneous or later exercise by a party of any
or all other such remedies. A party may by written instrument waive any breach
by the other party of the terms of this Agreement. No course of dealing between
the par-ties nor any delay in exercising any rights hereunder shall operate as a
waiver of rights.
30.5 If a party is prevented by a Force Majeure Event from substantially
performing its obligations under this Agreement for a period of 12 or more
consecutive months, then the other party shall be entitled to terminate this
Agreement by written notice to that effect to the party so prevented from
performing its obligations.
31. ARBITRATION
31.1 If any dispute arising out of or in connection with this Agreement cannot
be resolved through negotiation between the parties, the dispute shall be
submitted to arbitration in accordance with this Subsection. If within 30 days
after either party gives notice to the other of a dispute the parties agree upon
a single arbitrator, the arbitration will be held before such arbitrator;
otherwise, the arbitration shall be before a board of three arbitrators
comprising one appointed by RTI, one appointed by SCC, and one appointed by the
two arbitrators thus appointed. If RTI and SCC shall, after 14 days' notice,
fail to appoint such arbitrator, or if the two arbitrators fail to appoint a
third arbitrator within 14 days' from their own appointment, then upon
application by either party, the arbitrator or third arbitrator, as the case may
be, shall be selected in the manner provided in the Commercial Arbitration Act
(Canada). The provisions of this Subsection 31.1 shall be deemed to be a
"submission" to arbitration within the provisions of the Commercial Arbitration
Act (Canada). The parties to this Agreement agree that the rules of the British
Columbia International Commercial Arbitration Centre for the conduct of domestic
commercial arbitrations shall not apply to such arbitration. The decision of the
arbitrator (where a single arbitrator has been agreed upon) or a majority of the
arbitrators (where three arbitrators have been appointed) shall be final and
binding on the parties. The arbitrator(s) shall be required to render his, her
or their decision within 60 days of the conclusion of the arbitration
proceedings.
31.2 Any arbitrations shall be conducted in Vancouver, British Columbia unless
otherwise agreed to.
32. TAXES
32.1 Any tax (excluding income tax), duty, charge or fee including but not
limited to the federal Goods and Services Tax and amendments to or substitutions
therefor now or hereafter levied by any government body having jurisdiction over
the sulphur delivered
<PAGE> 28
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and/or services performed under this Agreement, or required to be paid or
collected by RTI by reason of the storage and handling of the sulphur hereunder,
shall be paid by SCC in addition to any monies payable by SCC under this
Agreement.
33. CONFIDENTIALITY
33.1 For the purposes of this Part 33, "Confidential Information" means
collectively (i) information concerning the business or affairs of any party,
(ii) information concerning the Project or the transactions contemplated by this
Agreement, (iii) negotiations and communications between the parties or their
representatives, (iv) this Agreement and the agreement formed by its acceptance,
and (v) all documents, materials, copies and adaptations relating to the
foregoing, excluding in all cases information that is of public record or
available to the public by reason other than disclosure involving breach of
confidence or breach of confidentiality.
33.2 The parties agree as follows:
(a) to use Confidential Information solely for the purpose of
carrying out the purpose and intent of this Agreement and for
no other purpose;
(b) to keep all Confidential Information strictly confidential
except as may be required by law, and provided that the
parties may disclose Confidential Information, on a strictly
confidential basis, to their respective officers, agents,
employees, consultants, professional advisors, auditors and
lenders and, with the consent of the other parties hereto, to
third parties, to the extent such disclosure is necessary to
carry out the purpose and intent of this Agreement;
(c) to take all reasonable precautions necessary to prevent any
unauthorized access to or use, disclosure or reproduction of
Confidential Information; and
(d) that all Confidential Information shall, as among the parties
hereto, remain property of the party providing same, and upon
termination of the agreement formed by acceptance of this
Agreement and the Sublease and Operating Agreement (if
executed and delivered), each party agrees to return on
request all Confidential Information and all documents and
materials containing Confidential Information provided by any
other parties.
33.3 If at any time, notwithstanding the other provisions of this Section 33,
one party hereto is obliged by law to release Confidential Information to third
parties then the other party hereto shall be released from its obligations of
confidentiality with respect to that same information and to the same extent of
the first party's disclosure.
<PAGE> 29
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34. SEVERABILITY
34.1 If any provision of this Agreement is illegal or unenforceable in any
relevant jurisdiction then such provision shall be deemed severable from every
other provision of this Agreement and this Agreement shall remain in full force
and effect save for any such provisions.
35. ASSIGNMENT
35.1 The rights of SCC under this Agreement shall not be transferred, assigned,
sold, mortgaged, sublicensed, sublet or disposed of in any other manner, in
whole or in part, to any other party without in any case first obtaining the
prior written consent of RTI which consent may be withheld and there shall be no
obligation upon the party withholding such consent, under any circumstances, to
justify the withholding of its consent. Notwithstanding any such consent being
given by RTI and such transfer, assignment, sale, mortgage, subletting,
sublicensing or disposition being effected, SCC shall remain bound to RTI for
the fulfillment of all of its obligations under this Agreement.
35.2 RTI may assign its rights and obligations under this Agreement without the
consent of SCC and upon such assignment and the assignee's agreement to assume
all the obligations on the part of RTI under this Agreement, RTI shall have no
liability for any subsequent breach of any obligation on the part of RTI by the
assignee.
35.3 If SCC is a corporation, the shares of which are not publicly traded on a
stock exchange and if, by the sale or other disposition of its shares or
securities, the control or beneficial ownership of such corporation is changed
at any time after the execution of this Agreement without the prior written
consent of RTI, RTI may, at its option, terminate this Agreement, the Subleases
and the Project Agreement upon giving fifty (50) days' notice to SCC of its
intention to terminate.
36. APPLICABLE LAW AND INTERPRETATION
36.1 This Agreement shall be governed by and construed under the laws of the
Province of British Columbia and the laws of Canada applicable therein and the
parties hereto hereby irrevocably attorn to the non-exclusive jurisdiction of
the courts of the Province of British Columbia. The provisions of this Agreement
shall be construed as a whole according to their common meaning and not strictly
for or against RTI or SCC. The plural shall include the singular. The masculine
gender shall include the feminine. The definitions contained in this Agreement
shall also apply to all schedules referred to herein and attached unless
otherwise indicated. Time is of the essence of this Agreement and each of its
provisions. Headings are included for convenience only, and shall have no effect
upon the construction or interpretation of this Agreement or any of the
schedules hereto.
<PAGE> 30
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37. METHOD OF NOTICE
37.1 All notices and other communications required or permitted hereunder shall
be in writing and either physically delivered or sent by facsimile transmission
(receipt confirmed) to the intended recipient as follows:
if to RTI: Post Office Bag 8000
Prince Rupert, British Columbia
V8J4H3
Attention: General Manager and Chief Operating Officer
Fax No.: 250-624-2389
if to SCC: Suite 620, Alberta Stock Exchange Tower
300 - 5th Avenue S.W.
Calgary, Alberta
T2P 3C4
Attention: Mr. Rod J. MacKenzie
President
Fax No.: 403-234-7706
or at such other addresses of which either party may from time to time notify
the other in writing. Any notice, approval or other communication so given shall
be deemed to have been given and received on the date on which it is delivered
if delivered and on the day transmitted if confirmed by facsimile.
38. ENTIRE AGREEMENT
38.1 There are no covenants, agreements, conditions or representations relating
to the subject matter of this Agreement subsisting between the parties hereto,
except as expressly set forth or incorporated in, or contemplated by, this
Agreement, the Subleases and Project Agreement or as concurrently or
subsequently agreed in writing. All prior communications, discussions,
representations, expressions of interest and, without limitation, the two
letters of intent exchanged between SCC and RTI dated May 29, 1998 and June 1,
1998 are hereby superseded, cancelled and of no force or effect whatsoever.
39. REVIEW OF AGREEMENT TERMS
39.1 The parties agree to undertake a review of the terms of this Agreement six
months from the date of first shipment of sulphur to a Vessel and to negotiate
in good faith in an attempt to make any amendments or modifications which either
party believes are reasonably required to address any circumstances not
contemplated hereby which arise in
<PAGE> 31
-28-
RTI's provision of terminal, storage, processing and shipping services for the
Facility. In the event that the parties are unable to agree upon any proposed
amendments then the terms of this Agreement shall continue in force unamended.
39.2 The parties agree that in the event that the capacity of the Sulphur
Terminal is expanded to accommodate the annual shipment through the Sulphur
Terminal of over 1,000,000 tonnes of sulphur the parties shall renegotiate the
throughput guarantee, the minimum and maximum shipment requirements, the
applicable throughput rates and the contents of Schedule "B" to this Agreement
and, failing agreement, shall arbitrate such matters in the manner set out in
Section 31 and, if applicable, Schedule "A" to this Agreement.
40. COUNTERPARTS
40.1 This Agreement may be executed in any number of counterparts and delivered
by facsimile, each of which counterparts shall together, for all purposes,
constitute one and the same instrument, binding on the parties, and each of
which shall together be deemed to be an original, notwithstanding that all of
the parties are not signatory to the same counterpart or facsimile.
IN WITNESS WHEREOF the parties hereto have executed this Agreement.
RIDLEY TERMINALS INC.
By:
Authorized Signatory
By:
Authorized Signatory
SULPHUR CORPORATION OF CANADA LTD.
By:
Authorized Signatory
By:
Authorized Signatory
<PAGE> 1
EXHIBIT 21.1
List of Subsidiaries of the Registrant
1. Sulphur Corporation of Canada, Ltd., a wholly-owned subsidiary of the
Registrant, was incorporated in the Province of Alberta, Canada on June 30,
1989.
2. Sulport Services International, Inc., a wholly-owned subsidiary of the
Registrant, was incorporated in the Province of British Columbia, Canada on
October 1, 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 45,350
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 61,379
<PP&E> 10,404
<DEPRECIATION> (8,847)
<TOTAL-ASSETS> 410,949
<CURRENT-LIABILITIES> 674,501
<BONDS> 0
0
0
<COMMON> 92,530
<OTHER-SE> (356,082)
<TOTAL-LIABILITY-AND-EQUITY> 410,949
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 355,985
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (355,985)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
