UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 20-F
(Mark One)
[x] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[ ] ANNUAL REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------------------- -----------------------
Commission file number: 0.30960
EARTHWORKS INDUSTRIES INC.
(Exact name of Registrant as specified in its charter)
EARTHWORKS INDUSTRIES INC.
(Translation of Registrant's name into English)
British Columbia, Canada
(Jurisdiction of incorporation or organization)
1608 - 675 West Hastings Street, Vancouver, B.C., Canada V6B 1N2
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act
Title of each class Name of each exchange on which registered
Common voting Canadian Venture Exchange (formerly
Vancouver Stock Exchange)
Page ii
Securities registered or to be registered pursuant to Section 12(g) of the Act
Common voting
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act
Nil
(Title of Class)
Indicate the number of outstanding shares of each of the Issuer's classes of
capital or common stock as of the closing of the period covered by the annual
report
Not applicable
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days
Yes No x not applicable
---------------- -----------------
Indicate by check mark which financial statement item the Registrant has elected
to follow
Item 17 x Item 18
---------------- -----------------
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No x not applicable
---------------- -----------------
NOTE: All references to monies herein are to Canadian dollars unless otherwise
specifically indicated
All references in this document to Items, Sections and sub-clauses are to Items,
Sections or sub-clauses of this document.
The following names or words used in this Statement have the following described
meaning:
"Company" - means Earthworks Industries Inc. - except where as indicated by the
context it means Earthworks Industries Inc. and CIWM.
"CIWM" - means the Company's wholly owned California subsidiary, Cortina
Integrated Waste Management, Inc.
Page iii
"Exchange" - means the Canadian Venture Exchange, the stock exchange upon which
the shares of the Company are listed for trading - which is a successor to the
Vancouver Stock Exchange upon which the shares of the Company were listed for
trading prior to the creation of the Canadian Venture Exchange.
"Project" - means the waste disposal and landfill operation as described in Item
4.B.1.
"PWS" - means Pacific Waste Services, Inc., the private California company which
the Company has contracted to purchase as described in Item 4.A.3.
Page iv
TABLE OF CONTENTS
PART I 1
Item 1. Identity of Directors, Senior Management and Advisers 1
A. Directors and senior management. 1
B. Auditors 1
Item 2. Offer Statistics and Expected Timetable 1
A. Selected financial data 2
B. Capitalization and indebtedness 3
C. Reasons for the offer and use of proceeds 3
D. Risk factors 3
Item 4. Information on the Company 5
A. History and development of the Company 5
Item 5. Funding Agreement with Solucorp Industries Ltd. 9
B. Business overview and description 9
D. Property, plants and equipment 12
Item 5. Operating and Financial Review and Prospects 12
A. Operating results 12
B. Liquidity and capital resources 13
C. Research and development, patents and licences 13
D. Trend information 13
Item 6. Directors, Senior Management and Employees 13
A. Directors and senior management 13
B. Compensation 14
C. Board practices 15
D. Employees 15
E. Share ownership 15
Item 7. Major Shareholders and Related Party Transactions 16
A. Major shareholders 16
B. Related party transactions 17
Item 8. Financial Information 17
A. Consolidated Statements and Other Financial Information 17
B. Significant Changes 18
Item 9. The Offer and Listing 18
Item 10. Additional Information 18
A. Share capital 18
B. Memorandum and articles of association 19
C. Material contracts 20
D. Exchange controls 20
E. Taxation 20
F. Dividends and paying agents 20
G. Documents on display 21
Item 11. Quantitative and Qualitative Disclosures About Market Risk 21
Item 12. Description of Securities Other than Equity Securities 21
Page v
PART II 21
Item 13. Defaults, Dividend Arrearages and Delinquencies 21
Item 14. Material Modifications to the Rights of Security Holders
and Use of 21
Proceeds 21
Item 15. [Reserved] 21
Item 16. [Reserved] 21
PART III 22
Item 17. Financial Statements 22
Item 18. Financial Statements 22
Item 19. Financial Statements and Exhibits 22
SIGNATURES 23
Page 1
PART I
Item 1. Identity of Directors, Senior Management and Advisers
A. Directors and senior management.
- --------------------------------------------------------------------------------
Names Addresses Functions/Positions
- --------------------------------------------------------------------------------
David Brent Atkinson 1608 - 687 West Hastings St. Director, Chairman of
Vancouver, B.C. , Canada the Board and Chief
Executive Officer
- --------------------------------------------------------------------------------
James A. Wyse 230 Manchester Street Director and President
Danville, California, U.S.A.
- --------------------------------------------------------------------------------
David Francis Andrews 301 - 1600 Hornby Street Director and Secretary
Vancouver, B.C., Canada
- --------------------------------------------------------------------------------
Deirdre Lydon 607 - 1625 West 13th Avenue Director
Vancouver, B.C., Canada
- --------------------------------------------------------------------------------
Dan L. Atkinson #38 - 777 Queens Road Director
North Vancouver, B.C., Canada
- --------------------------------------------------------------------------------
David S. Brischke 2731 Corey Place Director
San Ramon, California, U.S.A.
- --------------------------------------------------------------------------------
B. Auditors
Jones Richards & Company, Certified General Accountants, of #600 - 509 Richards
Street, Vancouver, B.C., Canada - since November 16, 1998
Until November 16, 1998 - Bruce F. Jamieson & Co, Certified General Accountant,
of #407 - 325 Howe Street, Vancouver, B.C. V6C 1Z7.
Item 2. Offer Statistics and Expected Timetable
Not applicable. The Company is not making, or proposing to make, an offering of
its securities.
Page 2
Item 3. Key Information
A. Selected financial data
The following information is provided as of November 30th the end of each of
the following fiscal years of the Company:
- --------------------------------------------------------------------------------
1999 1998 1997 1996 1995
$ $ $ $ $
- --------------------------------------------------------------------------------
Net sales/
operating revenues 43,009 29,426 24,568 8,720 56,273
- --------------------------------------------------------------------------------
Income (loss) from
operations (before
extraordinary items) (263,441) (470,423) (736,713) (359,433) (387,698)
- --------------------------------------------------------------------------------
Net income (loss) (263,441) (479,864) (742,667) (407,309) (330,986)
- --------------------------------------------------------------------------------
Net income (loss)
from operations
per share (0.04) (0.88) (0.15) (0.09) (0.10)
- --------------------------------------------------------------------------------
Total assets 2,320,381 2,042,858 1,751,220 1,873,371 1,491,998
- --------------------------------------------------------------------------------
Net assets 960,359 935,330 578,365 1,423,123 1,146,585
- --------------------------------------------------------------------------------
Capital stock 5,279,516 4,986,546 4,149,717 3,986,917 3,004,103
- --------------------------------------------------------------------------------
Dividends
declared per
share Nil Nil Nil Nil Nil
================================================================================
No. of shares
issued 7,062,091 6,246,640 4,842,789 4,706,289 4,014,939
The financial statements of the Company are denominated in Canadian currency and
the above data is provided in Canadian currency.
The history of Canada-United States exchange rates are presented on the basis of
the amount of Canadian funds required to purchase $1.00 (U.S.). The rates of
exchange used are the noon buying rate in the City of New York for cable
transfers of foreign currencies as certified by the Federal Reserve Bank of New
York - presented on a calendar year basis.
- --------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------
Rate at period end 1.4722 1.5433 1.4288 1.3697 1.3655
- --------------------------------------------------------------------------------
Average rate
during period 1.4858 1.4837 1.3849 1.3644 1.3689
- --------------------------------------------------------------------------------
High rate during
each period 1.5194 1.5433 1.4398 1.3822 1.4238
- --------------------------------------------------------------------------------
Low rate during
each period 1.4611 1.4168 1.3357 1.3310 1.3285
- --------------------------------------------------------------------------------
Page 3
B. Capitalization and indebtedness
The following are the figures existing as of August 31, 2000
Capitalization - $5,606,767
Indebtedness - guaranteed - $Nil
Indebtedness - unguaranteed - $Nil
Indebtedness - secured - $Nil
Indebtedness - unsecured - $1,069,737
The above debt figures include an amount of $646,324 of indebtedness alleged to
be owing by the Company which the Company disputes, in part, as it claims to
have a right of offset against the indebtedness damages which it is alleging are
owed by the creditor to the Company. No Court proceedings have yet been started
with respect to either the indebtedness or the Company's counter-claim for
damages. Accordingly, the ultimate net amount of indebtedness by the Company to
the creditor is not yet settled.
C. Reasons for the offer and use of proceeds
This item is not applicable as the Company is not involved in making, or
proposing to make, an offering of its securities.
D. Risk factors
As the only actual business enterprises of the Company are the efforts of its
wholly owned subsidiary CIWM, which is proposing the development of the Project,
many of the following described risks are directly risks to CIWM and only
indirectly risks to the Company. However, all risks to CIWM should be
considered to be risks to the Company. The following risks should be
considered:
(1) The Company holds no physical assets of significance. The contractual
rights that it holds may not have a realizable value. CIWM holds no
physical assets of significance.
(2) While CIWM now holds a business lease of Indian Reserve lands in Colusa
County, California, U.S.A., for the purpose of the Project, there is no
assurance that CIWM will be successful in obtaining final approval of the
lease from the Secretary of the Interior of the United States.
(3) There are no assurances that the Company or CIWM will be successful in
obtaining the necessary environmental and governmental approvals for the
Project; nor are there any assurances that CIWM will be able to raise the
capital that will be required to develop the site if it succeeds in
getting the appropriate lease and regulatory approvals; nor are there any
assurances that if CIWM is successful to the point of establishing the
landfill site as a business operation that it will ultimately prove to be
profitable.
Page 4
(4) Waste landfill operations in the State of California are highly
competitive businesses. There is no assurance that CIWM will be able to
attract, for the Project, sufficient volumes of waste, nor that it will be
able to charge a sufficient dumping fee, to make the operation profitable.
Existing competitors may have greater financial, management and technical
resources, operating histories and name recognition.
(5) Waste landfill operations are highly environmentally sensitive. There is
no assurance that CIWM will be able to satisfy all of the environmental
regulations and licensing requirements to enable it to put its proposed
site into operation, nor that it will thereafter be able to, from time to
time, satisfy what might become increasingly onerous environmentally
related requirements.
(6) The development of the proposed businesses of CIWM is speculative and
risky and there is no certainty that any of the ideas will be successfully
developed to the point of becoming commercially viable and profitable.
(7) There is no assurance that the issued shares of the Company will continue
to be listed for trading on the Exchange or on any securities trading
facility or exchange.
(8) The Company is a development-stage company which to date has not realized
any material operating revenues from operations. As of November 30, 1999,
the Company had incurred cumulative losses for the previous 2 fiscal years
of $468,493. Depending on the success of CIWM's efforts in securing
necessary contracts and environmental approvals, Management expects
operating losses to continue through at least the next year as CIWM
continues its efforts.
(9) The Company and CIWM will continue to require additional working capital
to conduct existing and proposed operations. The Company will need to
raise additional funds through debt financings, or through private or
public financings, to support its long-term and short-term objectives.
Any additional equity financing may be dilutive to shareholders of the
Company. If adequate funds are not available, the Company would be
required to curtail its business objectives in one or more areas. There
can be no assurance that unforeseen developments or circumstances will not
alter the Company's requirements for capital, and no assurance can be
given that additional financing will be available on acceptable terms, if
at all.
(10) The Company's share price on the Exchange has fluctuated significantly
during the past two years. There can be no assurance that the price of
the Company's shares will not decline below the current market price.
Future announcements concerning the Company or its competitors, quarterly
variations in operations results, the introduction of new environmental
rules or requirements, and other unpredictable developments, could cause
the market price of the Company's shares to fluctuate substantially. In
addition, stock markets have experienced extreme price and volume
volatility in recent years. This volatility has had a substantial effect
on the market prices of securities of many small public company for
reasons frequently unrelated to the operating performance or business
Page 5
prospects of the specific companies. These broad market fluctuations may
adversely affect the market price of the Company's shares.
(11) The Company has never declared or paid dividends on its shares and does
not anticipate doing so in the foreseeable future. There can be no
assurance that the Company's Board of Directors will ever declare
dividends, which action is exclusively within their discretion.
(12) There is no assurance that the Company will be able to complete and close
the proposed agreement to acquire 100% of the shares of PWS - described in
sub-clause A.3 of Item 4.
(13) The detailed planning of the CIWM project, following the securing of final
approvals, and the subsequent management and operation of the project,
will require expertise which the Company does not now have. The Company
presently expects to be successful in engaging that expertise as it is
required. The Company also anticipates that its ongoing relationship with
PWS will result in PWS supplying, under contract, significant amounts of
the expertise that CIWM will require.
Item 4. Information on the Company
A. History and development of the Company
1. Organization and incorporation of Company and CIWM
--------------------------------------------------
The Company was incorporated on March 2, 1984 pursuant to the British Columbia
Company Act. The Company obtained a receipt on January 14, 1986 for a
Prospectus filed in Canada with the British Columbia Securities Commission. The
shares of the Company were called for trading on the Exchange, on June 29, 1986.
The Company was originally incorporated under the name "Colima Resources
Limited". Its name was changed to Procordia Explorations Ltd. on April 27, 1990
and to its present name on September 10, 1993.
The authorized capital of the Company consists of 100,000,000 common shares
without par value. All of the shares of the Company rank equally as to
dividends, voting rights and as to any distribution of assets on winding-up or
liquidation. There are no indentures or agreements limiting the payment of
dividends and there are no conversion rights, special liquidation rights,
pre-emptive rights or subscription rights attached to the common shares of the
Company. None of the Company's currently outstanding common shares are subject
to any call or assessment.
The Company was originally incorporated with an authorized capital of 4,000,000
common voting shares. Effective April 27, 1990 the authorized capital was
increased to 20,000,000 voting common shares. Effective September 10, 1993 the
issued and authorized capital was consolidated on a 1 - for - 5 basis, reducing
Page 6
the authorized capital to 4,000,000 common shares and simultaneously the
authorized capital was increased to 10,000,000 consolidated common voting
shares. Effective July 17, 1998 the authorized capital was further increased to
20,000,000 common voting shares, and effective August 30, 2000 it was further
increased to 100,000,000 common voting shares.
The Company's head office is located at Suite 1608 - 675 West Hastings Street,
Vancouver, British Columbia, Canada V6B 1N2. The telephone number of the head
office is (604) 669-3147. The Company's registered and records offices are
located at Suite 1710 - 1177 West Hastings Street, Vancouver, British Columbia,
Canada V6E 2L3. The telephone number at the registered office is (604)
683-9262.
The Company has one subsidiary, being CIWM. CIWM was incorporated July 19,
1994. Its Registered Office is located at 100 - 2001 P Street, Sacramento,
California, U.S.A. 95814 - which is the address of its California agent, C T
Corporation. The telephone number is (916) 441-6568. Its Head Office is
maintained and located at the head office of the Company in Vancouver, Canada.
CIWM has issued one voting common share in its capital to the Company - which
makes it the 100% owned subsidiary of the Company.
2. General Development of the Business
-----------------------------------
Over the last 5 years the principal, and almost exclusive, focus of the Company
has been the development of the Project through CIWM, described in greater
detail in sub-clause B. While the Project is being developed in the name of
CIWM, the efforts to develop and finance the Project have been, effectively,
carried forth by the Company. Similarly, most of the funding required for the
Project has been raised by and in the name of the Company and the expenditures
on the Project of Company funds have been effectively on behalf of CIWM and as
advances to CIWM.
If the Company is able to complete and close the purchase of the issued shares
of PWS, as described in more detail under sub-clause 3, the asset base of the
Company will be greatly expanded. Further, as PWS is an operating company, the
acquisition of it as a wholly owned subsidiary would result in the Company
having, on a consolidated basis, the revenues of PWS.
3. Pacific Waste Services, Inc. acquisition
----------------------------------------
The Company entered into a Purchase Agreement dated March 31, 2000 ("the
Agreement") with the owners of 100% of the issued shares of PWS, a private
company based in San Ramon, California, U.S.A. The owners with which the
Agreement has been signed are:
James A. Wyse, Danville, California, U.S.A.
David S. Brischke, San Ramon, California, U.S.A.
Thomas G. Valentino, Chico, California, U.S.A.
Page 7
Scott D. Schmidt, Byron, California, U.S.A.
Doana Wyse, Danville, California, U.S.A.
(hereinafter called "Vendors")
The Company has agreed to issue to the Vendors, pursuant to the Agreement, for
the purchase of 100% of the issued shares of PWS, 8,000,000 shares in its
capital ("Shares") on three bases, being:
a. 5,000,000 Shares will be issued to the Vendors upon the acceptance for
filing of the Agreement - i.e. approval - by the Exchange (the date of such
acceptance being hereinafter called the "Acceptance Date") and following
the Closing of the Agreement. The Shares will all be issued but, pursuant
to Exchange requirements, 10% of the numbers issued to each Vendor will be
free of escrow restrictions but the remaining 90% will have to be deposited
in an escrow and released at a rate of 15% at 6 month intervals measured
from the Acceptance Date. The Exchange approved the Agreement September
13, 2000 - and that date is therefore the "Acceptance Date".
b. 2,000,000 "earn-out" Shares will be issued to the Vendors on the basis of
PWS's earnings from certain contracts which PWS did not have completed and
operational at the date of the Agreement but which were under negotiations
or were anticipated and which are believed by the Vendors to contribute
substantially to the value of PWS. One such Share will be issued to the
Vendors for each $1.00 (U.S.) of earnings by PWS from such contracts
calculated on a before interest, taxes, depreciation and amortization basis
("EBITDA earnings"). PWS's EBITDA earnings from such contracts will be
calculated on a quarterly basis and Shares will be issued quarterly on the
basis of such calculated earnings. Any of the said Shares which have not
become issuable to the Vendors by September 30, 2003 will cease to be
issuable and the number of Shares to be received by the Vendors pursuant to
the Agreement will be reduced accordingly.
c. 1,000,000 Shares, commonly called by the parties "Project Shares" will be
issued to the Vendors in consideration of the value of the interests
already effectively owned by PWS in the Cortina Project. The Project
Shares will be issued to the Vendors in equal quarterly tranches of
125,000 Shares each, the first to be issued on the last day of the calendar
quarter in which the Cortina Project commences operations on a commercial
basis ("Project Commencement Date"); provided however that Shares will only
be issued for a quarter in which the Cortina Project operates commercially
for at least 60 days. Any of the Project Shares which have not been issued
to the Vendors by 5 years after the Project Commencement Date will cease to
be issuable to the Vendors and the numbers of Shares issuable to the
Vendors pursuant to the Agreement will be reduced accordingly.
Page 8
Pursuant to the Agreement the principal Vendor, James A. Wyse, was appointed to
the Board of Directors of the Company on June 1, 2000, and a second Vendor,
David S. Brischke, was appointed a Director on October 5, 2000. The Agreement
provides that the Board will be reconstituted to be comprised of five persons
two of whom will be Vendors or Nominees of the Vendors. On October 5, 2000
James A. Wyse was appointed President of the Issuer and former President David
B. Atkinson became Chief Executive Officer and Chairman of the Board.
The closing of the transaction contained in the Agreement will occur on April
30, 2001. Provided that it is a condition of the closing of the Agreement that
the Company and/or CIWM will have, prior to that date, raised additional
financing, being:
a. at least $5,000,000 (Cdn.) of equity or debt financing will have been
raised by one or both of the Issuer and Cortina, or;
b. at least $3,000,000 (Cdn.) will have been raised by CIWM by non-equity
financing for application to the Cortina project and CIWM costs.
PWS is an established waste management consultant and contractor with operations
in the area of landfill management, design and waste disposal throughout the
Western United States. It has been expanding the scope of its operations and
anticipates to thereby expand both its gross and net revenues. It has reported
to the Company that it has been in business since 1988. PWS has been providing
consulting services to the Company and CIWM since 1995 with respect to the
Project. As a result of supplemental agreements with the Company PWS has
accepted part of its remuneration for work done by the accrual of fees which are
convertible into an interest in CIWM Project of up to 25%. In addition, PWS has
accepted portions of it's compensation by way of shares in the Company and
presently holds 533,000 shares of the Company. This agreement will cease to be
of any effect if and when the acquisition of PWS is completed.
4. Solucorp Royalty Interest
-------------------------
Pursuant to an agreement dated effective August 15, 1994 the Company contracted
with Solucorp Industries Ltd. and its wholly owned subsidiary, ESM Industries
(Canada) Inc. (hereinafter together referred to as "Solucorp"), to settle
certain outstanding financial issues and to receive in consideration thereof the
right to receive royalties equal to $1.00 (Cdn.) for each tonne of soil or other
material remediated or processed in Canada using Solucorp's MBS Process for the
period ending August 15, 2014. The Company also acquired the non-exclusive
right to market usage of the MBS Process in Canada and the United States, during
the period ending August 15, 2014 and to receive $1.00 (Cdn. or U.S. as may be
applicable) for each tonne of material remediated or processed using the MBS
Process as a result of the Company's marketing efforts.
In further consideration of the right to receive the payments the Company issued
Solucorp 50,000 shares in its capital and is obliged to issue to Solucorp an
Page 9
additional maximum of 200,000 shares in its capital on the basis of 1 share
having to be issued for each $1.00 (Cdn.) of royalty payments received, such
shares to be allotted in blocks of not less than 50,000 shares each from time to
time. To this date the Company has received royalties totaling $113,275 (Cdn.).
The Company has not issued any further shares to Solucorp. Solucorp has
reported to the Company that it is engaged in seeking contracts for the use of
its MBS Process in Canada and the U.S. and that it has had minor agreements for
its usage in Canada which has resulted in the royalty payments that have been
paid to the Company. The Company has investigated the possibility of marketing
Solucorp's MBS Process and has had exploratory negotiations with potential users
of it but it has not actively marketed the Process nor achieved any agreements
for the use of the Process.
Item 5. Funding Agreement with Solucorp Industries Ltd.
The Company entered into an Agreement dated September 5, 1995 and incidental
supplemental agreements (hereinafter together called the "Solucorp Agreement")
with Solucorp, pursuant to which Solucorp was granted the right to provide
funding of up to $1,000,000 (U.S.) to be applied to the costs of the development
of the Project. The Solucorp Agreement provided for the funding to be advanced
in portions from time to time as required by CIWM to pay specific costs or
invoices. Solucorp has provided a total of $304,712.
The Solucorp Agreement provided that Solucorp had the right, at any time after
supplying $400,000 (U.S.), to convert the advances to the acquisition of an
interest in the Project on the basis of each $40,000 (U.S.) advanced being
convertible to a 1% participating interest in the Project - and various
additional optional rights, none of which were earned or exercised by Solucorp.
Due to defaults by Solucorp the Company gave it notice in November 1998
terminating Solucorp's rights to advance further monies. As a result, the
monies that have been advanced are repayable by the Company with interest at a
rate of 15% per annum. None of the money or accrued interest has been paid
pending the resolution of claims that the Company is expressing against Solucorp
for compensation by way of damages for alleged defaults by Solucorp. The amount
that will be counterclaimed by the Company against Solucorp has not yet been
calculated.
B. Business overview and description
The Company is considered to have only one reportable industry segment and one
geographic segment, namely California, U.S.A.
1. The Project
The Company through CIWM has been continuing studies and negotiations relative
to the construction, installation and operation of the Project on lands (the
"Lands") located approximately 100 kilometers north of the City of Sacramento,
in Colusa County, California, U.S.A. The Company entered into a Memorandum of
Agreement dated June 10, 1993, as amended November 30, 1993, Mach 4, 1994 and
August 23, 1994 (the "Agreement"), with the owner of the Lands, being an Indian
Band known as "Cortina Indian Rancheria" (the "Band"). Subsequently, the
Page 10
Company entered into a lease agreement on the Lands dated October 31, 1995 with
the Band (the "Business Lease") for the purpose of facilitating the Project.
The Business Lease is subject to the formal approval of the Secretary of State
for the Interior of the United States of America ("Interior Secretary") - which
has been applied for but not yet finally received. The Business Lease was
amended, restated and re-executed by the Parties effective October 18, 2000.
The Company has paid the Band $33,000 (U.S.) pursuant to the Agreement. The
Agreement, and the payments made thereunder, were to secure for the Company the
exclusive rights to deal with the Band and to negotiate and sign the Business
Lease.
The Business Lease is for a term of 25 years running from the date of its
approval by the Interior Secretary and will be renewable, at the option of the
Company, for a further 25 years. A minimum rental of $15,000 (U.S.) per month
will have to be paid to the Band, starting as of the commencement of the
operation of the Project, and a $10,000 (U.S.) one-time payment must be made
within 21 days of the final approval of the Interior Secretary. Throughout the
term of the Business Lease a percentage of the gross revenues from the Project
will have to be paid, being 3% of the gross revenues received for the first
150,000 tons of waste dumped each year and 5% thereafter, subject to the monthly
minimums noted above.
During the period since the execution of the Agreement, the Company has, through
the efforts of its Management, and with advice from consultants and other
sources, investigated the feasibility and the potential economic viability of a
waste landfill on the Lands. The conclusion of Management is that the Project
is feasible and economically viable. Accordingly, the Company and CIWM are
continuing with the proposal to develop the Project.
The approval of the Business Lease by the Interior Secretary was subject to
extensive reviews being conducted on behalf of CIWM of virtually all aspects of
the Project including environmental impact, interference with archeological
sites, seismic stability of the underlying rock structure and other incidental
aspects. The approval is also subject to various reviews and local public
hearings. To date all such requirements have been successfully conducted and
concluded. Approval by the Interior Secretary will also effectively, under the
Solid Waste Regulations applicable, constitute a permit to proceed with the
building and operation of the Project facilities. After approximately 4 years
of working on satisfying all the requirements to obtain the approval of the
Interior Secretary that approval, in the form of a Record of Decision, was given
October 27, 2000. The approval is, however, subject to appeals that may be
filed by interested or affected persons.
The Project is to be an integrated waste management facility and landfill on the
443 acre Lands. The operation of the facility will offer landfilling,
recycling, composting, bioremediation, and treatment of contaminated soils,
sludge and green waste. If permitted to accept 1,500 tons of waste per day -
which is what has been applied for - the facility is projected to have a
capacity of accepting close to 30,000,000 tons of waste and landfill and to have
an operational life of more than 40 years. The various approval processes which
have been pursued by the Company and CIWM have required that the Company develop
detailed plans for the Project and the Project facilities. However, pending the
receipt of the final approval from the Interior Secretary - and the permitting
of the Project - the Company has not commenced construction of any Project
facilities. Nor has CIWM signed any contracts for the receipt and handling of
waste, nor any of the other incidental agreements that will be necessary to
Page 11
negotiate and settle to construct and then operate the Project facilities. The
Company has not yet realized any revenues from the proposed Project.
The Company has conducted studies to determine the potential amounts of waste
available within the area which is within economic distances of the Project
("Project Area"). This has included reviewing the existing waste handling and
landfill facilities in the area - essentially within approximately 150 miles of
the Project site. As virtually 100% of the waste moved to the site will have to
be by truck the hauling costs will be a factor in determining the distances from
which waste can be economically hauled to the site. The Company's reviews have
also been as to the remaining potential operational periods for other waste
facilities within the Project Area and other potentially new waste handling or
disposal facilities that have been announced or brought to the attention of the
Company within the Project Area. However, due to the uncertainty of the various
governmental authorities which would have jurisdiction over other waste handling
facilities in the Project Area - which would not be on Federal lands - no final
determination can be made of whether or not other competing facilities may be
licensed within the Project Area, or if extensions will be granted of the
permits for existing facilities. Management is aware of the fact that waste
handling - particularly waste that has any level of contamination, is an
environmentally and politically sensitive subject. Management also recognizes
that, notwithstanding that the Project is to be located on U.S. Federal Indian
lands, and therefore not fully subject to the rules and regulations of local or
State governments, local public opposition - of which there has been some -
could result in appeals of the approval given by the Interior Secretary, which
would result in further delays in getting approval or impose further
requirements of the final approval - or event result in final approval being
permanently denied.
Reviews and studies done on behalf of the Company to date satisfy Management
that there is available within the Project Area not less than the projected
1,500 tons of waste per day that will require disposal and which can potentially
be made the subject of disposal contracts in the Project facilities. The
development and the requirement to dispose of waste is not seasonal.
The Company calculates that it and CIWM have to August 31, 2000 expended
$2,434,272 on the development of the Project - both in direct costs and indirect
general and administrative costs. Management anticipates that further costs
will be incurred - for which funding will have to be obtained - until Project is
financially self-sufficient as follows:
- --------------------------------------------------------------------------------
For the period until approval is obtained from Interior
Secretary - projected to be March 31, 2001 $200,000 (U.S.)
- --------------------------------------------------------------------------------
For the period following approval for the development of
the final engineering and construction plans - estimated
to be for a period of 4 months - $300,000 (U.S.)
- --------------------------------------------------------------------------------
Capital costs for the construction of the Project
facilities $5,000,000 (U.S.)
- --------------------------------------------------------------------------------
Management is anticipating that it will be able to raise, by equity funding, all
of the costs required prior to the commencement of construction. Management is
anticipating being able to borrow, on acceptable terms, 100% of the capital cost
requirements for the Project.
Page 12
The Company expended, during the fiscal year ended November 30, 1999 $353,746
direct and indirect costs, on the Project. The Company does not have any
employees - other than its President, David Atkinson, who is engaged under a
Service Contract on a full-time basis. All other efforts on behalf of the
Company are done by consultants and contractors. The Company does not
anticipate engaging any employees until the Project facility is near completion
- - and then all employees will be engaged as employees of CIWM.
The Company entered into a Memorandum of Understanding ("MOU") dated September
25, 1996 with PWS - which the Company has now agreed to purchase as is disclosed
in sub-clause 3. In the MOU PWS was granted an option to acquire a maximum of
10% equity interest in CIWM. The option is exercisable upon CIWM obtaining the
required permits to build and operate Project facilities on the Land, for total
consideration to be established at the time initial site construction is
completed. Under the terms of the MOU, PWS agreed to allocate 50% of its direct
labour amounts billed to CIWM to the purchase of the equity position. To
October 31, 1999 $248,468 (U.S.) of amounts owing to PWS are available for the
purchase of equity in CIWM. As it cannot be established that permits to build
and operate a facility on the Lands will be received it is not possible to
establish whether or not PWS would acquire an interest in CIWM. The Agreement
will be effectively eliminated if the agreement described in sub-clause 3 is
closed and PWS becomes a wholly owned subsidiary of the Company.
D. Property, plants and equipment
Neither the Company nor CIWM own any property, plant or equipment. Their assets
are principally only the various agreements that are described above.
Item 5. Operating and Financial Review and Prospects
A. Operating results
Because the Company has not carried on any business operations and has had no
income generating activities no meaningful discussion and analysis can be done
of the Company's operations. The minor income which the Company has been
receiving has been primarily interest on occasional credit balances in the
Company's bank account. As is noted in Item 1, in describing the business
activities of the Company's subsidiary, CIWM, it is involved in attempts to
develop a new business. Unfortunately, it is subject to high degrees of
government regulation and environmental sensitivity over which the Company has
no control. The management of CIWM and the Company have verified, to their
satisfaction, that there is a current and potential long-term increasing demand
for waste disposal facilities, contaminated materials remediation and recycling
facilities. Management has also concluded to its satisfaction that there is at
least an unofficial policy prevalent in the United States Bureau of Indian
Affairs to support projects on Indian lands which provide economic benefits for
the tribes or bands involved, and that the Cortina Band is, due to a lack of any
other significant industrial or economic activities on its lands, strongly in
favour, in principle, of CIWM's proposed project. Management has accordingly
concluded that in this favourable potential marketplace the proposed landfill
project of CIWM should be actively developed, subject to the availability of
funding.
Page 13
B. Liquidity and capital resources
Because of the "start-up" status of both the Company and CIWM they do not have
liquidity, either short or long term. They do not have any material unused
sources of liquidity. The Companies do not have sufficient working capital to
carry forth their plans with respect to the Cortina Project. Management of the
Company is presently seeking additional working capital, primarily by way of the
sale of shares in the Company.
The Company did not have any material commitments for capital expenditures as at
the end of its last financial year or any subsequent interim period - other than
to pay its ongoing general and administrative costs, and to pay the costs of
advancing its plans for the Project. It has funded the necessary expenditures
from the proceeds received from the exercise of previously issued share purchase
warrants and share purchase options.
C. Research and development, patents and licences
The Company has not carried on any research and development during the past
three years and has no research and development policies.
D. Trend information
The Company cannot identify any significant trends which are applicable to it or
its plans. The Company is aware that, as the population grows, the amount of
waste that must be disposed of also grows. The Company also considers that
there is a continuing, if not growing, strong objection by the people who, in
organized territories generate the waste, to having waste disposal facilities in
their own jurisdictions. Hence the Company considers that there will be a
growing trend toward the use of - and need for - waste disposal and management
facilities such as the Company is proposing at the Project. The Company
therefore anticipates that there will be a continuing, if not growing, demand
for the facilities and services to be provided at the Project with appropriate
positive effects on the Company's cash.
The Company does not consider that the Project is sufficiently advanced in its
planning, or the timetable for its construction or initiation of operation, to
calculate or supply forward-looking financial information.
Item 6. Directors, Senior Management and Employees
A. Directors and senior management
- --------------------------------------------------------------------------------
Name, age and Offices held with Principal business activities
countries of residence the Company outside the Company
- --------------------------------------------------------------------------------
David Brent Atkinson - 42 Director, Chairman of Nil
British Columbia, Canada the Board and Chief
Executive Officer
- --------------------------------------------------------------------------------
Page 14
- --------------------------------------------------------------------------------
Dan L. Atkinson - 45 Director Executive Chef at Vancouver,
British Columbia, Canada Canada, area restaurants
- --------------------------------------------------------------------------------
David Francis Andrews - 56 Director and Chief Executive Officer of
British Columbia, Canada Secretary Miller Creek Power Ltd. and
Rutherford Creek Power Ltd.,
private companies which are
developing plans for the
installation of small hydro-
electric generating plants in
British Columbia, Canada
- --------------------------------------------------------------------------------
Employment Consultant for
Deirdre A. Lydon - 44 Director Businesswork B.C. in
British Columbia, Canada* Vancouver, Canada
- --------------------------------------------------------------------------------
James A. Wyse - 49 Director and President President and Chief Executive
California, U.S.A. Officer of Pacific Waste
Services, Inc.
- --------------------------------------------------------------------------------
David S. Brischke - Director Professional Civil Engineer.
--
California, U.S.A. Vice-President Pacific Waste
Services, Inc.
- --------------------------------------------------------------------------------
* Deirdre Lydon is the wife of David B. Atkinson
B. Compensation
None of the Directors or Officers of the Company are salaried. As James A. Wyse
and David S. Brischke are holding their positions as nominees of PWS they are
not paid any fees or salaries by the Company. Each of the Canadian Directors
are paid an annual fee for their services and are from time to time granted
share purchase options - the options outstanding in favour of various of them as
of this date being as follows:
- --------------------------------------------------------------------------------
Name Fees and services Options
- --------------------------------------------------------------------------------
David Atkinson $5,000 per month - for Options on 63,500 shares
full-time services exercisable at $0.40 per
share until August 7,
2002;
Options on 204,500 shares
exercisable at $0.56 per
share until February 14,
2005
- --------------------------------------------------------------------------------
David Andrews $1,500 per month Options on 55,000 shares
exercisable at $0.90 until
June 12, 2005;
- --------------------------------------------------------------------------------
Dan Atkinson $750 per month Options on 100,000 shares
exercisable at $0.40 per
share until March 9, 2002
- --------------------------------------------------------------------------------
Page 15
- --------------------------------------------------------------------------------
Deirdre Lydon $750 per month Options on 175,500 shares
exercisable at $0.40 per
share until May 5, 2003
- --------------------------------------------------------------------------------
James Wyse Nil Options on 140,000 shares
exercisable at $0.90 per
share until June 12, 2005
- --------------------------------------------------------------------------------
Neither the Company nor CIWM provide any pension, retirement or similar benefits
nor are they accruing any liability with respect to any such benefits.
C. Board practices
1. The Company's Board of Directors has only one committee - the Audit
Committee. The members of the Audit Committee do not have any fixed terms for
holding their positions and are appointed and replaced from time to time by
resolution of the Board of Directors.
2. All Directors, when elected or appointed, are to hold office until the
next Annual General Meeting of the Shareholders that is held, at which time it
is deemed that they all cease to hold office and are subject to reappointment at
the Meeting. The next Annual General Meeting of the Shareholders of the Company
has not been scheduled but must be held no later than April 29, 2001.
3. None of the service contracts under which Directors supply services to
the Company or CIWM have any provisions for individuals receiving benefits on
any termination of such contracts.
4. The members of the Audit Committee - currently comprised of Directors
David Andrews, Deirdre Lydon and Dan Atkinson - receive no separate remuneration
for acting as a member of the Committee, nor are their appointments for any
fixed term. Their appointments are not subject to any specific terms of
reference.
5. The Directors of CIWM - presently David Atkinson, David Andrews and James
Wyse - are appointed from time to time by Resolution of the Board of Directors
of the Company. The Directors of CIWM do not have any specific terms of office
nor do they receive any compensation for acting as Directors of CIWM.
D. Employees
Neither the Company nor CIWM have any employees - nor have they ever had any
employees.
E. Share ownership
The Directors and Officers of the Company hold, as at the date of this
Statement, the numbers of shares set opposite their names below - which are the
percentage of the Company's 9,148,091 issued shares also set opposite their
names:
Page 16
- --------------------------------------------------------------------------------
Name of Director Shares Held Percentage of
and Officer issued shares - %
- --------------------------------------------------------------------------------
David B. Atkinson 1,348,325 14.74
- --------------------------------------------------------------------------------
David F. Andrews 80,000 0.0087
- --------------------------------------------------------------------------------
Dan L. Atkinson 40,300 0.0044
- --------------------------------------------------------------------------------
Deirdre A. Lydon 10,000 0.001
- --------------------------------------------------------------------------------
James A. Wyse Nil Nil
- --------------------------------------------------------------------------------
David S. Brischke Nil Nil
- --------------------------------------------------------------------------------
Details of options held by the Directors and Officers are set forth in Section
B. All of the issued shares of the Company - including those held by the
Directors and Officers - and those which will be issued upon the exercise of
options, are voting common shares.
Item 7. Major Shareholders and Related Party Transactions
A. Major shareholders
1. A major shareholder is a shareholder owning directly or indirectly more
than 5% of the issued shares of the Company.
To the best of the knowledge of the Company and its management the only
shareholder holding directly or indirectly more than 5% of the issued
shares of the Company is its President, David B. Atkinson, the direct and
indirect holder of 1,348,325 shares of the Company, being 14.74% of the
issued shares of the Company. This does not constitute any significant
change in the percentage ownership held by any major shareholders during
the past three years. Mr. Atkinson does not hold any voting rights from
other shareholders.
2. The Company is not, to the best of the best of the knowledge of the Company
and its Directors and Officers, directly or indirectly owned or controlled
by another corporation or by any foreign government.
3. The Company's outstanding shares are in registered form but it is known to
the Company and its management that the registered holders of the
outstanding shares are, in large part, not the beneficial owners of the
outstanding shares and that significant numbers of the outstanding shares
are held registered in the names of various nominees on behalf of the
beneficial owners of such shares. As a result it is not possible for the
Company or its management to know who are all of the beneficial owners of
its outstanding shares or how many outstanding shares may be beneficially
owned by any single shareholder. As at October 31, 2000 the Company had 44
shareholders of record of which 33 were resident in Canada holding between
Page 17
them 7,766,898 shares and 10 were resident in the U.S.A. holding between
them 1,371,493 shares.
4. There are no arrangements known to the Company, the operation of which may
at a subsequent date result in a change in the control of the Company;
provided that when 5,000,000 shares of the Company are issued pursuant to
the Pacific Waste Agreement described in Item 4.A.3, James A. Wyse will
receive a number of shares of the Company which will result in him then
holding more than 10% of the issued shares of the Company. It is also
assumed that the 5,000,000 shares that the Vendors will receive under the
Pacific Waste Agreement will create shareholdings which will have the
potential of changing the control of the Company.
B. Related party transactions
There have not been any material related party transactions between the Company
or CIWM and any of the directors, officers, associates or major shareholders of
the Company except:
(a) The options which have been granted to directors or officers which are
detailed above;
(b) When, from time to time in the past, the Company has issued, by private
offering, shares or units consisting of shares with share purchase
warrants attached, Directors have purchased shares or units. In all
instances the terms upon which the Directors purchased the shares or units
were the same as the terms upon which other placees purchased shares or
units.
Item 8. Financial Information
A. Consolidated Statements and Other Financial Information
1. Exhibited hereto are audited consolidated financial statements prepared
by an independent auditor and accompanied by an audit report:
(a) prepared as at the last fiscal year-end, November 30, 1999 with
comparative figures;
(b) prepared as at the fiscal year-end, November 30, 1998 with comparative
figures shown as of November 30, 1997;
(c) unaudited consolidated interim financial statements covering the period
between the last fiscal year-end, November 30, 1999, and August 31, 2000
with comparative figures for the same 9 month period ending August 31,
1999.
2. The Company does not have any sales and accordingly the financial
statements show no sales revenues.
3. Demands have been made on the Company by Solucorp Industries Ltd. for the
payment of $604,243 - plus interest and costs, as disclosed in Item 4.A.5. The
creditor has threatened to commence legal action against the Company to collect
Page 18
the said amount but no action has yet been commenced. The Company intends to
dispute the claim with a counter-claim that the creditor has caused substantial
actionable damage to the Company. It is not possible at this date to quantify
the potential liability of the Company under this claim. If the claim is
proceeded with, it can be expected to have a significant negative effect on the
Company's financial position.
The Company is not aware of any other legal, arbitration or governmental claims
or proceedings existing of threatened.
4. The Company does not have a dividend policy.
B. Significant Changes
No significant changes have occurred since the various dates of the financial
statements which are exhibited.
Item 9. The Offer and Listing
The Company is not proposing any offering of its securities. This Statement is
not filed or issued with respect to any proposed offering or listing of its
securities, or other distribution of its securities.
Item 10. Additional Information
A. Share capital
1. The authorized capital of the Company consists of 100,000,000 common
voting shares without par value. As at the close of business October 31,
2000 there were 9,148,091 shares issued - all of which were issued as fully
paid shares. Each share has attached to it one non-cumulative vote. The
authorized capital of the Company was increased from 20,000,000 voting
common shares to 100,000,000 voting common shares pursuant to a Special
Resolution passed by the shareholders of the Company June 7, 2000;
2. Neither the Company nor CIWM hold any shares of the Company;
3. As at the close of business October 31, 2000 there were share purchase
warrants and options (including those held by Directors as disclosed in
Item 6.B above) outstanding pursuant to which the holders will be entitled
to purchase the following numbers of shares at the following prices on or
before the following dates:
- --------------------------------------------------------------------------------
Number of shares issuable
upon exercise of warrants Warrant exercise
and options price per share Expiry dates
- --------------------------------------------------------------------------------
243,000 - warrants $0.30 Various, November 2000
- --------------------------------------------------------------------------------
472,500 - warrants $1.20 January 24, 2001
- --------------------------------------------------------------------------------
195,000 - options $0.90 June 12, 2005
- --------------------------------------------------------------------------------
224,500 - options $0.56 February 14, 2005
- --------------------------------------------------------------------------------
Page 19
- --------------------------------------------------------------------------------
175,500 - options $0.40 May 4, 2003
- --------------------------------------------------------------------------------
100,000 - options $0.40 March 9, 2002
- --------------------------------------------------------------------------------
63,500 - options $0.40 August 7, 2002
- --------------------------------------------------------------------------------
45,000 share purchase warrants are held by four stock brokerage firms which are
members of the Exchange exercisable on or before July 25, 2001, each warrant
entitling the holder to purchase for a price of $1.00 one Unit. Each Unit will
consist of 1 share of the Company and a "B" share purchase warrant which will
entitle the purchase of a further 1 share of the Company exercisable at $1.25
per share on or before July 24, 2001, or 6 months after the date of the issuance
of the "B" warrant.
B. Memorandum and articles of association
1. The Company was incorporated in British Columbia, Canada, under Certificate
of Incorporation number 275063 March 2, 1994. The Company does not have
any stated "objects" or "purposes" as such are not required by the
corporate laws of the Province of British Columbia. Rather, the Company
is, by such corporate laws, entitled to carry on any activities whatsoever
which are not specifically precluded by other statutory provisions of the
Province of British Columbia.
2. The powers and functioning of the Directors are set forth in the Articles
of the Company which were adopted and filed as of the date of its
incorporation. They provide:
(a) subject to the obligation of a Director to disclose his potential
interest in a proposal, arrangement or contract being considered by the
Company, a Director may vote with respect to such matter in certain
instances and in certain instances shall not vote;
(b) the Directors may, in the absence of an independent quorum, vote
compensation to themselves;
(c) there are no limitations on the exercise by the Directors of the
Company's borrowing powers;
(d) there are no provisions for the retirement or non-retirement of
Directors under an age limit;
(e) there is no requirement for a Director to hold any shares in the
Company.
3. As all of the Company's authorized and issued shares are of one class
there are no special rights or restrictions of any nature or kind attached
to any of the shares.
4. To alter the rights of holders of issued shares of the Company such
alteration must be approved by the majority vote of 75% of the issued
shares of the Company attending and voting, and in a separate meeting by a
75% majority of the shares that are the subject of the proposed alterations
attending and voting at the meeting.
Page 20
5. Annual General Meetings are called and scheduled upon decision by the Board
of Directors. The Directors may convene an extraordinary general meeting
of the shareholders. The holders of not less than 5% of the issued shares
of the Company may requisition an extraordinary meeting of the
shareholders. All meetings of the shareholders may be attended by
registered shareholders or persons who hold powers of attorney or proxies
given to them by registered shareholders.
6. There are no limitations prohibiting shares being held by non-residents,
foreigners or any other group.
7. There are no provisions in the Company's Articles or charter documents that
would have an effect of delaying, deferring or preventing a change in the
control of the Company, or that would operate with respect to any proposed
merger, acquisition or corporate restructuring of the Company.
8. There are no bylaw provisions requiring share ownership to be disclosed.
The securities laws of the Province of British Columbia require disclosure
of shareholdings by insiders who are generally directors, officers,
employees or others holding more than 10% of the issued shares of the
company and their affiliates.
9. There are no provisions in the Company's Memorandum or Articles governing
changes in the Company's capital which are more stringent than required by
law.
C. Material contracts
The only material contract which the Company has entered into, and which is not
in the ordinary course of its business within the past 2 years, is the agreement
dated March 31, 2000 described in Item 4.A.3 to purchase 100% of the issued
shares of PWS.
D. Exchange controls
There are no Canadian laws, decrees, regulations or exchange controls which
would affect the import or export of capital or the availability of cash for use
by the Company, nor the remittance of dividends, interest or other payments to
non-resident holders of the Company's securities.
E. Taxation
The Company is, by the taxation laws of Canada, obliged to withhold potential
tax at source with respect to payments made to persons or companies which are
not residents of Canada and which would otherwise be taxable if received by
Canadian resident taxpayers. Canada has treaties with respect to such taxation
with various other countries including the United States.
F. Dividends and paying agents
The Company has no dividend payment policies nor dividend paying agents.
Page 21
G. Documents on display
Any of the documents referred to above can be viewed at the Company's Registered
Office, which is located at Suite 1710, 1177 West Hastings Street, Vancouver,
B.C., Canada. All of the documents referred to above are in English.
Item 11. Quantitative and Qualitative Disclosures About Market Risk
(a) As the Company is only still in a "start-up" mode and has undertaken no
business activities or the sale of its products or services, it is not in
a position to do any quantitative analysis of either general risk factors
applicable to it or risk factors applicable to its potential markets.
(b) The Company has identified risk factors that are applicable to it and
CIWM, which are described in Item 3.A.D above.
Item 12. Description of Securities Other than Equity Securities
The Company is not, by this Statement, registering any debt securities or other
securities - other than its voting common shares.
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
A. Neither the Company nor its subsidiary, CIWM, have committed any default in
the payment of any principal, interest, sinking or purchase fund
installment, or any other indebtedness. Reference is made, however, to the
claim against the Company referred to in Item 4.A.5 - which the Company
does not consider itself to be in default under and which the Company will
dispute and file a counter-claim with respect to, if the creditor attempts
to enforce the alleged indebtedness.
B. As the Company has never declared any dividends it is not in arrears with
respect to the payment of dividends, nor is it in any deficiency with
respect to any rights or obligations outstanding with respect to its issued
shares.
Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds
Nil
Item 15. [Reserved]
Item 16. [Reserved]
Page 22
PART III
Item 17. Financial Statements
The financial statements of the Company which are furnished and attached hereto
are prepared according to Canadian Generally Accepted Accounting Principles and
in the Accountant's Report attached thereto, and in the Notes thereto, reference
is made to the material variations in accounting principles, practices and
methods used in preparing financial statements pursuant to Canadian Generally
Accepted Accounting Principles in comparison to United States Generally Accepted
Accounting Principles.
Item 18. Financial Statements
Not applicable
Item 19. Financial Statements and Exhibits
Index of Exhibits attached: - Note that Exhibits 1 and 4-A, which are not
available electronically, were filed in hard copy with the Company's 20-F
Registration Statement filing which it made October 4, 2000 and withdrew
effective November 27, 2000. They are accordingly not attached.
- --------------------------------------------------------------------------------
Exhibit 1 - Articles of the Company; Certificate of Name Change issued
September 10, 1993; Special Resolution dated June 7, 2000 with
attached amended Memorandum
- --------------------------------------------------------------------------------
Exhibit 4-A - Funding Agreement dated September 5, 1995 between the Company,
Cortina and Solucorp Industries Ltd., and Amendments thereto
dated October 20, 1995, January 12, 1996, and October 15, 1996 -
referred to in Item 1.C.
- --------------------------------------------------------------------------------
Exhibit 4-B - First Amended and Restated Business Lease between The Cortina
Band of Wintun Indians and Cortina Integrated Waste Management,
Inc., dated October 18, 2000.
- --------------------------------------------------------------------------------
Exhibit 4-C - First Amended and Restated Environmental Certification and
Indemnification dated October 18, 2000 between The Cortina Band
of Wintun Indians and Cortina Integrated Waste Management, Inc.
- --------------------------------------------------------------------------------
Exhibit 4-D - Agreement dated March 31, 2000 between the Company and the
owners of Pacific Waste Services, Inc. - referred to in Item
1.B.
- --------------------------------------------------------------------------------
Exhibit 4-E - Specimen Share Purchase Option Agreement - being between the
Company and David B. Atkinson dated February 15, 2000
- --------------------------------------------------------------------------------
Exhibit 8 - List of subsidiaries of the Company
- --------------------------------------------------------------------------------
EARTHWORKS INDUSTRIES INC.
(A Company in the Development Stage)
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
YEARS ENDED NOVEMBER 30, 1999, 1998, and 1997
EARTHWORKS INDUSTRIES INC.
(A Company in the Development Stage)
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
YEARS ENDED NOVEMBER 30, 1999, 1998, and 1997
AUDITORS' REPORT AND COMMENTS BY AUDITORS
FOR U.S. READERS ON CANADA - U.S. REPORTING CONFLICT
CONSOLIDATED BALANCE SHEETS Exhibit A
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE Exhibit B
CONSOLIDATED STATEMENTS OF CASH FLOWS Exhibit C
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Exhibit D
CONSOLIDATED SCHEDULES OF ADMINISTRATION COSTS Schedule I
CONSOLIDATED SCHEDULES OF DEFERRED LANDFILL PROJECT COSTS Schedule II
CONSOLIDATED SCHEDULES OF DEFERRED POWER PROJECT COSTS Schedule III
CONSOLIDATED SCHEDULES OF DEFERRED EXPLORATION
EXPENDITURES Schedule IV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AUDITORS' REPORT
To the Shareholders of Earthworks Industries Inc.
(a Company in the development stage)
- -------------------------------------------------
We have audited the consolidated balance sheets of Earthworks Industries Inc. as
at November 30, 1999 and November 30, 1998, the consolidated statements of
operations and deficit accumulated during the development stage, the
consolidated statements of cash flows, the consolidated statements of
shareholders' equity, the consolidated schedules of administration costs,
deferred landfill project costs, deferred power project costs and deferred
exploration expenditures for the years ended November 30, 1999, November 30,
1998, and November 30, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at November 30, 1999
and November 30, 1998, and the results of its operations and its cash flows for
the years ended November 30, 1999, November 30, 1998, and November 30, 1997, in
accordance with generally accepted accounting principles. As required by the
Company Act of the Province of British Columbia, we report that, in our opinion,
these principles have been applied on a consistent basis.
/s/ Jones, Richards & Company
CERTIFIED GENERAL ACCOUNTANTS
Vancouver, British Columbia.
March 23, 2000
COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA - U.S. REPORTING CONFLICT
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the consolidated
financial statements are affected by significant uncertainties, related to
continuing operations, such as those referred to in the attached consolidated
balance sheets as to November 30, 1999 and November 30, 1998, and as described
in Note 1 to the consolidated financial statements. Our report to the
shareholders dated March 23, 2000 is expressed in accordance with Canadian
reporting standards which do not permit a reference to such uncertainties in the
auditors' report when the uncertainties are adequately disclosed in the
consolidated financial statements.
/s/ Jones, Richards & Company
CERTIFIED GENERAL ACCOUNTANTS
Vancouver, British Columbia.
March 23, 2000
Exhibit A
EARTHWORKS INDUSTRIES INC.
(A Company in the Development Stage)
CONSOLIDATED BALANCE SHEETS
(Expressed in Canadian Dollars)
November 30,
------------------------
1999 1998
------------------------
ASSETS
------
Current Assets
- --------------
Cash $ 1,620 $ 552
Cash in trust 6,989 5,010
Accounts receivable 12,408 13,572
Due from related parties - 216
Prepaid expenses 4,305 672
Share subscription receivable (Note 12e) 6,000 87,630
------------------------
31,322 107,652
Capital Assets (Notes 2e and 4) 4,491 5,912
Cortina Landfill Project (Notes 2b and 5) 2,252,189 1,894,915
Other Assets:
Incorporation costs 700 700
Royalty and Marketing Agreement (Notes 2d and 6) 30,000 32,000
Deposits 1,679 1,679
------------------------
$2,320,381 $2,042,858
========================
LIABILITIES
-----------
Current Liabilities
Accounts payable and accrued liabilities $ 215,769 $ 288,290
Due to related parties 24,553 21,000
------------------------
240,322 309,290
Convertible Loan Payable (Note 7) 604,243 499,482
Long-Term Account Payable (Note 8) 378,508 298,756
Private Placement Advances (Note 12a) 136,949 -
------------------------
1,360,022 1,107,528
------------------------
SHAREHOLDERS' EQUITY
--------------------
Share Capital (Note 9)
Authorized: 20,000,000 common shares
without par value
Issued and outstanding:
7,062,091 common shares - 1999 5,279,516 -
6,246,640 common shares - 1998 - 4,986,546
Deficit Accumulated During the
Development Stage (4,319,157) (4,051,216)
------------------------
960,359 935,330
------------------------
$2,320,381 $2,042,858
========================
Approved on Behalf of the Board:
/s/ David B. Atkinson /s/ Deirdre Lydon
- ---------------------------------- ----------------------------------
Director Director
The accompanying notes are an integral part of these financial statements.
Exhibit B
EARTHWORKS INDUSTRIES INC.
(A Company in the Development Stage)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
(Expressed in Canadian Dollars)
Year Ended November 30,
------------------------------------------------------------------
Inception to 1999 1998 1997
November 30,
1999
---------------------------------------------------------------------------------------
TOTAL ADMINISTRATION COSTS $ 3,336,171 $ 342,908 $ 357,801 $ 343,765
INCURRED DURING THE YEAR (Schedule I)
OTHER ITEMS:
Royalty revenue, net of amortized
Royalty and Marketing Agreement
cost ($2,000) (98,275) (32,803) (27,421) (21,058)
Consulting revenue (46,000) - - -
Gain on debt settlement (14,520) - (7,645) -
Interest and miscellaneous income (10,833) (8,206) (5) (1,510)
Gain on sale of capital assets (8,723) - - -
Bad debts (recovery) 6,846 - 8,161 (1,315)
Write-off of investment in
Bewilder Games 7,750 - - -
Loss (Gain) on conversion of
foreign currencies 55,310 (38,458) 51,097 35,430
Write-off advances regarding
Cortina Project 60,000 - - -
Loss on write-off of investments 63,300 - - -
Landfill project feasibility costs 233,925 - 88,434 92,786
Write-down and write-off of
deferred CPC Cascade Power 288,616 - 1 288,615
costs
Write-off of capitalized costs
related to the abandoned
mineral properties 376,927 - - -
---------------------------------------------------------------------------------------
LOSS BEFORE DISCONTINUED OPERATIONS 4,250,494 263,441 470,423 736,713
Loss from discontinued operations
(Note 3b) 12,269 - 6,315 5,954
Loss on disposal of CPC Cascade
Power Corporation (Note 3b) 3,126 - 3,126 -
---------------------------------------------------------------------------------------
NET LOSS FOR THE YEAR $ 4,265,889 $ 263,441 $ 479,864 $ 742,667
=======================================================================================
Basic Loss per Share $ - $ (0.04) $ (0.88) $ (0.15)
=======================================================================================
Weighted Average Shares Outstanding - 6,841,823 5,693,752 4,796,206
=======================================================================================
Increase in Deficit $ (4,265,889) $ (263,441) $ (479,864) $ (742,667)
Deficit at Beginning of Year - (4,051,216) (3,571,352) (2,828,685)
Share Issue Costs (53,268) (4,500) - -
---------------------------------------------------------------------------------------
$ (4,319,157) $ (4,319,157) $ (4,051,216) $ (3,571,352)
=======================================================================================
The accompanying notes are an integral part of these financial statements.
Exhibit C
EARTHWORKS INDUSTRIES INC.
(A Company in the Development Stage)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian Dollars)
Year Ended November 30,
------------------------------------------------------------------
Inception to 1999 1998 1997
November 30,
1999
---------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net loss for the year $ (4,265,889) $ (263,441) $ (479,864) $ (742,667)
Adjustments:
Amortization 27,520 1,421 1,862 3,434
Amortized royalty and
marketing agreement cost 10,000 2,000 2,000 2,000
Gain on sale of capital assets (8,723) - - -
Write-off of investment in
Bewilder Games 7,750 - - -
Loss (gain) on conversion
of foreign currencies 55,310 (38,458) 51,097 35,430
Loss on write-off of
investments 63,300 - - -
Write-down and write-off of
deferred CPC Cascade
Power Project costs 288,616 - 1 288,615
Write-off of costs related
to abandoned mineral
properties 376,927 - - -
Loss on disposal of CPC
Cascade Power Corporation 3,098 - 3,098 -
Interest on convertible loan
payable 299,531 81,781 113,710 56,116
---------------------------------------------------------------------------------------
(3,142,560) (216,697) (308,096) (357,072)
Increase (Decrease) in non-cash
working capital items 1,470,686 113,629 352,462 (4,034)
---------------------------------------------------------------------------------------
(1,671,874) (103,068) 44,366 (361,106)
---------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Issue of share capital for cash 3,738,171 185,250 164,251 162,800
Proceeds on sale of mineral
property for cash 20,000 - - -
Proceeds on sale of capital assets 30,000 - - -
Disposal of CPC Cascade Power
Corporation (75) - (75) -
Private placement advances 136,949 136,949 - 282,060
Convertible loan payable 304,712 22,980 (15,588) 15,588
Long term account payable 311,235 42,867 102,895 -
---------------------------------------------------------------------------------------
4,540,992 388,046 251,483 460,448
---------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Acquisition cost of mineral
properties (133,000) - - -
Deferred exploration and
development costs (88,927) - - -
Investment in Bewilder Games Inc. (7,750) - - -
Acquisition cost of capital assets (56,311) - (336) (2,138)
Incorporation costs (700) - - -
Investment in ESM Management
(Canada) Ltd. (43,300) - - -
Investment in Cortina Project (34,210) - - -
Cortina Landfill Project
deferred costs (2,150,706) (320,389) (263,715) (53,261)
CPC Cascade Power Project
deferred costs (288,616) - - -
Deposits (1,679) - - 9,460
---------------------------------------------------------------------------------------
(2,805,199) (320,389) (264,051) (45,939)
---------------------------------------------------------------------------------------
Gain (Loss) on conversion of
foreign currencies (55,310) 38,458 (51,097) (35,430)
---------------------------------------------------------------------------------------
Increase (Decrease) in Cash 8,609 3,047 (19,299) 17,973
Cash at Beginning of Year - 5,562 24,861 6,888
---------------------------------------------------------------------------------------
Cash at End of Year $ 8,609 $ 8,609 $ 5,562 $ 24,861
=======================================================================================
The accompanying notes are an integral part of these financial statements.
Exhibit D
EARTHWORKS INDUSTRIES INC.
(A Company in the Development Stage)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Expressed in Canadian Dollars)
Issued Share Capital Total
----------------------------
Retained Shareholders'
Number of Amount Earnings Equity
Shares $ (Deficit) (Deficiency)
----------------------------- ---------------------------------
Balance at November 30, 1996 4,706,289 $ 3,986,917 $(2,828,685) $ 1,158,232
----------------------------- ---------------------------------
Additions During the Year:
- Exercise of stock options at
$1.40 per share 57,500 80,500 - 80,500
- Exercise of stock options at
$0.78 per share 35,000 27,300 - 27,300
- Exercise of share purchase
warrants at $1.25 per share 44,000 55,000 - 55,000
- Increase in deficit - - (742,667) (742,667)
----------------------------- ---------------------------------
136,500 162,800 (742,667) (579,867)
----------------------------- ---------------------------------
Balance at November 30, 1997 4,842,789 4,149,717 (3,571,352) 578,365
----------------------------- ---------------------------------
Additions During the Year:
- Private placement financing at
$0.60 per unit (unit - one share and
one warrant), net of share issue
costs of $66,059 1,000,000 533,941 - 533,941
- Settlement of debt at $0.75 per share 403,851 302,888 - 302,888
- Increase in deficit - - (479,864) (479,864)
----------------------------- ---------------------------------
1,403,851 836,829 (479,864) 356,965
----------------------------- ---------------------------------
Balance at November 30, 1998 6,246,640 4,986,546 (4,051,216) 935,330
----------------------------- ---------------------------------
Additions During the Year:
- Private placement financing at
$0.30 per unit (unit - one share
and one warrant), net of share
issue costs of $3,750 400,000 116,250 - 116,250
- Finders fee at $0.30 per share 15,000 4,500 - 4,500
- Settlement of debt at $0.40
per share 321,500 128,600 - 128,600
- Settlement of debt at $0.75
per share 75,000 56,250 - 56,250
- Private placement financing at
$0.50 per share 150,000 75,000 - 75,000
- Cancel shares previously issued
at $0.60 per share (146,049) (87,630) - (87,630)
- Share issue costs - - (4,500) (4,500)
- Increase in deficit - - (263,441) (263,441)
----------------------------- ---------------------------------
815,451 292,970 (267,941) 25,029
----------------------------- ---------------------------------
Balance at November 30, 1999 7,062,091 $ 5,279,516 $(4,319,157) $ 960,359
==================================================================
The accompanying notes are an integral part of these financial statements.
Schedule I
EARTHWORKS INDUSTRIES INC.
(A Company in the Development Stage)
CONSOLIDATED SCHEDULES OF ADMINISTRATION COSTS
(Expressed in Canadian Dollars)
Year Ended November 30,
------------------------------------------------------------------
Inception to 1999 1998 1997
November 30,
1999
---------------------------------------------------------------------------------------
Amortization $ 26,287 $ 1,421 $ 1,862 $ 2,201
Bad debts 281,515 - - -
Bank charges and interest 335,688 92,068 65,703 97,035
Consulting 831,991 55,010 85,554 71,000
Insurance 12,349 1,788 1,788 1,788
Licenses, taxes and fees 9,224 1,208 1,179 1,117
Management fees 498,466 68,948 68,843 36,000
Office and administration 159,651 8,938 10,299 10,208
Printing and graphics 39,055 1,287 1,426 1,410
Professional fees 557,349 48,212 40,253 42,792
Promotion 44,792 504 810 1,859
Rent 194,808 34,619 46,780 33,828
Stock exchange fees 69,567 5,080 5,208 6,040
Telephone 116,216 13,513 14,930 26,766
Transfer agent 65,351 6,569 4,801 6,351
Travel 93,862 3,743 8,365 5,370
---------------------------------------------------------------------------------------
TOTAL ADMINISTRATION COSTS INCURRED $ 3,336,171 $ 342,908 $ 357,801 $ 343,765
DURING THE YEAR
=======================================================================================
The accompanying notes are an integral part of these financial statements.
Schedule II
EARTHWORKS INDUSTRIES INC.
(A Company in the Development Stage)
CONSOLIDATED SCHEDULES OF DEFERRED LANDFILL PROJECT COSTS
(Expressed in Canadian Dollars)
Year Ended November 30,
------------------------------------------------------------------
Inception to 1999 1998 1997
November 30,
1999
---------------------------------------------------------------------------------------
Deferred Landfill Project Costs:
Consulting $ 745,795 $ 164,625 $ 232,139 $ 94,658
Drilling 220,765 - - -
Environmental study 39,071 - - -
Geologist 187,456 - - -
Legal 252,967 46,742 39,913 854
Mapping and surveys 14,191 - - -
Marketing study 101,297 - - -
Project engineering 720,920 96,928 100,365 87,445
Public relations 76,148 41,628 - 197
Seismic logistics 21,731 - - -
Travel 71,563 7,351 10,120 7,774
---------------------------------------------------------------------------------------
Total costs incurred during the year 2,451,904 357,274 382,537 190,928
Balance of costs at beginning of year - 1,860,705 1,566,602 1,468,460
Landfill project feasibility costs (233,925) - (88,434) (92,786)
---------------------------------------------------------------------------------------
Balance of costs at end of year $ 2,217,979 $ 2,217,979 $ 1,860,705 $ 1,566,602
=======================================================================================
The accompanying notes are an integral part of these financial statements.
Schedule III
EARTHWORKS INDUSTRIES INC.
(A Company in the Development Stage)
CONSOLIDATED SCHEDULES OF DEFERRED POWER PROJECT COSTS
(Expressed in Canadian Dollars)
Year Ended
------------------------------------------------------------------
Inception to 1999 1998 1997
November 30,
1999
---------------------------------------------------------------------------------------
Deferred Power Project Costs:
Consulting $ 202,500 $ - $ - $ -
Staking costs 2,437 - - -
Travel 1,911 - - -
---------------------------------------------------------------------------------------
Total costs incurred during the year 206,848 - - -
Expense recovery (3,232) - - -
Cost of feasibility studies acquired 85,000 - - -
Balance of costs at beginning of year - - 1 288,616
Write-down of costs (288,616) - (1) (288,615)
---------------------------------------------------------------------------------------
Balance of costs at end of year $ - $ - $ - $ 1
=======================================================================================
The accompanying notes are an integral part of these financial statements.
Schedule IV
EARTHWORKS INDUSTRIES INC.
(A Company in the Development Stage)
CONSOLIDATED SCHEDULES OF DEFERRED EXPLORATION EXPENDITURES
(Expressed in Canadian Dollars)
Year Ended
------------------------------------------------------------------
Inception to 1999 1998 1997
November 30,
1999
---------------------------------------------------------------------------------------
Deferred Exploration Expenditures:
Accommodation and meals $ 393 $ - $ - $ -
Assays 4,817 - - -
Drafting 525 - - -
Engineer and supervision 11,810 - - -
Equipment rental 2,910 - - -
Geologist and staking costs 11,419 - - -
Gridlines and sampling 13,500 - - -
Labour 1,608 - - -
Magnetometer survey 3,800 - - -
Recording fees 3,986 - - -
Supplies 521 - - -
Travel 138 - - -
Trenching 33,500 - - -
---------------------------------------------------------------------------------------
Total costs incurred during the year 88,927 - - -
Balance at beginning of year - - - -
Write-off of costs related to
abandoned mineral properties (88,927) - - -
---------------------------------------------------------------------------------------
Balance at end of year $ - $ - $ - $ -
=======================================================================================
The accompanying notes are an integral part of these financial statements.
EARTHWORKS INDUSTRIES INC.
(A Company in the Development Stage)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1999
(NOVEMBER 30, 1998)
1. OPERATIONS, GOING CONCERN
Earthworks Industries Inc. (the "Company") is in the process of investigating
the environmental impact of a landfill project through its wholly-owned
subsidiary, Cortina Integrated Waste Management, Inc. These consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles with the assumption that the Company will be able to
realize its assets and discharge its liabilities in the normal course of
business rather than through a process of forced liquidation. The continued
operations of the Company and the recoverability of the amount shown for the
landfill project is dependent upon the ability of the Company to successfully
complete an environmental impact study, obtain necessary financing to complete
the development of the landfill operation and commence future profitable
operations. The Company had the following deficits and working capital
deficiencies as at the following dates:
Working capital
Date Deficit (deficiency)
-------------------------------------------------------------------------
November 30, 1999 $ 4,319,157 $ (209,000)
November 30, 1998 $ 4,051,216 $ (201,638)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
---------------------
The consolidated financial statements have been prepared in accordance with
accounting principles and practices generally accepted in Canada, and except
as disclosed in Note 13 below, are also in accordance in all material
respects with those in the United States. For United States accounting and
reporting purposes, the Company is considered to be in the development stage
and the accompanying consolidated financial statements are those of an
development stage enterprise.
b. Deferred Costs
--------------
The Company is in the environmental impact statement stage with respect to
its investment in a landfill project and accordingly follows the practice of
capitalizing all costs related to the project, until such time as the
project is put into commercial use, sold or abandoned. If commercial use
commences, the capitalized costs will be amortized over the projects
estimated years of useful life. If the project is abandoned, the related
capitalized costs will be written-off to deficit.
c. Values
------
The amounts shown for the Cortina Landfill Project represent costs to date
and are not intended to reflect present or future values.
Page 2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
d. Royalty and Marketing Agreement
-------------------------------
The Royalty and Marketing Agreement, described in Note 6 below, represents
the right of the Company to receive royalties from a contaminated materials
remediation process and is valued at the lower of cost or estimated
recoverable amount. The related acquisition costs were being amortized on a
straight-line basis over their remaining life to August 15, 2014.
e. Capital Assets and Amortization
-------------------------------
Capital assets are carried at cost less accumulated amortization.
Amortization is calculated using the declining balance method at the
following annual rates:
Computer equipment 30%
Equipment and office furniture 20%
f. Translation of Foreign Currencies
---------------------------------
Foreign currencies have been translated into Canadian funds using the
temporal method, as follows:
i. Monetary items, at the rate of exchange prevailing as at the
consolidated balance sheet date.
ii. Non-monetary items, at the historical rate of exchange.
iii. Revenue and costs, at the period average within which the
transaction occurred.
g. Incentive Stock Option Plan
---------------------------
The Company has not adopted a formal incentive stock option plan, but has
granted stock options as described in Note 9 below. No compensation expense
is recognized when shares are issued or stock options are granted. Any
consideration paid by individuals on exercise of stock options or purchase
of shares is credited to share capital.
h. Financial Instruments
---------------------
The Company's consolidated financial instruments consist of cash, cash in
trust, accounts receivable, share subscriptions receivable, amounts due from
and to related parties and accounts payable and accrued liabilities. Unless
otherwise noted, it is management's opinion that the Company is not exposed
to significant interest, currency, or credit risks arising from these
consolidated financial instruments. The fair values of these consolidated
financial instruments approximate their carrying value, unless otherwise
noted.
i. Use of Estimates
----------------
The preparation of consolidated financial statements, in conformity with
generally accepted accounting principles, requires the Company's management
to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and related notes to the consolidated
financial statements. Actual results may differ from those estimates.
Page 3
3. CONSOLIDATION OF FINANCIAL STATEMENTS
a. The consolidated financial statements include the accounts of Cortina
Integrated Waste Management, Inc., a wholly-owned subsidiary incorporated
in the State of California on July 20, 1994.
b. In addition, the comparative consolidated financial statements dated to
November 30, 1998 include the accounts of CPC Cascade Power Corporation
("CPC"), a former wholly-owned subsidiary incorporated in the Province of
British Columbia on October 15, 1991, acquired by the Company effective
October 17, 1994, for the period to April 16, 1998, the effective date of
disposition.
By an Agreement dated April 16, 1998, the Company disposed of it 100%
interest in CPC for consideration of being released and discharged from
any claims, other obligations or liabilities pursuant to the original
Purchase Agreement dated September 27, 1994 (effective October 17, 1994).
At April 16, 1998, the effective date of disposition, the net assets of
CPC and the loss on disposition were as follows:
Cash $ 75
Other current assets 28
Other capital assets 3,023
--------------
3,126
Proceeds on disposition -
--------------
Loss on disposal of CPC $ 3,126
==============
The loss from discontinued operations consists of:
Bank charges $ 38
Consulting fees 4,500
Professional fees 196
Telephone 121
Travel 1,460
--------------
$ 6,315
==============
4. CAPITAL ASSETS
Accumulated 1999 Net 1998 Net
Cost Amortization Book Value Book Value
--------------------------------------------------------
Computer equipment $ 16,187 $ 14,516 $ 1,671 $ 2,387
Equipment and
office furniture 8,060 5,240 2,820 3,525
--------------------------------------------------------
$ 24,247 $ 19,756 $ 4,491 $ 5,912
========================================================
Page 4
5. CORTINA LANDFILL PROJECT
By a Memorandum of Agreement dated June 13, 1993 (amended and extended November
30, 1993, March 4, 1994, and August 23, 1994), and a Solid Waste Management
Development Agreement dated March 31, 1995 (amended October 31, 1995), the
Company completed a feasibility study for a landfill project, negotiated the
Business Lease dated October 31, 1995 (described below) and is currently in the
process of preparing an environmental impact statement for its landfill project
located on the Cortina Indian Rancheria in Colusa County, California. Total
consideration consists of:
1999 1998
------------------------------
- Cash paid to date (US$25,000) $ 34,210 $ 34,210
- Deferred project costs incurred
by the Company 2,217,979 1,860,705
------------------------------
$2,252,189 $1,894,915
==============================
By a Business Lease dated October 31, 1995 ("the lease"), with the Cortina Band
of Wintun Indians of Sacramento, California, the Company acquired lands located
within the Cortina Indian Rancheria in Colusa County, California, for the
purpose of developing and operating a sanitary landfill and a materials recovery
facility for an initial term of twenty-five (25) years (with a renewal term of
an additional twenty-five (25) years), commencing on the date the lease is
approved by the Secretary of State for the Interior ("the Secretary"), for
consideration of:
(i) US$10,000 payable within 21 days of the lease being approved by the
Secretary.
(ii) US$15,000 per month commencing the first month following the month in
which commercial production commences, with monthly payments being
indexed on an annual basis according to increases in the Cost of Living
Index as published by the United States Government.
(iii) Fees equal to 3% of gross revenue on the first 150,000 tonnes of waste
received in a fiscal year, and 5% of gross revenue for waste in excess of
150,000 tonnes received in a fiscal year, to be calculated and paid
monthly.
As consideration for entering into the Memorandum of Agreement dated August 23,
1994, with the Cortina Indian Rancheria ("the Tribe") with regard to the Cortina
Landfill Project, described above, the Company agrees to pay all the Tribe's
reasonable attorney fees and costs incurred by Tribal officials and attorneys in
carrying out their obligations under this Agreement.
This Agreement and the project are subject to the approval of an environmental
impact study by the Bureau of Indian Affairs and approval of the Business Lease
by the Secretary of the Interior of the United States.
Page 5
6. ROYALTY AND MARKETING AGREEMENT
Accumulated 1999 Net 1998 Net
Cost Amortization Book Value Book Value
--------------------------------------------------------
Capitalized
acquisition costs $ 40,000 $ 10,000 $ 30,000 $ 32,000
========================================================
By a Memorandum of Understanding dated August 15, 1994 (amended March 13, 1995),
(effective August 1, 1994 through August 15, 2014), with Solucorp Industries
Ltd. ("Solucorp") and E.S.M. Industries (Canada) Inc., the Company acquired the
right to receive royalties from a contaminated materials remediation process
totalling Can$1.00 or US$1.00, as the case may be, for each tonne of
contaminated material treated in Canada or the United States using the
remediation process. In addition, the Company received the non-exclusive right
to market the process in Canada and the United States with any new Agreements
arising from such marketing efforts resulting in an additional royalty of
Can$1.00 or US$1.00 as is applicable (for a total royalty of Can$2.00 or US) for
each tonne of material processed under the new Agreements.
Total consideration for this Memorandum of Understanding consists of:
- - The parties agree to cancel all previous Agreements and the Company cancels
its right to recover $63,000 paid as part of those Agreements.
- - 50,000 shares of the Company's capital stock issued at a deemed price of
price of $0.80 per share to Solucorp on receipt of regulatory approval of
the Agreement (issued).
- - 200,000 shares of the Company's capital stock is to be issued to Solucorp,
in minimum blocks of 50,000 shares, on an earn-out basis of one (1) share
for each Can$1.00 or equivalent of royalty received. To date, none of
these shares have been issued.
Twenty-five percent (25%) of royalty revenue may be applied to reduce the
Convertible Loan Payable, as described in Note 7 below.
7. CONVERTIBLE LOAN PAYABLE
Can $ US $
----------------------- -----------------------
1999 1998 1999 1998
----------------------- -----------------------
Loan advances $ 304,712 $ 281,732 $ 238,025 $ 208,821
Accrued interest 299,531 217,750 171,770 116,935
----------------------- -----------------------
$ 604,243 $ 499,482 $ 409,795 $ 325,756
======================= =======================
The Company entered into a Convertible Loan Agreement dated September 5, 1995
(amended October 20, 1995), for the provision of a maximum US$1,000,000 funding
towards the Company's Cortina Landfill Project as described in Note 5 above.
The convertible loan, secured by a General Security Agreement dated October 12,
1995, is due October 20, 2000, bears interest at the rate of 15% per annum,
compounded semi-annually, with payment in US dollars limited to 25% of royalties
received under the Memorandum of Understanding described in Note 6 above. (To
date none of the royalties have been applied by the creditor to reduce the loan
balance.) The obligation to pay interest was to be cancelled if the loan was
converted as described below.
Page 6
7. CONVERTIBLE LOAN PAYABLE (CONT'D)
All or a portion of the outstanding principal amount could have been converted
into shares of the Company or an ownership interest in the Landfill Project on
the following basis:
a. For each amount which was advanced on or before September 20, 1996
(US$208,821), and which if converted within one (1) year of its payment
date, into shares of the Company at a price of $2.02 per share, and for each
year thereafter, measured from its payment date, the conversion price would
have escalated $0.25 per share.
For each amount which was advanced after September 26, 1996 and if converted
within one (1) year after its payment date, into shares of the Company at an
amount equal to the closing price of the Company's shares on the Canadian
Venture Exchange one (1) trading day immediately prior to the payment date.
Each year thereafter, measured from the payment date, the conversion price
would have escalated $0.25 per share.
b. Provided not less than US$400,000 was loaned, into an ownership interest in
the Landfill Project on the basis of a 1% interest for each US$40,000
loaned.
Effective November 10, 1998, the Company issued a Notice of Default to the
lender for failure to loan or advance funds to the Company on or before the
due dates required by the Convertible Loan Agreement, thereby terminating
the lender's right to advance further funds under the existing Agreement
described above.
Due to the inability of management to reasonably estimate the amount and
timing of future royalty revenues, as described in Note 6 above, no estimate
of a current portion has been made.
8. LONG-TERM ACCOUNT PAYABLE
The Company entered into a Memorandum of Understanding ("MOU") with Pacific
Waste Services Inc.("P.W.S.") (formerly James A. Wyse, Inc.), of San Ramon,
California, whereby P.W.S. has been granted an option to acquire a maximum 25%
equity interest in the Company's subsidiary, Cortina Integrated Waste
Management, Inc. ("Cortina"). The option is exercisable upon Cortina obtaining a
permit to build and operate facilities on the landfill site for total
consideration to be established at the time initial site construction is
completed. Under the terms of the MOU, P.W.S. agrees to allocate 50% of its
direct labour amounts billed to Cortina, in addition to cash advances made to
the project on behalf of Cortina, to the purchase of this equity position. To
November 30, 1999, $378,508 (US$256,703)(1998- $298,756 (US$194,845)) of amounts
owing to P.W.S. are available for the purchase of equity in Cortina. As it
cannot be established that the permit to build and operate a facility on the
landfill site will be received within the next fiscal year, this portion of
amounts owing to P.W.S. has been classified as a long-term liability.
Page 7
9. SHARE CAPITAL
The authorized share capital of the Company is 20,000,000 shares without
par value.
The Company has issued shares of its capital stock as follows:
Number of Amount
Fiscal Period Consideration Shares $
-------------------------------------------------------------------------------------------------------
1984 Cash 493,850 $ 88,940
1984 Cash (escrow) 750,000 7,500
------------------------------------
Balance Dec. 31, 1984 and Nov. 30, 1985 1,243,850 96,440
1986 Cash 485,500 133,925
------------------------------------
Balance November 30, 1986 1,729,350 230,365
1987 Cash 226,500 103,455
1987 Mineral Property 200,000 140,000
------------------------------------
Balance November 30, 1987 2,155,850 473,820
1988 Cash 706,000 134,200
1988 Mineral Property 100,000 17,000
------------------------------------
Balance November 30, 1988 2,961,850 625,020
1989 Cash 621,000 101,650
------------------------------------
Balance November 30, 1989 3,582,850 726,670
------------------------------------
1990 Share Consolidation 2.5:1 1,433,140 -
------------------------------------
Balance November 30, 1990 1,433,140 726,670
1991 Cash 1,458,767 229,600
1991 Cash (escrow) 309,375 7,734
1991 Debt 237,334 48,915
1991 Mineral Property 100,000 18,000
1991 Agency Fee 100,000 18,000
------------------------------------
Balance November 30, 1991 3,638,616 1,048,919
1992 Cash 1,113,340 282,770
1992 Subscriptions Receivable 829,280 233,873
1992 Equipment Lease 100,000 20,000
------------------------------------
Balance November 30, 1992 5,681,236 1,585,562
------------------------------------
1993 Share Consolidation 5:1 1,136,247 -
1993 Cash 96,500 85,015
------------------------------------
Balance November 30, 1993 1,232,747 1,670,577
1994 Cash 1,219,000 340,150
1994 Debt 330,340 127,745
1994 Finders Fee 115,000 31,050
------------------------------------
Balance November 30, 1994 2,897,087 2,169,522
1995 Cash 717,400 674,865
1995 Cash (escrow) 253,125 12,656
1995 Debt 97,327 107,060
1995 Investment 50,000 40,000
------------------------------------
Balance November 30, 1995 4,014,939 3,004,103
1996 Cash 527,000 653,720
1996 Debt 152,000 311,376
1996 Share Issue Costs 12,350 17,718
------------------------------------
Balance November 30, 1996 4,706,289 3,986,917
1997 Cash 136,500 162,800
------------------------------------
Balance November 30, 1997 4,842,789 4,149,717
1998 Cash 1,000,000 533,941
1998 Debt 403,851 302,888
------------------------------------
Balance November 30, 1998 6,246,640 4,986,546
1999 Cash 530,000 185,250
1999 Debt 396,500 184,850
1999 Finders Fee 15,000 4,500
1999 Subscriptions Cancelled (126,049) (81,630)
------------------------------------
Balance November 30, 1999 7,062,091 $ 5,279,516
====================================
Page 8
9. SHARE CAPITAL (CONT'D)
Stock Options:
-------------
The Company currently has no formal long-term incentive plans other than
incentive stock options granted from time to time by the Board of Directors.
A summary of the status of the Company's stock options as of November 30, 1999
and 1998, and changes during the years then ended is as follows:
1999 1998
--------------------------------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
--------------------------------------------------
Options Outstanding,
beginning of year 575,500 $0.74 400,500 $0.74
Granted - - 175,000 0.72
Exercised - - - -
Forfeited/cancelled - - - -
--------------------------------------------------
Options Outstanding,
end of year 575,500 $0.40 575,500 $0.74
==================================================
By a Directors resolution dated January 7, 1999, the exercise price of all
outstanding stock options was reduced to $0.40 per share.
The Company has outstanding stock options to acquire 575,500 shares of the
Company's capital stock as follows:
Number Exercise Price Expiry Date
-------------------------------------------------------------------------
131,500 $0.40 August 10, 2000
100,000 $0.40 March 6, 2002
169,000 $0.40 August 7, 2002
175,000 $0.40 March 5, 2004
------------
575,500
============
Warrants:
- --------
The Company has outstanding 400,000 share purchase warrants exercisable to
acquire 400,000 shares of the Company's capital stock at a price of $0.40 per
share on or before January 11, 2000 (subsequently expired).
10. REMUNERATION OF DIRECTORS AND SENIOR OFFICERS
a. Directors fees totalling $9,000 (1998 - $15,750) were incurred with a
Director for services rendered. At November 30, 1999, an amount totalling
$8,250 remains as due to related parties.
b. Consulting fees totalling $1,500 (1998 - $15,000) were incurred with a
Director for services rendered. At November 30, 1999 an amount totalling
$Nil (1998 - $10,500) remains as due to related parties.
Page 9
11. RELATED PARTY TRANSACTIONS
a. Management fees totalling $68,948 (1998 - $ 68,843) and consulting fees
totalling $12,000 (1998 - Nil) were paid to a corporation controlled by
the President of the Company. At November 30, 1999, an amount totalling
$4,264 (1998 - $216) remains as due to/from related parties for net
advances made.
b. Consulting fees totalling $9,000 (1998 -$5,250) were incurred with a
corporation controlled by a Director of the Company. At November 30, 1999
an amount totalling $7,930 (1998 - $5,250) remains as due to related
parties.
c. The Agreement dated April 16, 1998 with regard to the sale of CPC Cascade
Power Corporation, described in note 3b above, is with a Director of the
Company.
12. SUBSEQUENT EVENTS
a. The Company issued 600,000 units at a price of $0.25 per unit to complete
a private placement financing. Each unit consists of one (1) share and one
(1) non-transferable share purchase warrant exercisable to acquire one (1)
additional share at a price of $0.30 per share for one (1) year.
b. The Company issued 217,000 shares at a price of $0.40 per share for a
total consideration of $86,800 for the exercise of stock options.
c. The Company issued 288,000 shares for the exercise of share purchase
warrants as follows: 155,000 shares at a price of $0.40 per share for a
total consideration of $62,000; and 133,000 shares at a price of $0.30 per
share for a total consideration of $39,900.
d. By a Settlement and Release Agreement dated November 1, 1999, the Company
received and cancelled, effective January 5, 2000, a total of 60,000
shares of the Company's capital stock in settlement of amounts receivable
totalling $90,000, which had been previously reserved as a doubtful
account. The amount recovered is to be recorded as a reductions of share
capital and a bad debt recovery for the year ended November 30, 2000. The
shares have been returned to treasury.
e. Share subscriptions receivable totalling $6,000 were received subsequent
to the year end.
13. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
As disclosed in Note 2a, these consolidated financial statements have been
prepared in accordance with Canadian generally accepted accounting principles,
which conform in all material respects with those of the United States, except
as follows:
Page 10
13. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONT'D)
a. Escrow Shares
-------------
Three hundred and seventy-five thousand (375,000) contingently cancelable
escrow shares are excluded from the weighted average number of shares for
the calculation of earnings (loss) per share under U.S. G.A.A.P.:
CAN. G.A.A.P. U.S. G.A.A.P.
-------------------------- ---------------------------
Weighted Weighted
Average Basic Average Basic
Number of Loss Number of Loss
Shares per Shares per
Outstanding Share Outstanding Share
-------------------------- ---------------------------
November 30, 1999 6,841,823 $(0.04) 6,466,823 $(0.04)
November 30, 1998 5,693,752 $(0.08) 5,318,752 $(0.09)
November 30, 1997 4,796,206 $(0.15) 4,421,206 $(0.17)
b. Landfill Project Costs
----------------------
Under U.S. G.A.A.P., development expenditures are not capitalized and are
recorded as an expense as incurred on the Company's consolidated financial
statements of operations and deficit accumulated during the development
stage.
The application of U.S. G.A.A.P., as described above, would have the
following approximate effect on net loss, loss per share.
November 30, November 30, November 30,
1999 1998 1997
---------------------------------------------------------------------------------------------
Net loss as reported on the
consolidated statements of
operations and deficit
accumulated during the
development stage. $ (263,441) $ (470,423) $ (736,713)
Item increasing reported
net loss:
Landfill development
expenditures (357,274) (294,103) (98,142)
---------------------------------------------------------------------------------------------
Approximate net loss -
U.S. G.A.A.P. $ (620,715) $ (764,526) $ (834,855)
=============================================================================================
Weighted average shares
outstanding - U.S. G.A.A.P. 6,466,823 5,318,752 4,421,206
=============================================================================================
Approximate net loss per
share U.S. G.A.A.P. $ (0.10) $ (0.14) $ (0.19)
=============================================================================================
November 30, November 30,
1999 1998
-------------------------------------------
Total assets as reported
in the balance sheet $ 2,320,381 $ 2,042,858
Items increasing (decreasing)
reported total assets:
Cortina Landfill Projects
Costs (2,252,189) (1,894,915)
-------------------------------------------
Approximate total assets -
U.S. G.A.A.P. $ 68,192 $ 147,943
===========================================
Page 11
13. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONT'D)
November 30, November 30,
1999 1998
-------------------------------------------
Shareholders' Equity as
reported in the balance
sheet $ 960,359 $ 935,330
Items increasing (decreasing)
reported shareholders equity:
Cortina Landfill Projects
Costs (2,252,189) (1,894,915)
-------------------------------------------
Approximate shareholders'
equity (deficiency) - U.S.
G.A.A.P. $ (1,291,830) $ (959,585)
===========================================
14. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. Although the change in date has occurred, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect the entity, including
those related to customers, suppliers, or other third parties, have been fully
resolved.
Exhibit 4-B
FIRST AMENDED AND RESTATED
BUSINESS LEASE BETWEEN
CORTINA BAND OF WINTUN INDIANS AND CORTINA INTEGRATED
WASTE MANAGEMENT, INC.
Page i
TABLE OF CONTENTS
Page
RECITALS 1
- --------
TERMS AND CONDITIONS 2
1. Definitions. 2
2. Purpose; Obligation; Lease Relationship. 11
3. Development Expenses. 15
4. Initial Term. 15
5. Renewal Term. 16
6. Reasonableness; Good Faith. 16
7. Rentals and Royalties. 16
8. Accounting and Audits. 18
9. Representations and Warranties. 19
10. Performance Bonds. 25
11. Improvements. 26
12. Construction; Maintenance. 27
13. Delay or Omission. 27
14. Post-Closure Maintenance. 27
15. Trust Fund. 28
16. Companies Bonding and Insuring. 28
17. CIWMI's Remedial Action. 29
18. Assignment; Transfer; Encumbrance. 31
19. Agreements for Roads and Utility Services. 32
20. Taxes; Assessments; Utility Charges. 33
21. The Band's Right to Perform CIWMI's Covenants. 34
22. Time of the essence. 35
23. Default, Cancellation of Lease. 35
24. Prohibition Against Hazardous Waste; Indemnification. 38
25. Insurance. 42
26. Holding Over. 44
27. Termination of Federal Trust. 44
28. CIWMI's Obligations to the Band and the United States. 44
29. Best Efforts. 45
30. Payments and Notices. 45
31. Inspection and Testing. 45
32. Indian Preference. 46
33. Interest of Member of Congress. 46
34. Tax Immunity. 46
35. Currency. 47
36. Validity. 47
37. Non-Responsibility Notices. 47
Page ii
38. Severability. 47
39. Construction; Contractu Situ. 47
40. Entire Agreement; Modification. 48
41. Headings. 48
42. Gender, Number. 48
43. Arbitration. 48
44. Limited Waiver of Immunity. 49
45. Attorney's Fees. 49
46. Binding Provisions. 49
FIRST AMENDED AND RESTATED BUSINESS LEASE
THIS FIRST AMENDED AND RESTATED BUSINESS LEASE ("Lease") is made and
entered into this day of , 2000 by and between THE CORTINA
-------- ---------------
BAND OF WINTUN INDIANS ("Band"), formally known as the Cortina Indian Rancheria
of Wintun Indians of California,, whose address is 1275 Halyard Dr. West, Suite
100, Sacramento, CA 95691, and CORTINA INTEGRATED WASTE MANAGEMENT, INC.
("CIWMI"), a California corporation and wholly owned subsidiary of Earthworks
Industries, Inc. of Vancouver, Canada, which expression shall include its
assigns and successors in interest, whose address is 12925 Alcosta Boulevard,
Suite 1, San Ramon, California, 94583, under the provisions of the Act of August
9, 1955, 69 Stat. 539, codified as amended at 25 U.S.C. 415, and as supplemented
by Part 162 - Leasing and Permitting, of the Code of Federal Regulations
("CFR"), Title 25, and any amendments thereto relative to business leases on
trust or restricted lands.
RECITALS
--------
WHEREAS the Band, a federally recognized Indian tribal government, wishes
to have developed on its lands, subject to the exclusive jurisdiction of the
Band, within the Cortina Indian Rancheria ("Rancheria") an integrated solid
waste management facility ("Facility") consisting of a municipal solid waste
landfill ("Landfill"), a materials recovery facility ("MRF"), a composting
facility, and Petroleum-Contaminated Soil Bioremediation project;
WHEREAS a Facility is to be constructed and operated on certain lands
leased by the Band to the CIWMI, and CIWMI wishes and intends to act as
developer and operator of the Facility pursuant hereto;
WHEREAS, on March 31, 1995, CIWMI and the Band executed an Environmental
Certification and Indemnification Agreement as consideration for the development
and execution of a Business Lease;
Page 2
WHEREAS, on October 31, 1995, CIWMI and the Band executed a Business Lease
for properties described therein for construction, operation, maintenance,
closure, and post-closure maintenance of the Facility;
WHEREAS, the CIWMI and the Band have discovered that there are problems
with the Environmental Certification and Indemnification Agreement and the
Business Lease as drafted, and changes need to be made to ensure that the plans
and intent of CIWMI and the Band may effectively carried out; and
WHEREAS both CIWMI and the Band believe that it is in their best interests
to execute contemporaneously a First Amended and Restated Environmental
Certification and Indemnification and a First Amended and Restated Business
Lease;
NOW, THEREFORE, in consideration of the Recitals hereinabove mentioned and
the terms, conditions, covenants, and warranties hereinafter mentioned to be
kept, honored, and performed by the parties, it is hereby agreed as follows:
TERMS AND CONDITIONS
--------------------
1. Definitions.
-----------
A. "Agreements" means this First Amended and Restated Business Lease and
the First Amended and Restated Environmental Certification and Indemnification.
B. "Band" means the Cortina Band of Wintun Indians.
C. "CIWMI" means Cortina Integrated Waste Management, Inc., a California
corporation and wholly owned subsidiary of Earthworks Industries, Inc. of
Vancouver, Canada.
Page 3
D. "Closure" means the termination of receiving, handling, recycling,
treatment, composting, or disposal of Solid Waste at a Solid Waste facility, and
such operations as may be necessary to prepare the facility for post-closure
maintenance.
E. "Composting facility" means facility for the biological acceleration of
natural decomposition of organic waste.
F. "Commencement Date" means the date on which this Lease is approved by
the Secretary.
G. "De Minimis Amounts" means, with respect to any given level of
Hazardous Waste, such level or quantity of Hazardous Waste (in any form or
combination of forms) that (1) does not constitute a violation of any
Environmental Requirements and (2) is customarily employed in, or associated
with, commercial, retail, and/or residential facilities in California.
H. "Environmental Damages" means all claims, causes of action, proceeding,
complaints, judgments, damages, losses, penalties, fines, liabilities (including
strict liability), encumbrances, liens, and costs and expenses of investigation
and defense of any claim (whether or not such claim is ultimately defeated), and
settlement of any claim or judgement, of whatever kind or nature, contingent or
otherwise, matured or unmatured, foreseeable or unforeseeable, including but not
limited to reasonable attorneys' fees and disbursements and consultants' and
experts' fees, any of which arise out of or are incurred at any time as a result
of the presence, release, treatment, discharge, or disposal of Hazardous Waste
upon, from, about, or beneath, on, or to the Property, or migrating or
threatening to migrate to or from the Property, or as a result of the existence
of a violation of any Environmental Requirements pertaining to the Property or
adjacent property, and including but not limited to:
(1) The resultant actual and foreseeable consequential damages for
personal injury, or injury to property or natural resources occurring upon or
off the Property, including but not limited to lost profits, the cost of
Page 4
demolition and rebuilding of any improvements on real property, and interest and
penalties and including but not limited to any diminution in the value of the
Property, and damages for the loss of business or restriction on the use of or
adverse impact on the marketing of rentable or useable space or any amenity of
the Property;
(2) Reasonable fees incurred for the services of attorneys, consultants,
contractors, experts, laboratories, and all other costs incurred in connection
with the investigation, on-site and off-site cleanup, removal, or remediation of
such Hazardous Waste or violation of any Environmental Requirements; including
but not limited to the preparation of any feasibility studies or reports or the
performance of any cleanup, remediation, removal, response, abatement,
containment, closure, restoration, or monitoring work required by any federal,
state, tribal, or local governmental agency or political subdivision, or
reasonably necessary to make full economic use, in a manner consistent with its
current planned use, of the Property or any other property to which such
Hazardous Wastes are migrating or threatening to migrate, or otherwise expended
in connection with such conditions; including but not limited to any attorneys'
fees, costs, expert witness fees, and expenses incurred in enforcing this
Indemnification or collecting any sums due hereunder; and including but not
limited to any and all costs of remediation as may be required or necessary to
bring the Property into full compliance with all Environmental Requirements, as
such compliance may be defined or mandated by any federal, state, tribal, or
local governmental agency or political subdivision;
(3) Liability to any third person or government agency to indemnify such
person or agency for costs incurred in connection with such presence, release,
treatment, or disposal of Hazardous Waste or the violation of any Environmental
Requirements; and
(4) Any and all Remedial Work.
I. "Environmental Requirements" means all applicable present and future
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises, and similar guidance
or requirements, of all governmental agencies, departments, commissions, boards,
Page 5
bureaus, authorities, or instrumentalities of the United States, the State of
California, the Band, and any political subdivisions thereof as any such may be
amended from time to time ("Laws"); and all applicable judicial, administrative,
and regulatory decrees, judgments, and orders ("Orders") relating to the
protection of human health or the environment, including but not limited to all
Laws and Orders for or concerning reporting, licensing, permitting,
investigating, treating, or remediating emissions, discharges, spills, or
releases, threatened or actual, of any chemical substances, pollutants,
contaminants, or hazardous or toxic substances, materials, or wastes, including
Hazardous Waste, whether solid, liquid, or gaseous in nature, into or onto the
air, surface water, groundwater, or land; and including but not limited to all
Laws and Orders relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of chemical substances,
pollutants, contaminants, or hazardous or toxic substances, materials, or
wastes, including Hazardous Waste, whether solid, liquid, or gaseous in nature.
J. "Excusable Delay" means any cause or condition beyond a party's control
which such party is unable to overcome by the exercise of reasonable diligence
or effort, including but not limited to (1) major fire, flood, earthquake,
volcanic activity, wind, drought, and other acts of the elements; (2)
prohibitory judicial, legislative, or administrative action by any civil or
military authority; (3) strike, lockout, or other incapacitating labor dispute;
(4) riot, insurrection, sabotage, or war; or (5) massive breakdown of or damage
to any facilities or equipment; provided that, delay resulting from acts or
omissions in violation of the Environmental Requirements and/or resulting in
Environmental Damages shall not be considered Excusable Delay.
K. "Facility" means the integrated solid waste management facility to be
constructed on the Premises and consisting of a municipal solid waste landfill,
a materials recovery facility, a composting facility, and a petroleum-
contaminated soils bioremediation project.
L. "Hazardous Waste" means any waste substance, material, smoke, gas,
particulate matter, or combination thereof, that:
Page 6
(1) because of its quantity, concentration, or physical, chemical, or
infectious characteristics, may either cause or significantly contribute to an
increase in mortality or serious irreversible or incapacitating illness or may
pose a substantial present or potential hazard to human health, living
organisms, or the environment when improperly treated, stored, transported,
composted, disposed of, or otherwise handled; or
(2) is defined to be hazardous or toxic by any Environmental Requirement,
including but not limited to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 or the Resource Conservation and
Recovery Act of 1976, as either Act may be amended from time to time; or
(3) is hazardous, explosive, infectious, radioactive, carcinogenic,
mutagenic, toxic, ignitable or flammable, reactive, or corrosive and that is or
becomes regulated as such by any governmental agency, department, commission,
board, agency, or instrumentality of the Band, WEPA, the State of California, or
the United States of America; or that is an irritant or a strong sensitizer; or
that generates pressure through decomposition (excluding gases generated or
occurring naturally within a landfill); and that may cause substantial personal
injury, serious illness, or harm to humans, domestic animals, or wildlife,
during or as a proximate result of its disposal.
(4) The terms "toxic," "corrosive," "flammable," "irritant," and "strong
sensitizer" shall be given the same meaning as in the California Hazardous
Substances Act (Chapter 13 commencing with section 28740 of Division 21 of the
Health and Safety Code); or
(5) requires investigation or remediation under any Environmental
Requirement; or
(6) contains asbestos, polychlorinated biphenyls ("PCBs"), petroleum
hydrocarbons, urea formaldehyde foam insulation, or radon gas.
Page 7
M. "Hazardous Waste Claims" means any and all enforcement, cleanup,
removal, remedial, or other governmental or regulatory actions, agreements, or
orders threatened, instituted, or completed pursuant to any Environmental
Requirements, together with any and all claims made or threatened by any third
party against the Band, the CIWMI, or the Leased Premises relating to damages
(including but not limited to Environmental Damages), contribution, costs
recovery compensation, loss or injury resulting from the presence, release,
treatment, disposal or discharge of Hazardous Waste upon, from, about, beneath,
on, or to the Leased Premises.
N. "Initial Term" means the term of this Lease commencing on the
Commencement Date and extending for twenty five (25) years thereafter.
O. "Landfill" means the Municipal Solid Waste Landfill to be developed,
constructed, operated, maintained, closed, and maintained after closure, as
part of the Facility, pursuant to this Lease, which will employ a method of
disposing of Solid Waste on land without creating nuisances or hazards to public
health or safety by using methods to confine the Solid Waste to the smallest
practical area, to reduce it to the smallest practical volume, and to cover it
with a layer of suitable cover material at specific designated intervals, and
including all appurtenant structures and equipment, and all modifications and
additions to and replacements of the same, to be constructed or installed on the
Leased Premises and constructed, operated, used, or maintained by CIWMI pursuant
to this Lease.
P. "Leased Premises" means the lands leased by the Band to CIWMI pursuant
to this Lease and being those outlined in red on the plat attached Exhibit A,
which is hereby made a part of this Lease, and includes such rights of way and
easements as may be reasonably necessary for the construction, use, operation,
maintenance, closure, and post-closure maintenance of the Facility; the
construction, use, and maintenance of access roads; the construction, use, and
maintenance of all necessary water wells and monitoring wells.
Page 8
Q. "Materials Recovery Facility" or "MRF" means a facility to be
constructed on the Leased Premises for separation and recovery of recyclable
materials such as aluminum, other metals, glass, plastics, cardboard, newsprint,
other paper, wood, and green wastes from the waste stream for sale in the
regional recycling markets..
R. "Operations Commencement Date" means the date upon which the CIWMI
commences receiving waste onto the Leased Premises on a commercial basis and in
consideration of payment to be made to the CIWMI therefor.
S. "Permitted Mortgage" means an encumbrance consented to and approved in
the manner provided in this Lease.
T. "Permitted Mortgagee" means the mortgagee, pledgee, or owner of a
security interest, encumbrance, or lien under a Permitted Mortgage.
U. "Person" means an individual, trust, firm, association, partnership,
political subdivision, government agency, municipality, industry, public or
private corporation, or any other entity whatsoever.
V. "Personal Property" includes but is not limited to any personal
property or fixtures that can be reasonably removed from the Leased Premises and
shall not include property that normally would be attached or affixed to the
buildings, improvements, or land in such a way as to become a part of the
realty, regardless of whether such property is in fact so attached or affixed in
such a way as to retain, technically, the characteristics of personal property.
W. "Petroleum-Contaminated Soil Bioremediation" means a biological process
that introduces microorganisms, usually bacteria, into petroleum-contaminated
soil to detoxify hydrocarbon contaminants and transform them into simpler, less
toxic compounds.
Page 9
X. "Pollution" means the condition caused by the presence in or on soil,
air, or water of any Solid Waste, Hazardous Waste, or substances derived
therefrom in such quantity, of such nature and duration, or under such condition
that the quality, appearance, or usefulness of the soil, air, or water is
significantly degraded or adversely altered, other than the emplacement and
maintenance of solid waste or substances derived therefrom in a landfill
complying with applicable legal requirements.
Y. "Post-closure maintenance" means all activities undertaken at a closed
Solid Waste facility to maintain the integrity of containment features and to
monitor compliance with applicable performance standards, as more definitively
described by the rules and regulations of WEPA and the United States.
Z. "Recycling" means the process of sorting, cleansing, treating, and
reconstituting Solid Waste or other discarded material in order to prepare it
for use.
AA. "Remedial Work" means:
(1) the costs of removal of any and all Hazardous Waste from all or any
portion of the Leased Premises or the adjacent property;
(2) the costs required to take necessary precautions to protect against
the release of Hazardous Wastes on, in, under, or affecting the Leased Premises
into the air, ground, body of water, or adjacent property to the extent required
by the Environmental Requirements or any governmental entity or authority,
including but not limited to the costs of environmental testing and assessments;
and
(3) the costs incurred to comply, or to bring all or any portion of the
Leased Premises or any adjacent property adversely affected by the Facility, or
the parties' acts or omissions under this Lease into compliance with, all
Page 10
applicable Environmental Requirements, including but not limited to payment of
any fines, penalties, and administrative and overhead costs charged or assessed
by any governmental entity or authority.
BB. "Renewal Term" means the twenty five (25) year term following the
Initial Term of this Lease.
CC. "Rancheria" means the Cortina Indian Rancheria.
DD. "Secretary" means the Secretary of the Interior or his authorized
representative of the Secretary of the Interior acting under delegated
authority.
EE. "Solid Waste" means all putrescible and non-putrescible solid,
semisolid, and liquid waste, including but not limited garbage, trash, refuse,
paper, rubbish, ashes, industrial waste, construction and demolition waste,
abandoned vehicles and parts thereof, discarded home and industrial appliances,
manure, vegetable or animal solid and semisolid wastes, other discarded solid,
liquid, and semisolid waste from a wastewater treatment plant, water supply
treatment plant, or air pollution control facility, or other discarded contained
gaseous material resulting from industrial, commercial, mining, or agricultural
operations or community activities, but not including solid or dissolved
material in domestic sewage, solid or dissolved material in irrigation return
flows, industrial discharges that are point sources subject to permits under 33
U.S.C. 1342, source, special nuclear, or byproduct material defined by the
Atomic Energy Act of 1954, as amended, 42 U.S.C. 2011 et seq., and not including
Hazardous Waste.
FF. "Taxes" shall include all real estate taxes, personal property taxes,
reality transfer taxes, land use and property use taxes, sewer and water
charges, assessments, taxes on the rents or measured by or based in whole or in
part upon the Leased Premises, and other similar governmental charges, whether
in force on the date hereof or becoming applicable during the Term of this
Lease, if such are levied, assessed, or imposed with respect to, or become liens
upon, the Leased Premises, this Lease, or the rent reserved herein.
Page 11
GG. "Term" means the Initial Term and the Renewal Term, if exercised, of
this Lease, or either of them, unless specifically limited in context to either
the Initial Term or the Renewal Term.
HH. "WEPA" means the Wintun Environmental Protection Agency, a
governmental agency of the Band.
2. Purpose; Obligation; Lease Relationship.
---------------------------------------
A. CIWMI hereby agrees to and does lease from the Band, and the Band
hereby leases to CIWMI, the Leased Premises to use or cause to be used to
construct, operate, maintain, close, and maintain after closure, the Facility.
CIWMI shall comply in all respects with the conditions contained in such Record
of Decision as may be issued by the Secretary pursuant to the National
Environmental Policy Act, 42 U.S.C. 4321-370a (NEPA). For the benefit of and
on behalf of CIWMI, the Facility will be designed, constructed, operated,
closed, and maintained after-closure by Pacific Waste Services, Inc. of San
Ramon, California. Pacific Waste Services is a solid waste facility management
firm specializing in design, construction, operation, closure, and maintenance
of landfills and waste management systems.
B. CIWMI shall not use, or cause or allow to be used, any part of the
Leased Premises for any illegal conduct, business, or purpose, nor in any manner
so as to create a nuisance or trespass. If CIWMI uses, or permits to be used,
the Leased Premises for any prohibited purpose or for any purpose other than
those permitted by this Lease, such use shall be an Event of Default and shall
constitute grounds for cancellation of this Lease. At all times during the
Term, CIWMI will diligently attempt to keep the Leased Premises and all portions
thereof actively and properly used. All businesses on the Leased Premises shall
be conducted during the regular and customary hours of such businesses and on
all regular business days, consistent with good operating practices, in good
faith, so the Band will at all times receive the maximum income under the rental
provisions of the Lease.
C. CIWMI hereby agrees that, at its own expense, it will comply promptly
with any and all Environmental Requirements and with all applicable requirements
Page 12
of any legally constituted public authority having jurisdiction over the Leased
Premises, which requirements are made necessary by reason of CIWMI's occupancy
or use of the Leased Premises. If CIWMI fails to so comply, such failure shall
be an Event of Default and shall constitute grounds for cancellation of this
Lease.
D. CIWMI, on its own behalf and on behalf of its employees, contractors,
and agents, to the extent that they are acting within the scope of their
employment contract, or agency, agrees to abide by all applicable laws,
regulations, and ordinances now in force and effect, or that may be hereafter in
force and effect, including but not limited to the Environmental Requirements.
E. (1) CIWMI will use the Leased Premises in an orderly manner and with
the aim of conserving usable land for future landfilling or other industrial
purposes after the expiration of the Term of this Lease. The Landfill cells
shall be constructed adjacent or close to other cells constructed or to be
constructed, and in any event all cells shall be located within the same general
area of the Leased Premises. Liner material and daily and final cover material
shall be stored as close as reasonably practical to the cells to be filled,
consistent with the topography of the Leased Premises. Stones removed from
cells constructed or under construction shall be stored in an orderly manner on
the Leased Premises in the same manner as any other material held for Recycling.
Any revenues received from the sale of any such stones will be included in the
gross revenues of the CIWMI for the purposes of calculating rents and royalties.
(2) The parties agree that Solid Waste will be delivered to the Leased
Premises only by truck. At CIWMI's sole and exclusive expense CIWMI will
design, construct, improve, and pave as necessary an existing or a new road
connecting State Highway 20 to the Leased Premises (the "Access Road"), prior to
commencing operations of the Facility and shall maintain the same during the
Term. The intersection of the Access Road and the State Highway shall meet the
requirements of state law. All Solid Waste originating outside the Rancheria
shall be transported to the Leased Premises exclusively on the Access Road.
Page 13
(3) Each load of Solid Waste delivered or caused to be delivered by CIWMI
will be weighed upon its arrival at the Leased Premises. The Solid Waste will
be directed either to the Landfill for immediate disposal or, if the Solid Waste
evidently contains recyclable materials, to the MRF. The MRF will handle
primarily commercial Solid Waste consisting of papers, corrugated cardboard,
metals, and tires, although other recyclable Solid Waste, including but not
limited to plastics and glass, may be directed to the MRF. If approved by the
Secretary, if such approval is necessary, CIWMI may develop facilities to handle
construction and demolition debris, sludge, and compost on the Leased Premises,
and CIWMI agrees to and shall cooperate in the direction of such Solid Waste to
such facilities. The Band will require the putrescible portion of the Solid
Waste that is not recycled to be delivered to the working face of the Landfill
for disposal, and CIWMI shall comply with all reasonable health and safety rules
and regulations applicable to assure that Solid Waste is delivered efficiently
to the working face of the Landfill.
(4) The CIWMI may establish and operate facilities for the recycling of
Solid Waste remote from the MRF, including but not limited to establishing and
operating materials reduction facilities at any transfer stations developed by
CIWMI at which Solid Waste is handled prior to its delivery to the Reservation.
(5) CIWMI agrees not to enter into any contracts, arrangements, or other
commitments with any party other than the Band for the development and operation
of any facility to handle, transport, treat, process, or dispose of Solid Waste
originating within three hundred (300) miles of the boundaries of Colusa County.
CIWMI agrees not to enter into any contract, arrangements, or other commitments
to or with any party other than the Band, which contracts, arrangements, or
commitments relate to, detract from, or affect the Facility, unless such
contracts, arrangements, or commitments are agreed to and approved in writing by
the Band.
(6) Unless the Band otherwise agrees in writing, CIWMI will not direct
Solid Waste originating within three hundred (300) miles of the boundaries of
Colusa County to any landfill or solid waste disposal facility other than the
Facility unless and until CIWMI is delivering to the Landfill at least one
Page 14
thousand (1,000) tons per day (on an annual average basis) of Solid Waste, or
whatever average daily maximum may be established by the Secretary, the Band,
or WEPA, if any, and, after a written request from CIWMI, the Secretary or the
Band refuses to allow CIWMI to increase the amount of Solid Waste delivered to
the Landfill.
F. This Lease is subject to the terms and conditions herein. This Lease
creates the relationship of lessor and lessee between the parties
hereto; however, regardless of the fact that rental payments may be determined
in part on a percentage basis, CIWMI and the Band are not in partnership or
joint venture, nor are they or shall they be deemed to be partners or joint
ventures of any kind or for any purposes. The parties intend and agree that,
while the Band has all rights detailed in this Lease, including but not limited
to the right to require clean-up, to require compliance with applicable
environmental and other laws and regulations, to monitor activity on the Leased
Premises, and to inspect the Leased Premises, the Band has no active
participation in the CIWMI's operational affairs, nor does the Band control or
have the ability to control the manner in which CIWMI conducts its business, and
the Band is neither expected nor permitted to exercise such control. No
exercise by the Band of any of its remedies in law, in equity, or agreed upon
herein shall operate to place upon the Band any responsibility for the
operation, control, care, management, or repair of the Leased Premises, nor will
such exercise make the Band the "operator" or "responsible party" within the
meaning of any applicable environmental laws or Environmental Requirements.
CIWMI's interest in the Leased Premises is possessory only, is personal to
CIWMI, and is not subject to levy or sale, nor assignable by CIWMI except under
the limited and specific conditions described herein below.
G. At anytime during the Term, at the Band's option, and with the specific
and separate approvals of the Band, WEPA, and the Secretary (which approval by
the Secretary shall require compliance with the NEPA), the Band may retake
possession of a portion or portions of the Leased Premises for another use or
other uses, provided however, that such portion is not essential to the
construction, operation, maintenance, closure, or maintenance after closure of
the Facility and provided further, that the use or uses of the land by the Band
will not materially interfere with the construction, operation, maintenance,
closure, or post-closure maintenance of the Facility. Should the Band exercise
Page 15
and the Band, WEPA, and the Secretary approve the Band's option to retake
possession, CIWMI shall be relieved of its obligations under this Lease with
respect to the lands of which the Band retakes possession, and such lands shall
no longer be a portion of the Leased Premises.
3. Development Expenses.
--------------------
A. Until operations commence at the Facility, CIWMI shall pay the
reasonable administrative expenses of the Band for doing such things as are
necessary to satisfy its obligations hereunder, including but not limited to
reasonable attorneys' fees and expenses.
B. CIWMI shall pay all costs incurred by the Band and its contractors and
agents in obtaining permits from WEPA to construct and operate the Facility to
the extent that the Band may be required to pay any such costs. It shall be the
CIWMI's responsibility to obtain such permits and to pay the costs incurred by
it in doing so. CIWMI shall pay directly to WEPA on a monthly basis the
administrative expenses and costs of third parties retained by WEPA to assist
WEPA in its review of the Facility construction and operating permit
applications.
C. The development expenses to be paid by CIWMI under this Section are in
addition to any rental or other amounts due under this Lease.
4. Initial Term. The Initial Term of this Lease shall be twenty-five years
-------------
from the Commencement Date.
5. Renewal Term.
------------
A. Subject to the conditions in sub-Sections B and C this Lease may be
renewed at the option of CIWMI for an additional twenty-five years upon
substantially the same conditions and terms as are in effect at the expiration
Page 16
of the Initial Term, provided that notice of the exercise of such option shall
be given by CIWMI to the Band and the Secretary, in writing, at least fifteen
(15) months prior to the expiration of the Initial Term.
B. No renewal of this Lease shall occur if the Lease has been terminated,
CIWMI is in default, or the Band shall have cancelled this Lease as described in
Section 23 below.
C. No renewal of this Lease shall occur if, at the expiration of the
Initial Term, the maximum capacity of the Landfill shall have been reached.
6. Reasonableness; Good Faith. The parties agree to cooperate fully with each
--------------------------
other and to act reasonably, in good faith, and in a timely manner in all
matters hereunder so that both of them may obtain the benefits to which they are
entitled hereunder and for which they have negotiated. Both parties agree to
negotiate in good faith and without delay as to all matters requiring
negotiation. Neither party shall unreasonably deny, withhold, or delay any
consent or approval required or contemplated for any action or transaction
proposed to be taken or made hereunder, except as otherwise provided herein.
Nothing herein is intended or shall be construed to require the Band to consent
to the storage, handling, treatment, or presence of Hazardous Waste as more
specifically prohibited in Section 24 below, or to consent to any assignment or
transfer that is not completely satisfactory to the Band, with or without good
cause or good reasons.
7. Rentals and Royalties. The CIWMI shall pay monies to the Band as follows:
---------------------
A. $10,000 will be paid within twenty-one days after CIWMI receives
written confirmation that the Commencement Date has occurred.
B. (1) Commencing on the first day of the first month following the
Operations Commencement Date, CIWMI will pay to the Band $15,000 and shall
continue to pay $15,000 on the first day of each and every month thereafter
during the Term of the Lease, subject to adjustment increases as hereinafter
provided.
Page 17
(2) The monthly payments of $15,000 shall be adjusted upwards according
to increases in the Cost of Living Index, as determined and published by the
United States Government for the United States of America ("Index") using, as
the "Base Year," the calendar year next following the year in which the
Operations Commencement Date occurs. In each year following the Base Year,
immediately following the publication of the Index figures for the preceding
year, the monthly payments for such year will be increased by a percentage equal
to the increase in the Index over the Index figures for the Base Year less
increases effected in previous years as a result of increases in the Index
figures in previous years. For the months of such year in which payments have
already been made based on the monthly amounts used in the previous year, a lump
sum will be paid to pay the shortfalls in the previous months of such year.
C. CIWMI shall also pay to the Band monies which shall be a percentage of
the gross revenues received by CIWMI as tipping fees, dumping fees, or other
compensation for receiving waste onto the Leased Premises whether for deposit in
the Landfill or for Recycling, or other handling on the Leased Premises, all as
follows:
(1) In each Fiscal Year, ending on the 30th day of November each year,
monies will be paid equal to 3% of the gross receipts received from the delivery
onto the Property of the first 150,000 tons of waste dumped during such year.
(2) For any waste in excess of 150,000 tons received onto the Leased
Premises in a fiscal year, CIWMI will pay to the Band monies equal to 5% of the
gross revenues received therefrom.
(3) Payments of a percentage of gross revenues pursuant hereto will be
made on a monthly basis. In particular, for each calendar month a calculation
will be made of the gross revenues received within twenty-one days after the end
of such month and the appropriate percentage of such amount will be paid by
CIWMI to the Band within thirty days after the end of such month.
Page 18
(4) With each payment of a percentage of gross revenues CIWMI will
present to the Band a statement as to the tonnage of waste received by CIWMI
onto the Leased Premises during such month.
D. All payments required paid more than fifteen days after the date on
which they become due shall be paid with interest at the rate of twelve percent
(12%) per annum from the due date until paid, but this provision shall not be
construed to relieve CIWMI from its obligations to make timely rental payments.
8. Accounting and Audits.
---------------------
A. Not later than sixty (60) days after the end of each calendar year,
CIWMI shall submit to the Band and the Secretary certified reports summarizing
the monthly reports for that year. With said reports, CIWMI shall tender
payment of any difference between amounts paid in the previous year and any
greater amount due, together with any interest due thereon. Each report shall
be prepared in conformity with generally accepted accounting principles
consistently applied. CIWMI will keep and maintain at its main California
offices full, complete, and accurate books, accounts, and reports of its
condition and its operations prepared in accordance with generally accepted
accounting principles consistently followed.
B. During the normal business hours of any working day, and upon
reasonable written notice to CIWMI, the Band, the Secretary, and any certified
public accountant(s) acting as agent (s) of the Band shall have access to and
the right to examine and audit any or all pertinent books, documents, papers,
records, and tax returns of CIWMI as may relate to this Lease or the calculation
and payment of rentals or payments in lieu of taxes, including but not limited
to any and all customer lists, billing and shipping files, and Hazardous Waste
and Solid Waste manifests.
Page 19
C. If the Band or the Secretary should cause an audit to be performed
pursuant to this Section, and if such audit reveals that the Band has been paid
less than ninety percent (90%) of the amount to which the Band is entitled for
the period covered by the audit, then the expense of such audit shall be borne
by CIWMI; otherwise the expense of such audit will be borne by the Band.
D. The Band and the Secretary shall be entitled, at any time with four
(4) years after the receipt of any rental payment, to question the sufficiency
of the amount thereof and/or the accuracy of the monthly report(s) or the annual
report(s) furnished by CIWMI to justify the same, and shall have the right to
examine and/or audit as provided hereinabove. CIWMI shall, for these periods of
time, keep safe and intact all of the books, documents, papers, records, and tax
returns to which the Band has the right of examination and/or pursuant to this
Section.
9. Representations and Warranties.
------------------------------
A. The Band hereby represents and warrants as follows:
(1) The Band is a federally recognized Indian tribe.
(2) The Band has the right and power, and has been authorized, (a) to
enter into this Lease; (b) to perform each of its obligations hereunder; and (c)
to sublease all or a portion of the Leased Premises pursuant to the terms and
conditions of the Lease.
(3) The execution and delivery by the Band of this Lease, and
performance of its obligations hereunder, has been duly and properly authorized
by all necessary action, including but not limited to action of the General
Council of the Band; the Board of Directors of WEPA; the Bureau of Indian
Affairs, United States Department of the Interior; and any other relevant
governmental authority/ies; and such execution, delivery, and performance will
not contravene or violate any provision of law or any valid agreements to which
Page 20
the Band is a party. Each and all persons executing this Lease on behalf of the
Band have been duly authorized to execute and deliver such document on behalf of
the Band pursuant to its organizational documents and all applicable law.
(4) This Lease has been duly and validly executed and delivered by the
Band and constitutes the valid, legally binding obligation of the Band.
(5) There are no claims or litigation, pending or threatened, known to
the Band, that could materially and adversely affect this Lease of the Lease,
the Leased Premises, the Band's interest in and to the Leased Premises, or the
Band's ability to perform any of its obligations under this Lease or the Lease;
nor is there any basis known to the Band for any unfavorable decision, ruling,
or finding that would materially, adversely affect the validity of this Lease,
or that might result in any material adverse change in the condition of the
Band.
(6) All written representations and warranties made by the Band and/or
its officers and agents in connection with this Lease (a) were true, correct,
and complete in all material respects when furnished to CIWMI and as of the date
made; and (b) are true, correct, and complete in all material respects as of the
date on which this Lease is executed.
(7) Performance by the Band of its obligations under and compliance by
the Band with this Lease will not violate any existing federal or tribal law, or
any other instrument or agreement binding upon the Band; and will not result in
the imposition of any lien, charge, or encumbrance of any nature on any of the
Band's assets or property, including but not limited to all or any portion of
the Leased Premises.
(8) There are no claims, liens, encumbrances, or other restrictions
against the Band that result from liabilities arising under applicable
environmental laws, including but not limited to the Environmental Requirements.
Page 21
(9) The Leased Premises and the uses contemplated therefor in this Lease
comply, to the Band's knowledge, in all respects, with all existing applicable
federal and tribal zoning, building, subdivision, platting, and land use
requirements.
(10) The Band is not prohibited from entering into this Lease by any
valid agreement or other writing known to the Band or by federal or tribal law
or regulation.
(11) The Band is solvent and has not filed a petition for bankruptcy.
(12) To the Band's knowledge, the Band is in compliance in all material
respects with all applicable laws, including but not limited to the
Environmental Requirements.
(13) The Band has received no notice, order, or other communication of
any alleged or potential violation or, or failure to comply with, applicable
laws, including but not limited to the Environmental Requirements.
(14) The Band is not operating, and has not operated, under or used any
other name or assumed name except that name set forth at the head of this Lease.
(15) To the Band's knowledge, after diligent inquiry and inspection, no
Hazardous Waste (other than De Minimis Amounts) is being or has ever been
generated, stored, released, treated, or disposed of on, in, under, or from the
Leased Premises, which premises are in compliance with all the Environmental
Requirements as of the date this Lease is executed.
(16) No written certificate or statement delivered or made by the Band
to CIWMI in connection with this Lease contains any untrue statement of a
material fact or fails to state any material fact necessary to keep the
statements, representations, or warranties contained in this Lease from being
misleading.
Page 22
(17) The Band's organizational documents each have been duly adopted
consistent with all applicable law and have been amended pursuant to the terms
thereof and consistent with all applicable law.
(18) The Band will conduct its business in an orderly, efficient, and
customary manner and will keep and maintain all of its properties and equipment
in good working order and condition.
B. CIWMI hereby represents and warrants as follows:
(1) CIWMI is an independent corporation, duly incorporated under the
laws of the State of California.
(2) CIWMI has the right, the corporate power, and has been authorized
(a) to enter into this Lease; (b) to perform each of its obligations hereunder;
and (c) to construct, operate, maintain, close, and maintain after closure the
Facility pursuant to the terms and conditions of this Lease.
(3) The execution and delivery by CIWMI of this Lease, and performance
of its obligations thereunder, has been duly and properly authorized by all
necessary action, including but not limited to action of the board of Directors
of CIWMI and any relevant governmental authority/ies, and such execution,
delivery, and performance will not contravene or violate any provision of law or
any valid agreements to which CIWMI is a party. Each and all persons executing
this Lease on behalf of CIWMI have been duly authorized to execute and deliver
such document on behalf of CIWMI pursuant to its organizational documents and
all applicable law.
(4) This Lease has been duly and validly executed and delivered by CIWMI
and constitutes the valid, legally binding obligation of CIWMI.
Page 23
(5) There are no claims or litigation, pending or threatened, known to
CIWMI, that could materially and adversely affect this Lease, the Leased
Premises, CIWMI's ability to complete construction of the improvements or to
perform any of its obligations under this Lease; nor is there any basis known to
CIWMI for any unfavourable decision, ruling, or finding that would materially,
adversely affect the validity of this Lease, or that might result in any
material adverse change in the condition of CIWMI.
(6) All written representations and warranties made by CIWMI and/or its
officers and agents in connection with this Lease (a) were true, correct, and
complete in all material respects when furnished to the Band and as of the date
made; and (b) are true, correct in all material respects as of the date on which
this Lease is executed.
(7) Performance by CIWMI of its obligations under, and compliance by
CIWMI with, this Lease will not violate any applicable law, or any other
instrument or agreement binding upon CIWMI; and will not result in the
imposition of any lien, charge, or encumbrance of any nature on any of CIWMI's
assets or property, including but not limited to all or any portion of the
Leased Premises.
(8) There are no claims, liens, encumbrances, or other restrictions
against CIWMI known to CIWMI that result from liabilities arising under
applicable environmental laws, including but not limited to the Environmental
Requirements.
(9) CIWMI is not prohibited from entering into this Lease by any valid
agreement or other writing known to CIWMI or by federal, tribal, or state law or
regulation.
(10) CIWMI is solvent and has not filed a petition for bankruptcy.
(11) To CIWMI's best knowledge, CIWMI is in compliance in all material
respects with all applicable laws, including but not limited to the
Environmental Requirements.
Page 24
(12) CIWMI has received no notice, order, or other communication of any
alleged or potential violation of or failure to comply with applicable laws,
including but no limited to the Environmental Requirements.
(13) CIWMI is not operating, and has not operated, under or used any
other name or assumed name except Cortina Integrated Waste Management, Inc.
(14) CIWMI has not been involved in the generation, manufacture,
storage, transportation, treatment, handling, release, disposal, production,
use, or processing of any Hazardous Waste (other than De Minimis Amounts),
except in compliance with applicable laws, including but not limited to the
Environmental Requirements.
(15) CIWMI will not keep, store, or use underground storage tanks on
the Leased Premises.
(16) No written certificate or statement delivered or made by CIWMI to
the Band in connection with this Lease contains any untrue statement of a
material fact or fails to state any material fact necessary to keep the
statements, representations, or warranties contained in this Lease from being
misleading.
(17) All financial statements of CIWMI, including any schedules or notes
pertaining thereto, heretofore delivered to the Band have been prepared in
accordance with generally accepted accounting principles consistently applied,
and fully and fairly represent the financial condition of CIWMI at the dates
thereof and the results of operations for the periods covered thereby; and there
have been no material adverse changes in the financial condition or business of
CIWMI from the date of such statement to the date of the execution of this
Lease.
(18) As of the date of such financial statements, CIWMI had no material
indebtedness of any nature, including but not limited to any liens,
garnishments, judgments, encumbrances, liabilities for taxes and any interest or
Page 25
penalties relating thereto, except to the extent reflected (in a footnote or
otherwise) and reserved against in such financial statements or as disclosed in
or permitted by this Lease.
(19) CIWMI's organizational documents each have been duly adopted
consistent with all applicable laws and have been amended pursuant to the terms
thereof and consistent with all applicable laws.
(20) During the Term, CIWMI has and will have all necessary right,
power, and authority to operate and manage any business permitted by this Lease.
(21) All permits, certificates, approvals, licenses, and other
authorizations ("permits") of any governmental authority necessary to permit
construction on and development of the Leased Premises will be issued prior to
CIWMI's commencement of such construction or development; and there are no
actions or proceedings known to CIWMI, pending or threatened, that question or
would question the issuance or validity of any of such permits, nor which claim
or allege, or which would claim or allege, that any additional permits are
necessary in order to construct, use, or operate the Leased Premises.
(22) CIWMI is authorized to do business in California and will remain
qualified and authorized to do so during the Term.
(23) CIWMI will conduct its business in an orderly, efficient, and
customary manner and will keep and maintain all of its properties and equipment
in good working order and condition.
C. The representations and warranties of the parties hereinabove are
intended and agreed by both parties to survive the Term to the full extent
necessary to enable the parties to enforce their respective rights as described
herein.
Page 26
10. Performance Bonds.
-----------------
A. Before beginning construction of any improvement with a value in excess
of $50,000 on the Leased Premises, CIWMI agrees to provide a performance and
payment bond or other financial assurances adequate to guarantee payment of the
estimated construction cost of any such improvement, completion of the
improvement, and payment in full of claims of all persons for work performed on
or materials furnished for construction. In relation to the Landfill, such
bonds may be for the construction of the Landfill as a whole or on a cell-by-
cell basis, CIWMI's option.
B. This provision is not, and shall not be construed to be, a waiver of
the Band's right to hold its lands in general and the Leased Premises in
particular free from liens.
C. Prior to the commencement of any such construction, CIWMI shall provide
to the Band and the Secretary evidence satisfactory to the Band and the
Secretary that the available funds are sufficient to pay all estimated
construction costs of any such improvement.
D. At any time during the Term, the Secretary may require CIWMI to post a
bond satisfactory to the Secretary in a penal sum of not less than the
succeeding year's minimum rent, which bond shall be deposited with the
Secretary. If minimum rent is being paid at less than annual periods, the
Secretary may accept a bond in an amount smaller than the said amount of rent
due. Any other type of security may be offered by CIWMI to satisfy the
requirement of this Section will be given reasonable consideration by the
Secretary, but acceptance of other security shall be at the sole discretion of
the Band and the Secretary. It is agreed that a bond required by this provision
will guarantee payment of rent only.
11. Improvements. All buildings and improvements, excluding Personal Property,
------------
on the Leased Premises shall, at the option of the Band, remain on the Leased
Premises after the termination of this Lease and shall thereupon become the
property of the Band. If the Band opts to remove or alter such buildings and/or
improvements, such removal or alteration shall be at the sole expense of the
Band. CIWMI expressly waives any and all provisions of applicable law
pertaining to CIWMI's right to own such buildings and improvements after
termination of this Lease, including if and when CIWMI affixed such buildings or
Page 27
improvements to the land in good faith and erroneously believing, because of a
mistake either of law or facts, that CIWMI has a right to own such buildings or
improvements after the termination of this Lease.
12. Construction; Maintenance. CIWMI shall cause all improvements placed on
--------------------------
the Leased Premises to be constructed in a good and workmanlike manner and in
accordance with applicable laws and/or building codes, or in accordance with
such standards as may be required by a Permitted Mortgagee, provided that
compliance with such latter standards does not violate applicable laws or
building codes. Removal or demolition of, or material alterations to, any
improvements, which removal, demolition, or alteration materially and adversely
alters the value of Leased Premises and/or the businesses conducted thereon,
shall not be made without the prior written consent of the Band, and the
Secretary if necessary. All parts of buildings exposed to perimeter properties
shall present a pleasant appearance, and all services areas shall be screened
from public view. CIWMI shall, at all times during the Term and at CIWMI's sole
cost and expense, maintain the Leased Premises and all improvements thereon in
good order and repair; in a neat, sanitary, and attractive condition; and in
compliance with applicable laws, ordinances, and regulations.
13. Delay or Omission. No delay or omission to exercise any right, power or
-----------------
remedy accruing under this Lease shall impair such right, power or remedy, nor
shall it be construed to be a waiver of or acquiescence in a breach of or
default under this Lease. Both parties specifically and affirmatively agree not
to construe the conduct, oral statements, delay, or omission of the other party
as altering in any way the parties' agreements as defined in this Lease, and
further agree not to rely upon any such conduct, oral statements, delays or
omissions. Any waiver, permit or approval of any breach of or default under
this Lease must be in writing, and, because the language of this Section was
negotiated and intended by both parties to be binding and is not a mere recital,
both parties hereby agree that they will not raise waiver, estoppel, or other
similar arguments as affirmative defenses so as to limit or negate the clear
language and intent of this Section. All remedies, either under this Lease, by
law, or otherwise afforded to either party shall be cumulative, not alternative.
14. Post-Closure Maintenance. CIWMI is required to perform any and all closure
------------------------
activities, post-closure maintenance, emergency response, and corrective actions
Page 28
as may be required by the laws and regulations of the Band or the United States,
including but not limited to the Environmental Requirements, and shall have such
access to the Leased Premises as may be necessary for it to do so.
15. Trust Fund.
----------
A. CIWMI shall establish a trust fund or other financial assurance
satisfactory to WEPA that shall at all times contain or ensure sufficient funds
to pay the costs of closure, post-closure maintenance, emergency response, and
corrective actions in accordance with the laws and regulations of the Band and
the United States, including but not limited to the Environmental Requirements.
B. The Band shall be named as the sole beneficiary of the trust fund to
the extent necessary to enable the Band to draw funds from it to pay any of the
costs required to be paid; and
C. Upon completion of the payment of all of any such costs as may be
payable, and upon the satisfaction in full to the satisfaction of the Band of
any and all possible obligations for with the trust fund is established, the
trust fund shall be wound up, and all funds therein (including any interest
earned) shall be paid to CIWMI.
D. The trust fund in existence at the expiration of the Term will continue
to be maintained not withstanding such expiration, and the provisions herein for
the use of the funds in the trust fund shall survive such expiration or other
termination of this Lease.
16. Companies Bonding and Insuring. All surety bonds provided in compliance
------------------------------
with this Lease shall be furnished by companies determined by the United States
Secretary of the Treasury to be acceptable sureties on federal bonds, and shall
note that the obligation of the surety is to the United States as well as to the
Band. Insurance policies shall be furnished and maintained by such responsible
companies as are rated A-Plus, AAA, or better, in the current edition of Best's
Insurance Guide.
Page 29
17. CIWMI's Remedial Action.
-----------------------
A. Throughout the Term, CIWMI shall promptly advise the Band in writing
of:
(1) any and all Hazardous Waste Claims;
(2) the presence of, and any spill, release, or threat of spill or
release of, any Hazardous Waste (other than De Minimis Amounts) on, in, under,
or affecting the Leased Premises, or emanating therefrom, in violation of any
Environmental Requirements;
(3) CIWMI's discovery of the presence of Hazardous Waste (other than de
Minimis Amounts) on, under, or about any real property adjoining the Leased
Premises;
(4) any remedial action by CIWMI in response to any Hazardous Waste on,
in, under, or affecting the Leased Premises, or emanating therefrom;
(5) CIWMI's discovery of any occurrence or condition on any real
property adjoining or in the vicinity of the Leased Premises that could cause
the Leased Premises or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability, or use of it under any Environmental
Requirements;
(6) its receipt of any third party or governmental communication or
notice in connection with any Hazardous Waste on, in, under, or affecting, the
Leased Premises or emanating therefrom or migrating or threatening to migrate to
or from the Leased Premises, including but not limited to communications or
notices that CIWMI or the Band has been designated as a potentially responsible
party in connection with any state or federal superfund list respecting the
Leased Premises, or has received a Section 104(E) letter from the United States
Environmental Protection Agency requesting information regarding the Leased
Premises;
(7) its notice or knowledge of a lawsuit or threat of suit against CIWMI
or the Band or concerning the Leased Premises, whether initiated by a
governmental agency or authority, or by a third party (such communication or
Page 30
notice shall be provided to the Band and be accompanied by a description of
CIWMI's proposed actions to remedy such situation and a time-frame therefor);
and
(8) any and all Hazardous Waste Claims and any remedial action taken or
Remedial Work done or incurred by CIWMI in response to any Hazardous Waste
Claims.
In addition, CIWMI shall immediately provide the Band with copies of all
communications to or from CIWMI with federal, tribal, state, or local
governments or agencies relating to the Environmental Requirements and all
communications relating to Hazardous Waste Claims.
B. CIWMI shall promptly take any and all necessary remedial action in
response to the presence, use, storage, transportation, discharge, or release or
any Hazardous Waste on, under, or about the Leased Premises in violation of
Environmental Requirements; provided however, that CIWMI shall take such
remedial action in good faith so as to minimize any impairment to the Leased
Premises. The remedial action CIWMI shall take hereunder includes but is not
limited to removal of any and all Hazardous Waste from the Leased Premises or
any surrounding areas; the taking of precautions to protect against the release
of Hazardous Waste on, in, under, or affecting the Leased Premises, or in the
air, any body of water, any other public domain or any surrounding areas; and
compliance, in connection with all or any portion of the Leased Premises or any
surrounding areas, with applicable Environmental Requirements. In the event
CIWMI undertakes any remedial action hereunder, including but not limited to
Remedial Work, with respect to any Hazardous Waste on, in, under, or affecting
the Leased Premises, CIWMI shall conduct and complete such remedial action (i)
in compliance with all applicable Environmental Requirements; and (ii) in
accordance with the orders and directives of all federal, state, tribal, and
local government authorities. CIWMI shall immediately provide the Band with a
copy of its plans for such remedial action and any revision thereto, and with
copies of all communications between CIWMI and federal, tribal, state, or local
governments relating to such remedial action.
C. CIWMI shall not create or permit to continue in existence any lien upon
the Leased Premises imposed pursuant to any Environmental Requirements.
Page 31
D. The Band shall have the right to join and participate in, as a party if
it so elects, any legal proceedings or actions initiated in connection with any
Hazardous Waste Claims and to have attorney's fees in connection therewith paid
by CIWMI.
18. Assignment; Transfer; Encumbrance.
---------------------------------
A. CIWMI shall not assign or transfer all or any part of its interest in
this Lease, or grant any license or concession for all or any portion of the
Leased Premises, without the prior written approval of the Secretary, if
necessary, and the written consent of the Band and any surety of CIWMI's
obligations. The Band and the Secretary are not bound by reasonableness or
conventions of good faith in denying their respective consent or approval to any
assignment or transfer, which consents and approvals may be denied in their sole
discretion; provided however, that with respect to any assignment or transfer
to an entity of which CIWMI is the majority owner, conventions of good faith and
reasonableness shall be applied in connection with the required consents.
Except as otherwise provided in this Lease, no assignment, grant, or transfer
shall be valid or binding without said consent and approval, and then only upon
the condition that the assignee or other successor in interest has agreed in
writing to be bound by each and all of the covenants and conditions of the
Lease. Any assignment or transfer made except as aforesaid shall be deemed a
breach of the Lease and an Event of Default and shall constitute grounds for
cancellation of this Lease.
B. This Lease, or any right to or interest in this Lease, or any of the
improvements on the Leased Premises, may be encumbered with the written approval
of the Secretary. No such encumbrance or any addition thereto or extension
thereof shall be valid without said approval.
An encumbrance must be confined to the leasehold interest of CIWMI or the
subleasehold interest of a sublessee and shall not jeopardize in any way the
Band's interest in the Leased Premises. CIWMI agrees to furnish as requested
any financial statements or analyses pertinent to the encumbrance that the
Secretary may deem necessary to justify the amount, purpose, and terms of said
encumbrance. CIWMI further agrees to authorize an encumbrancer to furnish the
Page 32
Secretary, upon written request from the Secretary, any specific information
regarding the status of the encumbrance at any time during the Term of this
Lease.
In the event of default by the CIWMI under the terms of an approved encumbrance,
the encumbrancer may exercise any rights provided in the agreement or by law for
discharging said encumbrance, provided that, before any sale of the leasehold,
whether under power of sale or foreclosure, the encumbrancer shall give to the
Secretary and the Band notice of the same character and duration as is required
to be given to CIWMI by such encumbrance and/or the laws of the State of
California.
If any sale under the approved encumbrance occurs, whether by power of sale or
foreclosure, the purchaser at such sale shall succeed to all of the rights,
title, and interest of CIWMI in the leasehold estate covered by said approved
encumbrance. It is further agreed that, if the purchaser at such sale is the
encumbrancer, the encumbrancer may sell and assign the leasehold interest
without any further consent, provided that the assignee shall agree in writing
to be bound by all the terms and conditions of this Lease. If the encumbrancer
is the purchaser, it shall be required to comply with all the covenants and
conditions of this Lease only so long as it retains title to this Lease. If a
sale under the approved encumbrance occurs and the purchaser is a party other
than the encumbrancer, said purchaser, as successor in interest to CIWMI, shall
be bound by all the terms and conditions of this Lease.
If notice of such sale shall be given and the defaults or any of them upon which
such notice of sale is based shall then continue, the Band shall have the right
to correct such defaults at any time prior to the date of sale or foreclosure,
and to terminate such leasehold upon paying to the encumbrancer the amount of
principal and accrued interest which remains unpaid.
19. Agreements for Roads and Utility Services.
-----------------------------------------
A. The Band hereby agrees in good faith to grant, or facilitate the grant
by the Secretary or others of authorized easements or rights-of-way, both
appurtenant to and upon the Leased Premises, for adequate and appropriate
Page 33
access, roads, utilities, and other facilities, including but not limited to
gas, water, electricity, telephone, television and sewer, as may be necessary or
desired by CIWMI for the full enjoyment of the Leased Premises and the
development thereof in accordance with the provisions of this Lease. Such
right-of-way and easements shall be coterminous with the Term, or as may be
reasonable and necessary for satisfactory and efficient use by and for utility
service, roadway or railroad access, or any other purpose, over, across, or
under the Leased Premises and the Lands leased by the Band that adjoin or are
proximate to the Leased Premises; provided that CIWMI shall be bound by the
terms and conditions of all such rights-of-way and easements; and provided
further that CIWMI shall have such access to the Leased Premises as may be
necessary to perform any closure activities, post-closure maintenance, emergency
response, and corrective actions as may be required by the laws and regulations
of the Band or the United States, including but not limited to, the
Environmental Requirements.
B. CIWMI shall at its cost and expense make all arrangements with
governmental authorities and public utilities and pay all costs and charges for
commencement and continuation of all utilities and other like services,
including but not limited to electricity, telephone, water, sewer, and gas,
required for use on the Leased Premises and otherwise in connection with the
Facility. The Band shall cooperate with CIWMI and shall join as a party and
execute any and all documents, permits, or applications required to bring any
such utilities and like services to the Leased Premises.
20. Taxes; Assessments; Utility Charges.
-----------------------------------
A. Neither the Band or any agency thereof may, and the Band hereby waives
any taxing authority which it might otherwise have to, levy, assess, or collect
any taxes, assessments, license charges, fees, or other like charges during the
Term upon or against CIWMI or the Leased Premises and all CIWMI's interests
therein or property thereon. Any tribal tax, assessment, licence charge, fee,
or other like charge on any other person, entity, or property during the Term
shall require the prior approval of CIWMI.
Page 34
B. CIWMI shall pay, when and as the same become due and payable, all
taxes, assessments, licenses, fees, and other like charges levied during the
Term by any non-tribal legally constituted governmental authority upon or
against the Leased Premises and all interests therein and property thereon for
which either CIWMI or the Band may become liable.
C. The Band and/or any surety of CIWMI's obligations shall have the
option, but not the obligation, to pay any taxes, obligations underlying any
claim of lien, assessments, licenses, fees, and other like charges payable by
CIWMI, or settle any action therefor, if after written notice from the Band, the
Secretary or a surety of CIWMI's obligations fails to do so or to post adequate
bond against enforcement. All such costs and other expenses so incurred shall
be repaid by CIWMI upon demand. Failure to make such repayment on demand, or to
post adequate bond against enforcement, shall be an Event of Default and shall
constitute grounds for cancellation of this Lease; provided that no default
shall occur if CIWMI properly files a timely protest against or takes other
appropriate action to contest the imposition of such tax, lien, assessment,
license, fee, or other like charge and diligently prosecutes such protest or
other action. Interest shall accrue from date of payment by the Band and/or a
surety of CIWMI's obligations until repaid by CIWMI, at the rate of eighteen
percent (18%) per annum, unless CIWMI shall have properly filed a timely protest
against or taken other appropriate action to contest the imposition of such
taxes, liens, assessments, licences, fees, or other like charges and shall have
diligently prosecuted such protest or other action to resolution, in which case
such interest shall be abated.
21. The Band's Right to Perform CIWMI's Covenants.
---------------------------------------------
A. CIWMI covenants and agrees that, if it shall at any time fail to make
any payment or perform any other act on its part to be made or performed under
this Lease within the periods provided herein, the Band, after ten (10) days
written notice to CIWMI, may, but shall not be obligated to, and without waiving
or releasing CIWMI from any obligation of CIWMI under this Lease, make such
payment or perform such other act to the extent the Band may deem desirable, and
in connection therewith pay expenses and employ counsel. All sums so paid by
the Band and all expenses in connection therewith, including but not limited to,
Page 35
reasonable legal fees and interest payments incurred by the Band from the date
of such payment, shall be payable by CIWMI to the Band on demand, and the same
shall constitute additional rent hereunder.
B. The Band's exercising of such rights shall not waive or excuse an Event
of Default by CIWMI, nor shall it preclude the Band from simultaneously or
subsequently exercising any of its other rights.
22. Time of the essence. Because of the potential health and economic impacts
-------------------
upon the Band and the surrounding community should either of the parties default
in the performance of their duties in a timely and efficient manner, time is
agreed to be of the essence in the performance of each of the terms and
conditions of this Lease. This provision is a bargained-for consideration, not
a mere recital, and both parties specifically agree to be bound by it.
23. Default, Cancellation of Lease.
------------------------------
A. The happening of any of the following shall constitute an Event of
Default:
(1) CIWMI shall default in the payment of any monies required to be
paid hereunder when the same shall be due and payable and such default shall
continue unremedied for a period of fifteen days.
(2) Any written representation or warranty made by CIWMI in this Lease
or in any report, certificate, financial statement, or other instrument or
document delivered in connection with this Lease shall prove to have been false
or misleading in any material respect.
(3) CIWMI shall default in the performance of any material covenant,
warranty, or condition on its party to be performed or observed pursuant to the
terms of this Lease.
(4) CIWMI files a voluntary petition for bankruptcy or reorganization,
is adjudicated a bankrupt or insolvent, applies for or consents to a receiver,
trustee, or liquidator of CIWMI or its assets, makes a general assignment for
Page 36
the benefit of creditors, or admits in writing its inability to pay its debts as
they mature.
(5) CIWMI violates any applicable federal laws or regulations,
including but not limited to the Environmental Requirements, or any regulations
regarding leasing and permitting of Indian land.
(6) Any other act described as a default or an Event of Default in the
Agreements.
B. (1) Should an Event of Default occur, and the Secretary being satisfied
that there has been a violation of this Lease by CIWMI, then, (a) upon delivery
of written notice of default as described hereinbelow and as may be required by
applicable law, regulation, or this Lease, (b) after the Cure Period
(hereinafter defined), and (c) subject to the other provisions of this Lease,
the Band may proceed to cancel or terminate, or to request the cancellation or
termination of, and/or may exercise other of its remedies under, this Lease.
(2) The Band shall (a) deliver or cause to be delivered by certified or
registered mail of the Postal Service of the United States of America postage
prepaid or (b) hand-deliver or cause to be hand-delivered by courier or
overnight delivery service, to CIWMI, with duplicate copies delivered in the
same manner to any surety of CIWMI's obligations and to the Secretary, any and
all notices of default or notices to show cause why this Lease should not be
cancelled ("Default Notice"). Such Default Notice shall set forth with
specificity the default that the Band alleges, whether in the opinion of the
Band and/or the Secretary the default may be corrected, and if so, the action
CIWMI must take in order to cure such default.
(3) CIWMI shall have ten (10) days from the receipt of the Default
Notice to confirm to the Band its intention to cure its default and how it will
do so.
(4) Unless it is determined that the default cannot be corrected, CIWMI
will be given a reasonable time, but in no event less than thirty (30) days, in
which to cure the default described in the Default Notice ("Cure Period").
Page 37
C. If CIWMI fails to cure its default within the Cure Period, the Band
may, without cancelling or terminating this Lease, (1) proceed by suit or
administrative action or otherwise enforce collection or any other provision of
this Lease, or (2) enter the Leased Premises and remove all persons and property
of CIWMI therefrom and re-let the premises as the agent and for the account of
CIWMI, without affecting rights of the Band or any obligation of CIWMI
hereunder. The terms and conditions of such re-letting shall be at the
discretion of the Band, and the Band shall have the right to alter and repair
all or any portion of the Leased Premises as it deems advisable, and to re-let
with or without any equipment or fixtures situated thereon. If a sufficient sum
is not thus realized to pay all amounts due, including attorneys' fees, CIWMI
shall pay monthly, when due, any deficiency, and the Band may sue CIWMI
thereafter as any subsequent deficiency shall arise.
D. Notwithstanding anything to the contrary in this Lease, the Band may
not cancel or terminate this Lease, or otherwise exercise its remedies
hereunder, unless the Band has delivered to any surety of CIWMI's obligations a
Default Notice and, at the end of the thirty (30) day period following the
expiration of the Cure Period (or, if a determination is made that the default
may not be cured, at the end of the thirty (30) day period following the date of
the Default Notice), the surety has failed to (1) cure the default described in
the Default Notice; (2) pursue diligently the cure of the default described in
the Default Notice; or (3) exercise any of its remedies under the surety
document. If the Band initiates any proceedings to cancel or terminate this
Lease and, before such proceeding are fully and finally completed and/or
adjudicated, the surety cures or diligently pursues the cure of the default, the
Band shall immediately take and consummate any and all steps necessary or
desirable to stop the termination or cancellation proceeding.
E. During and until the completion of any cure, any surety pursuing a cure
shall pay the rents due and payable by CIWMI under this Lease; shall maintain
all insurance as required by this Lease; shall begin the cure of any other
default not curable by payment or expenditure of money that can reasonably be
undertaken; and shall diligently prosecute the said cure of such default.
Nothing herein shall require the surety pursuing the cure to enter any premises
to which it has no legal or contractual right to enter.
Page 38
F. The failure of CIWMI to comply with any obligation herein shall not be
deemed an Event of Default if the failure results from Excusable Delay, provided
that CIWMI's payment obligations shall not be excused unless Excusable Delay
results in CIWMI's inability to construct the Facility within a reasonable time
or in CIWMI's permanent inability to operate the Facility.
G. Notwithstanding anything else contained in this Lease, the Band will
comply with the requirements of 25 CFR 162.14, before cancelling this Lease.
24. Prohibition Against Hazardous Waste; Indemnification.
----------------------------------------------------
A. CIWMI agrees that the Leased Premises will not be used as an open dump
or for the handling, recycling, treatment, composting, or disposal of Hazardous
Waste (other than De Minimis Amounts), on either a permanent or temporary
basis. CIWMI shall not cause, arrange for, or permit any Hazardous Waste (other
than De Minimus Amounts) to be delivered, received, accepted, used, stored,
released, generated, transported, handled, processed, treated, reduced,
separated, recovered, converted, recycled, transferred, or disposed of on, to or
in the Leased Premises by CIWMI, its agents, employees, contractors, invitees,
or any other persons, and the Band's refusal to consent to such is considered
and adamant and shall not be deemed to be unreasonable, notwithstanding anything
herein to the contrary; provided, however, that CIWMI may take such actions as
may reasonably be necessary to divert Hazardous Waste inadvertently delivered to
the Leased Premises to safe and lawful disposal elsewhere. This restriction is
a material condition of this Lease, and without CIWMI's agreement to comply with
such restriction and to indemnify, release, and hold harmless the Band from any
and all liability resulting from CIWMI's failure to comply with such
restriction, the Band would not have entered into this Lease.
If, during the Term of this Lease or during closure activities and post-closure
maintenance, Hazardous Waste is delivered, received, accepted, used, stored,
released, generated, transported, handled, processed, treated, reduced,
separated, recovered, converted, recycled, transferred, or disposed of on, to or
in the Leased Premises, or if the Leased Premises become contaminated by Solid
Waste or Hazardous Waste in any manner, CIWMI shall indemnify and hold harmless
the Band from any and all Environmental Damages. Without limiting the
Page 39
foregoing, if CIWMI causes, arranges for, or permits the presence of any
Hazardous Waste on the Leased Premises that results in a threatened or actual
contamination, CIWMI shall promptly, at its sole expense and responsibility,
take any and all necessary actions to return the Leased Premises to a safe and
acceptable condition as close as reasonably possible to the existing prior to
the presence of any such threatened or actual contamination, pursuant to the
rules and regulations of the Band and of the United States and after having
first obtained the requisite approval, including but not limited to the approval
of WEPA, for any such remedial action.
B. CIWMI agrees to and shall protect, indemnify, exculpate, exonerate,
hold harmless, and defend, and hereby releases the Band, and the United States,
and their officers, agents, attorneys, and employees, from and against any and
all claims, causes of action, proceedings, judgements, complaints, demands,
penalties, settlements, fines, costs, damages liability (including but not
limited to strict liability), loss, costs (including but not limited to Remedial
Work), and expense (including but not limited to Environmental Damages), for any
loss, damage including but not limited to Environmental Damages, contamination,
or injury of any kind or nature, known or unknown, contingent or otherwise,
threatened or actual, matured or unmatured, foreseeable, unforeseeable (except
with respect to consequential damages), to the person or property of the Band,
or any other person, which, during the Term or as a result of CIWMI's conduct of
closure activities or post-closure maintenance:
(1) occurs on, adjacent to, or otherwise arises out of or is related to
the Leased Premises;
(2) may be caused or prevented by CIWMI, howsoever it may occur or be
related, negligent or otherwise, including but not limited to causation by:
(a) the use or misuse by CIWMI of the Leased Premises,
(b) CIWMI's failure to comply with the Environmental Requirements,
Page 40
(c) CIWMI's breach of its obligations under this Lease, or
(d) any misrepresentation or violations by CIWMI of the
representations, warranties, covenants, terms, or conditions contained in this
Lease; or
(3) may be caused:
(a) by any defect in any structure erected on or near the Leased
Premises,
(b) by or arising from accident, fire, contamination, or
(c) other casualty or occurrence on the Leased Premises whatsoever.
C. The Band agrees to and shall protect, indemnify, exculpate, exonerate,
hold harmless, and defend, and hereby releases CIWMI and its officers, agents,
and employees, from and against any and all claims, complaints, demands,
penalties, settlements, fines, damages, liability (including but not limited to
strict liability), loss, costs (including but not limited to Remedial Work), and
expense (including but not limited to Environmental Damages) for any loss,
damage, contamination, or injury of any kind or nature, known or unknown,
contingent or otherwise, threatened or actual, to the person or property of
CIWMI, or any other person, that may be caused by the Band and that occurs on,
adjacent to, or otherwise arises out of or is related to the Leased Premises.
D. The indemnifying parties each agree that the releases and
indemnifications for Environmental Damages and for violation of any
Environmental Requirements shall survive this Lease, and shall continue for such
period of time and under such conditions as specified by WEPA, but in no event
shall they survive less than thirty (30) years from the date of termination or
cancellation of the Lease, and in no event shall such releases or
indemnifications be construed to cover acts or omissions of other persons, which
acts or omissions occur on the Leased Premises after the date of termination or
cancellation of this Lease.
Page 41
E. The indemnifying party ("Indemnitor") shall provide the indemnitee with
prompt written notice of (1) the presence of any spill, release, or threat of
spill or release of, any Hazardous Waste on, in, under, or affecting the Leased
Premises, or emanating therefrom; (2) its receipt of any third party or
governmental communication or notice in connection with any Hazardous Waste on,
in under, or affecting, the Leased Premises or emanating therefrom or migrating
or threatening to migrate to or from the Leased Premises, including but not
limited to communications or notices that either party to this Lease has been
designated as a potentially responsible party in connection with any state or
federal superfund list respecting the Leased Premises, or has received a Section
104(E) letter from the United States Environmental Protection Agency requesting
information regarding the leased Premises; (3) its notice or knowledge of a
lawsuit or threat of suit against any party or concerning the Leased Premises
whether initiated by a governmental agency or authority, or by a third party
(such communication or notice shall be provided to indemnitee and be accompanied
by a description of indemnitor's proposed actions to remedy such situation and a
schedule therefor); and (4) any and all Hazardous Waste Claims and any remedial
action taken or Remedial Work done or incurred by the Indemnitor in response to
any Hazardous Waste Claims.
F. No undertaking to indemnify shall constitute, nor shall it be construed
to constitute, an admission of responsibility. Without negating or diminishing
the promises to indemnify, the indemnitee shall be permitted to participate in
any settlement negotiations that could result in civil or criminal penalties,
damages, or injunctive relief against the indemnitee, its officers, directors,
employees, agents, or attorneys. In addition the Band, and the Secretary if
necessary, must approve in writing of any settlement CIWMI, as indemnitor, may
make pursuant to this Lease.
G. Liability and the requirement to indemnify arises:
(1) upon demand for such by an indemnitee;
(2) when a Hazardous Waste is released or is threatened to be released,
on, in, under, or affecting the Leased Premises, or emanates therefrom or
migrates or threatens to migrate to or from the Leased Premises, in violation
of any Environmental Requirements, or the discovery thereof; and/or
Page 42
(3) upon the service of delivery of a Hazardous Waste Claim to or upon
an Indemnitor.
H. BOTH PARTIES ACKNOWLEDGE THAT THEY HAVE BEEN ADVISED BY THEIR
RESPECTIVE LEGAL COUNSEL AND ARE FAMILIAR WITH THE PROVISIONS OF CALIFORNIA
CIVIL CODE 1542, WHICH PROVIDE AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
To the extent, if at all, that this section does or may apply to this Lease, the
parties hereby expressly waive any rights they may have thereunder, as well as
under any other statutes or common law principles of similar effect.
25. Insurance.
---------
A. CIWMI, at all times and at its expense, shall provide and keep in
force, for the benefit of the Band, (1) insurance as the Band, from time to
time, may reasonably require, in companies, form, amounts, and with such other
provisions and for such periods as are satisfactory to the Band, to protect
against loss or damage to the Leased Premises and/or any improvements thereon,
which loss or damages results from or is caused by fire and such other hazards,
casualties, and contingencies; (2) comprehensive general public liability
insurance covering the Leased Premises and the businesses to be operated thereon
in companies, form, amounts, and with such other provisions and for such periods
as are satisfactory to the Band, and such liability policies must comply with
such limits of insurance as may be required by the laws or regulations of the
Band and the United States; and (3) such other insurance as reasonably may be
Page 43
required by the laws and regulations of the Band or the United States from time
to time (collectively, "Policies"). Any and all proceeds from any such Policies
shall be distributed, used and/or otherwise disposed of pursuant to the terms of
such Policies and of the Lease. The Policies shall be reviewed annually by the
Band for adequacy, and the coverage adjusted to accommodate for inflation and
increased risk factors. Such Policies shall designate the Band and the United
States as additional insureds and loss payees. CIWMI shall furnish to the Band
and the Secretary certificates of such Policies within thirty (30) days after
the Commencement Date, on an annual basis thereafter, and at such other times as
the Band or the Secretary may reasonably require.
B. The Policies shall be issued by a company or companies authorized to do
insurance business in the State of California, with a copy to be provided by
CIWMI to the Band, and the Secretary. The Policies will provide that they will
not be cancelled, terminated, suspended, or modified by the insurer without
first giving the Band and the Secretary at least sixty (60) days prior written
notice before any such cancellation, termination, suspension, or modification
shall become effective. CIWMI will deliver to the Band and the Secretary
certificates of Renewal Policies not less than thirty (30) days prior to the
respective dates of expiration of the Policies. CIWMI will deliver to the Band
and the Secretary receipts for the payment of premiums on all such Policies.
C. (1) If any act or occurrence of any kind or nature (including any
casualty for which insurance is not in effect) shall result in substantial
damage to or substantial loss or destruction of the Leased Premises and/or any
of the businesses or property thereon or part thereof, and CIWMI has knowledge
of such act or occurrence and damage, loss, or destruction, CIWMI agrees to and
shall give immediate notice thereof the Band and the Secretary.
(2) If insurance proceeds from the Policies are sufficient for such
purpose, or CIWMI is able and willing to supplement insufficient insurance
proceeds so that the amounts available are sufficient for such purpose, CIWMI
will promptly commence and continue diligently to complete the restoration,
repair, replacement, and reconstruction of any damage to the Leased Premises
and/or the improvements thereon and shall have full use of such proceeds for
such purpose.
Page 44
(3) If insurance proceeds from the Policies are insufficient for the
restoration, repair, replacement, and reconstruction of damage to the Leased
Premises and/or improvements thereon, and CIWMI is unable or unwilling to
supplement such insurance proceeds, then the Band shall retain and own all
proceeds of Policies, and this Lease shall be deemed terminated by mutual
consent of the Band and CIWMI and with the approval of the Secretary, which
consent is hereby irrevocably given; provided that, CIWMI may at its discretion
supplement the insurance proceeds so that the amounts available are sufficient
to complete the restoration, repair, replacement, and reconstruction of damage
to the Leased Premises and/or improvements thereof; in such case, CIWMI shall
promptly commence and continue diligently to do so, and this Lease shall not be
terminated.
26. Holding Over. Holding over by CIWMI after the termination or expiration of
------------
this Lease shall not constitute a renewal or extension thereof or give CIWMI any
rights hereunder or in or to the Leased Premises. CIWMI agrees to remove all
Personal Property prior to the termination or expiration of this Lease;
provided, however, that if this Lease is cancelled prior to the expiration
date, CIWMI shall have thirty (30) days after the cancellation date to remove
all such Personal Property. Should CIWMI fail to remove any such property
within the specified time, the Band shall have the right to remove it and
dispose of it or have it stored at CIWMI's expense.
27. Termination of Federal Trust. Nothing contained in this Lease shall
----------------------------
operate to delay or prevent a termination or modification of federal trust
responsibilities with respect to the Leased Premises by the issuance of a fee
patent or otherwise during the Term of this Lease; however, such termination
shall not serve to abrogate this Lease.
28. CIWMI's Obligations to the Band and the United States. While the Leased
-----------------------------------------------------
Premises are held in trust by the United States or subject to a restriction
against alienation imposed by the United States, all of CIWMI's obligations
under this Lease and the obligations of any surety of CIWMI's obligations are to
the Band and the United States.
29. Best Efforts. The Band will use its best efforts to assist CIWMI in (A)
------------
obtaining commitments for Solid Waste disposal in the Landfill and shall
cooperate fully in such efforts when so requested by CIWMI, but will not
Page 45
approach independently any source for Solid Waste without the full knowledge and
written approval of CIWMI; and (B) obtaining all necessary approvals,
authorizations, and other favorable actions by the Band, the United States and
agencies thereof, the State of California and agencies thereof, and the County
of Colusa that are or may be necessary for the construction, operation,
maintenance, closure, and post-closure maintenance of the Facility.
30. Payments and Notices. All notices, payments, demands or communications
--------------------
required or permitted under this Lease shall be in writing and shall be deemed
to have been given sufficiently if personally served or mailed certified or
registered, return receipt requested and postage prepaid, and addressed to the
parties at the addresses indicated on the first page of this Lease or at such
other address as any party may hereafter furnish the other in writing; or by
courier or overnight delivery service. Notices to a surety of CIWMI's
obligations may be given in the same manner at the last address of such entity
known to the mailing party. If personally served, a notice or demand shall be
deemed to have been made upon actual delivery. If mailed, a notice or demand
shall be deemed to have been made on the fifth (5th) day after posting, or on
the date actually received, whichever occurs first.
31. Inspection and Testing. The Secretary, the Band, WEPA, and their
----------------------
authorized representatives shall have the right, at any reasonable times during
the Term of this Lease, regularly, and with reasonable written notice to CIWMI,
and at the Band's or WEPA's sole cost and expense, to enter upon the Leased
Premises or any portion thereof for the purpose of inspecting and/or conducting
environmental tests on and assessments of the Leased Premises, all buildings and
other improvements erected and placed thereon, and all activities occurring
thereon; provided that CIWMI shall have the right to be present, or to have its
designated representatives present, at all times during such inspection or
testing. CIWMI agrees to permit such inspection and/or testing. This right to
inspect and test does not extend to confidential information or trade secrets of
CIWMI. Should the Secretary, WEPA, or the Band find any violation or suspected
violation of any applicable laws or the Environmental Requirements, the
Secretary, WEPA, or the Band may compel CIWMI to investigate and remedy any such
violations or resultant hazards or Environmental Damages, at CIWMI's sole cost
and expense.
Page 46
32. Indian Preference. CIWMI shall provide Indian preference in employment to
-----------------
the greatest extent feasible by hiring qualified members of the Band, their
spouses, and their adult children in all positions for the construction,
operation, maintenance, closure, and post-closure maintenance of the Facility.
If no member of the Band, his or her spouse, or his or her adult child(ren)
applies for, qualifies for, or accepts the terms of employment of an available
position, then CIWMI agrees to provide Indian preference in employment to the
greatest extent feasible by hiring qualified members of other Indian tribes in
all positions at the Facility for which such members are qualified. The initial
position descriptions and qualifications for all positions anticipated at the
Facility will be provided to the Band by CIWMI no later than thirty (30) days
after either the Commencement Date or the date on which WEPA issues a permit
authorizing construction of the Landfill, whichever is earlier; thereafter, on a
monthly basis, CIWMI will submit to the Band a list of position descriptions and
qualifications for all positions at the Facility, and the Band will submit to
CIWMI a list of all member of the Band, their spouses, and their adult children.
33. Interest of Member of Congress. No member of or delegate to Congress, or
------------------------------
Resident Commissioner, shall be admitted to any share or part of this Lease or
to any benefit that may arise herefrom, but this provision shall not be
construed to extend to this Lease if made with a corporation for its general
benefit.
34. Tax Immunity. Nothing contained in this Lease is intended or shall be
------------
construed to constitute a waiver by either party of any applicable laws that
provide tax immunity to trust or restricted Indian property or to any interest
therein or income derived therefrom.
35. Currency. All references to money herein are to the lawful money of the
--------
United States of America.
36. Validity. This Lease, and any modification of or amendment to this Lease,
--------
shall not be valid or binding upon either party hereto unless approved by the
Secretary.
Page 47
37. Non-Responsibility Notices. Prior to the commencement or construction of
--------------------------
each improvement on the Leased Premises, or any repair or alteration thereto,
CIWMI shall give the Band and the Secretary ten (10) days advance notice in
writing of intention to begin said activity, in order that non-responsibility
notices may be posted and recorded as may be provided by any applicable laws.
The Band hereby authorizes the Secretary to post said notices on the Band's
behalf. Nothing contained in this Lease shall be construed to waive any
immunity of trust or restricted property from liens, or to obligate the
Secretary or the Band to post non-responsibility notices while the Leased
Premises are in a trust or restricted status.
38. Severability. In the event that any term or provision in this Lease shall
------------
be held invalid or unenforceable by a court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other term or provision
of this Lease.
39. Construction; Contractu Situ. This Lease was, and shall be deemed to have
----------------------------
been, negotiated and written by both parties. This Lease is made, executed,
delivered and to be performed on the Cortina Rancheria, Colusa County, State of
California, and shall be construed according to and governed by applicable
federal, state, and tribal law, unless state law is pre-empted or prohibited by
federal or tribal law. Notwithstanding any provision of this Lease to the
contrary, and except as augmented or pre-empted by federal or tribal law, the
parties intend that, in any dispute or controversy arising out of or involving
this Lease, this Lease shall be construed according to the principles of the
contract laws of the State of California. This provision is not intended, nor
shall it be construed, to incorporate, or concede the applicability of, any
other laws of the State of California, including but not limited to
environmental or usury laws.
40. Entire Agreement; Modification. The Agreements constitute the final and
------------------------------
entire agreement between the parties, and there is no other agreement or promise
on the part of either party to do or omit to do any act or thing not mentioned
in the Agreements. The Agreements are intended as a complete and exclusive
statement of the terms and conditions of the parties' agreement and may not be
effectively amended, changed, modified, or altered without the written consent
of both parties.
Page 48
41. Headings. The headings to the various sections of this Lease are inserted
--------
only for convenience of reference and are not intended, nor shall they be
construed, to modify, define, limit, or expand the intent of the parties, or in
any way to affect the meaning or interpretation of this Lease.
42. Gender, Number. Any noun or pronoun used herein shall refer to and gender
--------------
and to any number as the context requires or permits.
43. Arbitration. If a dispute concerning the construction or enforcement of
-----------
this Lease arises between the parties that cannot be resolved, the parties agree
to submit the dispute to arbitration prior to initiating legal proceedings, and
either of the following procedures may be followed: (1) a three-member
arbitration board shall be established, one member to be selected by the Band
and one member to be selected by CIWMI. The two members shall thereafter select
a third member; or (2) a demand for arbitration shall be submitted to the
American Arbitration Association.
Nothing herein is intended to, and shall not, require arbitration of any dispute
relating to a material breach of any term of this Lease. Upon written notice to
the Secretary that CIWMI and the Band are seeking resolution of a dispute by
arbitration, the Arbitrator or Arbitration Board shall be established within
thirty (30) days thereafter.
The costs of such arbitration or arbitration board shall be shared equally by
CIWMI and the Band. The Secretary shall be encouraged to accept decisions
reached by an arbitrator or arbitration board, but the Secretary shall not be
bound by any decision that might be in conflict with federal law or that the
Secretary determines is adverse to the interests of the Band.
44. Limited Waiver of Immunity. Each of the parties hereby expressly,
--------------------------
unequivocally, and irrevocably waives any immunity from suit it may enjoy with
respect to any and all controversies or claims arising out of or related to this
Lease, and each consents and attorns to the personal jurisdiction of any court
of competent jurisdiction with respect to any action to collect any or all of
the sums due or obligations owed by it to the other party or to enforce any of
the other party's rights and/or remedies under this Lease. These respective
waivers are not intended to nor shall they be construed to waive the immunity of
Page 49
either party for any other purpose or with respect to any claims or other
matters not specifically mentioned, and are not intended to, nor shall they,
extend to the benefit of any person other than the parties, their successors and
assigns.
45. Attorney's Fees. Upon determination of breach or default of this Lease by
---------------
one of the parties, the other party shall have the right to recover all
reasonable attorneys' fees, expert witness fees, and court costs incurred in
enforcing its rights hereunder or in successfully defending itself against the
claims by the breaching party.
46. Binding Provisions. The provisions of this Lease shall be binding on the
------------------
successors and assigns of the parties in like manner as on the original parties
unless modified by mutual written agreement, with the written consent of the
Secretary.
IN WITNESS WHEREOF the parties hereto have hereunto set their hands.
CORTINA BAND OF WINTUN INDIANS
By:
------------------------------------------
Frank Frease, Chairperson
Attest:
By:
---------------------------------
CORTINA INTEGRATED WASTE MANAGEMENT, INC.
By:
------------------------------------------
David B. Atkinson - President
Page 50
CERTIFICATION OF CORTINA INTEGRATED WASTE MANAGEMENT, INC.
----------------------------------------------------------
I, the undersigned, as President of Cortina Integrated Waste Management
Inc. do hereby certify that the foregoing First Amended and Restated Business
Lease was considered and approved by the Board of Directors at a duly called
meeting on the 12th day of October, 2000, at which a quorum was present, that
the same was adopted by a unanimous vote in favour and that David B. Atkinson,
as President of Cortina Integrated Waste Management, Inc., was authorized to
sign the First Amended and Restated Business Lease on behalf of Cortina
Integrated Waste Management, Inc.
------------------------------------------
David B. Atkinson, President
CERTIFICATION OF CORTINA BAND OF WINTUN INDIANS
-----------------------------------------------
I, the undersigned, as Chairperson of the Cortina Band of Wintun Indians, do
hereby certify that the I have been authorized by the General Council and
Business Council of the Band to enter into this Agreement according to the terms
of the attached Resolutions.
------------------------------------------
Frank Frease, Chairperson
Attest:
- ------------------------------------------
Secretary
ACKNOWLEDGMENT OF CORTINA INTEGRATED
------------------------------------
WASTE MANAGEMENT, INC.
----------------------
STATE OF CALIFORNIA )
) ss:
COUNTY OF SACRAMENTO )
ON THIS day of , 2000, before me, the undersigned
--------- ------------------
Notary Public, personally appeared David B. Atkinson, President of Cortina
Integrated Waste Management, Inc., proved to me on the basis of satisfactory
evidence, to be the person whose name is subscribed to the within instrument,
and acknowledged to me that he executed the same in his authorized capacity, and
that by his signature, Cortina Integrated Waste Management, Inc. executed the
instrument.
WITNESS my hand and official seal.
------------------------------------------
Notary Public
Residing in
------------------------------
My Commission Expires:
-------------------
ACKNOWLEDGMENT OF CORTINA BAND OF WINTUN INDIANS
------------------------------------------------
STATE OF CALIFORNIA )
) ss:
COUNTY OF SACRAMENTO )
ON THIS day of , 2000, before me, the undersigned
--------- ------------------
Notary Public, personally appeared Frank Frease, Chairperson of the Cortina Band
of Wintun Indians, proved to me on the basis of satisfactory evidence, to be the
person whose name is subscribed to the within instrument, and acknowledged to me
that he executed the same in his authorized capacity, and that by his signature
on the instrument, the Cortina Band of Wintun Indians executed the instrument.
WITNESS my hand and official seal.
------------------------------------------
Notary Public
Residing in
------------------------------
My Commission Expires:
-------------------
Page 52
UNITED STATES
DEPARTMENT OF THE INTERIOR
BUREAU OF INDIAN AFFAIRS
Pacific Region
THE WITHIN Lease between the Cortina Band of Wintun Indians and Cortina
Integrated Waste Management, Inc. is hereby approved.
Date of Approval: By:
--------------------
---------------------------------------
Regional Director
Pursuant to the authority redelegated
by 209 DM 8, Secretary's Order 3150 and
10 BIAM Bulletin 13, as Extended.
Exhibit 4-C
FIRST AMENDED AND RESTATED
--------------------------
ENVIRONMENTAL CERTIFICATION
---------------------------
AND INDEMNIFICATION
-------------------
This FIRST AMENDED AND RESTATED ENVIRONMENTAL CERTIFICATION AND
INDEMNIFICATION ("Indemnification") effective, 2000, is given by
----------------
CORTINA INTEGRATED WASTE MANAGEMENT, INC. ("CIWMI"), a California corporation
and wholly owned subsidiary of Earthworks Industries, Inc. of Vancouver, Canada,
which expression shall include its assigns and successors in interest, whose
address is 12925 Alcosta Boulevard, Suite 1, San Ramon, California, 94583, in
favour of The CORTINA BAND OF WINTUN INDIANS ("Band"), formally known as the
Cortina Indian Rancheria of Wintun Indians of California, and whose address is
1275 Halyard Dr. West, Suite 100, Sacramento, CA 95691 in conjunction with a
certain lease ("Lease") made between the Band and CIWMI.
RECITALS
--------
WHEREAS, on March 31, 1995, CIWMI and the Band executed an Environmental
Certification and Indemnification Agreement as consideration for the development
and execution of a Business Lease;
WHEREAS, on October 31, 1995, CIWMI and the Band executed a Business Lease
for properties described therein for construction, operation, maintenance,
closure, and post-closure maintenance of an integrated solid waste management
facility;
WHEREAS CIWMI and the Band have determined the Environmental Certification
and Indemnification Agreement and the Business Lease as drafted and executed in
1995 do not accurately reflect the facts and the parties' intentions, and
changes need to be made to accurately reflect the facts and to ensure that the
plans and intent of CIWMI and the Band are effectively carried out;
Page 2
WHEREAS both CIWMI and the Band believe that it is in their best interests
to execute an amended and restated business lease and, in order to agree
thereto, the Band has required CIWMI to execute and deliver as well an amended
and restated environmental certification and indemnification; and
WHEREAS, in consideration of CIWMI's execution and delivery of this First
Amended and Restated Environmental Certification and Indemnification
("Indemnification"), and induced thereby, the Band has agreed to enter into a
First Amended and Restated Business Lease, which is incorporated herein by
reference, pursuant to the terms of which the Band agrees to lease to CIWMI and
CIWMI agrees to lease from the Band certain real property described therein
("Property") for purposes of construction, operating, maintaining, and closing
an integrated solid waste management facility consisting of a municipal solid
waste landfill ("Landfill"), a materials recovery facility ("MRF"), a composting
facility, and Petroleum-Contaminated Soil Bioremediation project;
NOW, THEREFORE, in consideration of the Recitals hereinabove mentioned and
of the terms, conditions, covenants, and warranties hereinafter mentioned to be
kept, honored, and performed by CIWMI, it is hereby agreed as follows:
TERMS AND CONDITIONS
--------------------
1. Definitions. As used herein, the following terms shall have the following
-----------
meanings:
A. "Band" means the Cortina Band of Wintun Indians.
B. "CIWMI" means Cortina Integrated Waste Management, Inc., a California
corporation and wholly owned subsidiary of Earthworks Industries, Inc. of
Vancouver, Canada.
C. "Composting" means a biological process that accelerates natural
decomposition of organic waste.
Page 3
D. "De Minimis Amounts" means, with respect to any given level of
Hazardous Waste, such level or quantity of Hazardous Waste (in any form or
combination of forms) that (1) does not constitute a violation of any
Environmental Requirements and (2) is customarily employed in, or associated
with, commercial, retail, and/or residential facilities in California.
E. "Environmental Damages" means all claims, causes of action, proceeding,
complaints, judgments, damages, losses, penalties, fines, liabilities (including
strict liability), encumbrances, liens, and costs and expenses of investigation
and defense of any claim (whether or not such claim is ultimately defeated),
and settlement of any claim or judgement, of whatever kind or nature, contingent
or otherwise, matured or unmatured, foreseeable or unforeseeable, including but
not limited to reasonable attorneys' fees and disbursements and consultants' and
experts' fees, any of which arise out of or are incurred at any time as a result
of the presence, release, treatment, discharge, or disposal of Hazardous Waste
upon, from, about, or beneath, on, or to the Property, or migrating or
threatening to migrate to or from the Property, or as a result of the existence
of a violation of any Environmental Requirements pertaining to the Property or
adjacent property, and including but not limited to:
(1) The resultant actual and foreseeable consequential damages for
personal injury, or injury to property or natural resources occurring upon or
off the Property, including but not limited to lost profits, the cost of
demolition and rebuilding of any improvements on real property, and interest and
penalties and including but not limited to any diminution in the value of the
Property, and damages for the loss of business or restriction on the use of or
adverse impact on the marketing of rentable or useable space or any amenity of
the Property;
(2) Reasonable fees incurred for the services of attorneys, consultants,
contractors, experts, laboratories, and all other costs incurred in connection
with the investigation, on-site and off-site cleanup, removal, or remediation of
such Hazardous Waste or violation of any Environmental Requirements; including
but not limited to the preparation of any feasibility studies or reports or the
performance of any cleanup, remediation, removal, response, abatement,
Page 4
containment, closure, restoration, or monitoring work required by any federal,
state, tribal, or local governmental agency or political subdivision, or
reasonably necessary to make full economic use, in a manner consistent with its
current planned use, of the Property or any other property to which such
Hazardous Wastes are migrating or threatening to migrate, or otherwise expended
in connection with such conditions; including but not limited to any attorneys'
fees, costs, expert witness fees, and expenses incurred in enforcing this
Indemnification or collecting any sums due hereunder; and including but not
limited to any and all costs of remediation as may be required or necessary to
bring the Property into full compliance with all Environmental Requirements, as
such compliance may be defined or mandated by any federal, state, tribal, or
local governmental agency or political subdivision;
(3) Liability to any third person or government agency to indemnify such
person or agency for costs incurred in connection with such presence, release,
treatment, or disposal of Hazardous Waste or the violation of any Environmental
Requirements; and
(4) Any and all Remedial Work.
F. "Environmental Requirements" means all applicable present and future
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises, and similar guidance
or requirements, of all governmental agencies, departments, commissions, boards,
bureaus, authorities, or instrumentalities of the United States, the State of
California, the Band, and any political subdivisions thereof as any such may be
amended from time to time ("Laws"); and all applicable judicial, administrative,
and regulatory decrees, judgments, and orders ("Orders") relating to the
protection of human health or the environment, including but not limited to all
Laws and Orders for or concerning reporting, licensing, permitting,
investigating, treating, or remediating emissions, discharges, spills, or
releases, threatened or actual, of any chemical substances, pollutants,
contaminants, or hazardous or toxic substances, materials, or wastes, including
Hazardous Waste, whether solid, liquid, or gaseous in nature, into or onto the
air, surface water, groundwater, or land; and including but not limited to all
Laws and Orders relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of chemical substances,
Page 5
pollutants, contaminants, or hazardous or toxic substances, materials, or
wastes, including Hazardous Waste, whether solid, liquid, or gaseous in nature.
G. "Hazardous Waste" means any waste substance, material, smoke, gas,
particulate matter, or combination thereof, that:
(1) because of its quantity, concentration, or physical, chemical, or
infectious characteristics, may either cause or significantly contribute to an
increase in mortality or serious irreversible or incapacitating illness or may
pose a substantial present or potential hazard to human health, living
organisms, or the environment when improperly treated, stored, transported,
composted, disposed of, or otherwise handled; or
(2) is defined to be hazardous or toxic by any Environmental Requirement,
including but not limited to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 or the Resource Conservation and
Recovery Act of 1976, as either Act may be amended from time to time; or
(3) is hazardous, explosive, infectious, radioactive, carcinogenic,
mutagenic, toxic, ignitable or flammable, reactive, or corrosive and that is or
becomes regulated as such by any governmental agency, department, commission,
board, agency, or instrumentality of the Band, WEPA, the State of California, or
the United States of America; or that is an irritant or a strong sensitizer; or
that generates pressure through decomposition (excluding gases generated or
occurring naturally within a landfill); and that may cause substantial personal
injury, serious illness, or harm to humans, domestic animals, or wildlife,
during or as a proximate result of its disposal.
(4) The terms "toxic," "corrosive," "flammable," "irritant," and "strong
sensitizer" shall be given the same meaning as in the California Hazardous
Substances Act (Chapter 13 commencing with section 28740 of Division 21 of the
Health and Safety Code); or
Page 6
(5) requires investigation or remediation under any Environmental
Requirement; or
(6) contains asbestos, polychlorinated biphenyls ("PCBs"), petroleum
hydrocarbons, urea formaldehyde foam insulation, or radon gas.
H. "Hazardous Waste Claims" means any and all enforcement, cleanup,
removal, remedial or other governmental or regulatory actions, agreements, or
orders threatened, instituted, or competed pursuant to any Environmental
Requirements, together with any and all claims made or threatened by any third
party against CIWMI, the Band, or the Property relating to damages (including
but not limited to Environmental Damages), contribution, costs recovery
compensation, loss, or injury resulting from the presence, release, treatment,
disposal, or discharge of Hazardous Waste upon, from, about, beneath, on, or to
the Property.
I. "Indemnification" means this First Amended and Restated Environmental
Certification and Indemnification made by CIWMI in favour of the Band.
J. "Lease" means the First Amended and Restated Business Lease to be
entered into between the Band and CIWMI contemporaneously with this
Indemnification.
K. "Materials Recovery Facility" or "MRF" means a facility for separation
and recovery of recyclable materials such as aluminum, other metals, glass,
plastics, cardboard, newsprint, other paper, wood, and green wastes from the
wastestream for sale in the regional recycling markets.
L. "Person" means an individual, trust, firm, association, partnership,
political subdivision, government agency, municipality, industry, public or
private corporation, or any other entity whatsoever.
Page 7
M. "Petroleum-Contaminated Soil Bioremediation" means a biological
process that introduces microorganisms, usually bacteria, into petroleum-
contaminated soil to detoxify hydrocarbon contaminants and transform them into
simpler, less toxic compounds.
N. "Remedial Work" means:
(1) the costs of removal of any and all Hazardous Waste from all or any
portion of the Leased Premises or the adjacent property;
(2) the costs required to take necessary precautions to protect against
the release of Hazardous Wastes on, in, under, or affecting the Leased Premises
into the air, ground, body of water, or adjacent property to the extent required
by the Environmental Requirements or any governmental entity or authority,
including but not limited to the costs of environmental testing and assessments;
and
(3) the costs incurred to comply, or to bring all or any portion of the
Leased Premises or any adjacent property adversely affected by the Facility, or
the parties' acts or omissions under this Lease into compliance with, all
applicable Environmental Requirements, including but not limited to payment of
any fines, penalties, and administrative and overhead costs charged or assessed
by any governmental entity or authority.
O. "Secretary" mean the Secretary of the Interior or his authorised
representative acting under delegated authority.
P. "Solid Waste" means all putrescible and non-putrescible solid,
semisolid, and liquid waste, including but not limited garbage, trash, refuse,
paper, rubbish, ashes, industrial waste, construction and demolition waste,
abandoned vehicles and parts thereof, discarded home and industrial appliances,
manure, vegetable or animal solid and semisolid wastes, other discarded solid,
liquid, and semisolid waste from a wastewater treatment plant, water supply
Page 8
treatment plant, or air pollution control facility, or other discarded contained
gaseous material resulting from industrial, commercial, mining, or agricultural
operations or community activities, but not including solid or dissolved
material in domestic sewage, solid or dissolved material in irrigation return
flows, industrial discharges that are point sources subject to permits under 33
U.S.C. 1342, source, special nuclear, or byproduct material defined by the
Atomic Energy Act of 1954, as amended, 42 U.S.C. 2011 et seq., and not including
Hazardous Waste.
Q. "Term" means the Initial term and the Renewal Term, if exercised, of
the Lease, or either of them, unless specifically limited in context to either
the Initial Term or the Renewal Term.
R. "WEPA" means the Wintun Environmental Protection Agency, a governmental
agency of the Band.
2. Representations and Warranties.
------------------------------
A. CIWMI hereby represents and warrants as follows;
(1) CIWMI is an independent corporation, duly incorporated under the laws
of the State of California, and is and will remain during the Term qualified and
authorized to do business in California.
(2) CIWMI has the right and corporate power, and has been authorized to
(a) enter into this Indemnification; (b) perform each of its obligations
hereunder; and (c) construct, operate, maintain, close, and maintain after
closure the Landfill pursuant to the terms and conditions of the Lease.
(3) The execution and delivery by CIWMI of this Indemnification and the
Lease, and performance of its obligations hereunder and thereunder, have been
duly and properly authorized by all necessary action, including but not limited
Page 9
to action of the Board of Directors of CIWMI and any relevant government
authority/ies, and such execution, delivery, and performance will not contravene
or violate any provision of law or any valid agreements to which CIWMI is a
party. Each and all persons executing the Lease and/or this Indemnification on
behalf of CIWMI have been duly authorized to execute and deliver such documents
on behalf of CIWMI pursuant to its organizational documents, authorizations, and
all applicable law.
(4) This Indemnification and the Lease have been duly and validly
executed and delivered by CIWMI and constitute the valid, legally binding
obligations of CIWMI.
(5) There are no claims or litigation, pending or threatened, known to
CIWMI, that could materially and adversely affect this Indemnification, the
Property, the Lease, CIWMI's interest in and to the Property, or CIWMI's
ability to complete construction of the improvements or to perform any of its
obligations under the Lease or this Indemnification; nor is there any basis
known to CIWMI for any unfavourable decision, ruling, or finding that would
materially, adversely affect the validity of the Lease or the Indemnification,
or that might result in any material adverse change in the condition of CIWMI.
(6) All written representation and warranties made by CIWMI and/or its
officers and agents in connection with this Indemnification and the Lease (a)
were true, correct, and complete in all material respects when furnished to the
Band and as of the date made; and (b) are true, correct, and complete in all
material respects as of the date of which this Indemnification and the Lease are
executed.
(7) The Property and the uses contemplated therefor in the Lease comply,
to CIWMI's knowledge, in all respects with all existing applicable federal,
state, and tribal zoning, building, subdivision, platting, and land use
requirements, including but not limited to the Environmental Requirements.
Page 10
(8) Performance by CIWMI of its obligations under, and compliance by
CIWMI with, this Indemnification and the Lease will not violate any applicable
law, or any other instrument or agreement binding upon CIWMI: and will not
result in the imposition of any lien, charge, or encumbrance of any nature on
any of CIWMI's assets or property, including but not limited to all or any
portion of the Property.
(9) There are no claims, liens, encumbrances, or other restrictions
against CIWMI known to CIWMI that result from liabilities arising under any
applicable environment laws, including but not limited to the Environmental
Requirements.
(10) CIWMI is not prohibited from entering into this Indemnification or
the Lease by any valid agreement or other writing known to CIWMI or by federal,
state, or tribal law or regulation.
(11) CIWMI is solvent and has not filed a petition for bankruptcy.
(12) To CIWMI's best knowledge, CIWMI is in compliance in all material
respects with all applicable laws, including but not limited to the
Environmental Requirements.
(13) CIWMI has received no notice, order, or other communication of any
alleged or potential violation of or failure to comply with applicable laws,
including but not limited to the Environmental Requirements.
(14) CIWMI is not operating, and has not operated, under or used any
other name or assumed name except Cortina Integrated Waste Management, Inc.
(15) CIWMI has not been involved in the generation, manufacture, storage,
transportation, treatment, handling, release, disposal, production, use, or
processing of any Hazardous Waste (other than De Minimis Amounts), except in
Page 11
compliance with applicable laws, including but not limited to the Environmental
Requirements.
(16) CIWMI will not keep, store, or use underground storage tanks on the
Property.
(17) No written certificate or statement delivered or made by CIWMI to
the Band in connection with this Indemnification or the Lease contains any
untrue statement of a material fact or fails to state any material fact
necessary to keep the statements, representations, or warranties contained in
the Lease from being misleading.
(18) All financial statements of CIWMI, including any schedules or notes
pertaining thereto, heretofore delivered to the Band have been prepared in
accordance with generally accepted accounting principles consistently applied,
and fully and fairly represent the current financial condition of CIWMI as of
the dates thereof and the results of operations for the periods covered thereby;
and there have been no material adverse changes in the consolidated financial
condition or business of CIWMI from the date of such statements to the date of
the execution of this Indemnification.
(19) As the date of such financial statements, CIWMI had no material
indebtedness of any nature, including but not limited to any liens,
garnishments, judgments, encumbrances, liabilities for taxes and any interest or
penalties relating thereto, except to the extent reflected (in a footnote or
otherwise) and reserved against in such financial statements or as disclosed in
or permitted by this Indemnification or the Lease.
(20) CIWMI's organizational documents each have been duly adopted and/or
amended consistent with all applicable law.
(21) During the Term of the Lease, CIWMI has all necessary right, power,
and authority to operate and manage any business permitted by the Lease.
Page 12
(22) All permits, certificates, approvals, licenses, and other
authorizations ("Permits") of any governmental authority necessary to permit
construction on and development of the Property will be issued prior to CIWMI's
commencement of such construction of development; and there are no such actions
or proceedings known to CIWMI, pending or threatened, that question or would
question the issuance or validity of any of such Permits, nor that claim or
allege, or would claim or allege, that any additional Permits are necessary in
order to construct, use, or operate the Property.
(23) CIWMI will conduct its business in an orderly, efficient, and
customary manner and will keep and maintain all of its properties and equipment
in good working order and condition.
B. CIWMI's representations and warranties hereinabove are intended and
agreed by CIWMI to survive the Lease to the full extent necessary to enable the
Band to enforce its rights as described in this Indemnification and in the
Lease.
3. Prohibition Against Hazardous Waste; Indemnification.
----------------------------------------------------
A. CIWMI agrees that the Property will not be used as an open dump or for
the handling, recycling, treatment, composting, or disposal of Hazardous Waste
(other than De Minimis Amounts), on either a permanent or temporary basis.
CIWMI shall not cause, arrange for, or permit any Hazardous Waste (other that De
Minimis Amounts) to be delivered, received, accepted, used, stored, released,
generated, transported, handled, processed, treated, reduced, separated,
recovered, converted, recycled, transferred, or disposed of on, to, or in the
Property by CIWMI, its agents, employees, contractors, invitees, or any other
persons, and the Band's refusal to consent to such is considered and adamant and
shall not be deemed to be unreasonable, notwithstanding anything to the
contrary; provided, however, that CIWMI may take such actions as may reasonably
be necessary to divert Hazardous Waste inadvertently delivered to the Property
to safe and lawful disposal elsewhere.
Page 13
This restriction is a material condition of this Indemnification and the Lease,
and, without CIWMI's agreement to comply with such restriction and indemnify,
release, and hold harmless the Band from any and all liability resulting from
CIWMI's failure to comply with such restriction, the Band would not have entered
into this Indemnification and the Lease. If, during the Term of the Lease or
during closure activities and post-closure maintenance, Hazardous Waste is
delivered, received, accepted, used, stored, released, generated, transported,
handled, processed, treated, reduced, separated, recovered, converted, recycled,
transferred, or disposed of on, to, or in the Property, or if the Property
becomes contaminated by Solid Waste or Hazardous Waste in any manner, CIWMI
shall indemnify and hold harmless the Band from any and all Environmental
Damages. Without limiting the foregoing, if CIWMI causes, arranges for, or
permits the presence of any Hazardous Waste on the Property that results in a
threatened or actual contamination, CIWMI shall promptly, at its sole expense
and responsibility, take any and all necessary actions to return the Property to
a safe and acceptable condition as close as reasonably possible to that existing
prior to the presence of any such threatened or actual contamination, pursuant
to the rules and regulations of the Band and of the United States and after
having first obtained the requisite approvals, including but not limited to the
approval of WEPA, for any such remedial action.
B. CIWMI agrees to and shall protect, indemnify, exculpate, exonerate,
hold harmless, and defend, and hereby releases the Band and the United States,
and their officers, agents, attorneys, and employees, from and against any and
all claims, causes of action, proceedings, judgments, complaints, demands,
penalties, settlements, fines, costs (including but not limited to Remediation
Work), damages, liability (including but not limited to strict liability), loss,
and expense, for any loss, damage including but not limited to Environmental
Damages, contamination, or injury of any kind or nature, known or unknown,
contingent or otherwise, threatened or actual, matured or unmatured,
foreseeable, unforeseeable, to the person or property of the Band or any other
person, that, during the Term of the Lease or as a result of CIWMI's conduct of
closure or post-closure maintenance:
(1) occurs on, adjacent to, or otherwise arises out of or is related to,
the Property;
Page 14
(2) may be caused or prevented by CIWMI, howsoever it may occur or be
related, negligent or otherwise, including but not limited to causation by:
(a) the use or misuse by CIWMI of the Property,
(b) CIWMI's failure to comply with the Environmental Requirements,
(c) CIWMI's breach of its obligations under this Indemnification or the
Lease, or
(d) any misrepresentation or violation by CIWMI of the representations,
warranties, covenants, terms, or conditions contained in the Indemnification or
the Lease; or
(3) may be caused:
(a) by any defect in any structure erected on or near the Property,
(b) by or arising from accident, fire, contamination, or other casualty
or occurrence on the Property, or
(c) by or from any other cause or other use of the Property whatsoever.
C. CIWMI agrees that the releases and indemnifications for Environmental
Damages and for violation of any Environmental Requirements shall continue for
such period of time and under such conditions as specified by WEPA, but in no
event shall they survive less than thirty (30) years from the date of
termination or cancellation of the Lease, and in no event shall such releases or
indemnifications be construed to cover acts or omissions of other persons, which
acts or omissions occur on the Property after the date of termination or
cancellation of the Lease.
Page 15
D. No undertaking to indemnify shall constitute, nor shall it be
construed to constitute, an admission of responsibility. Without negating or
diminishing the promises to indemnify, the Band shall be permitted to
participate in any settlement negotiations that could result in civil or
criminal penalties, damages, or injunctive relief against the Band, its
officers, directors, employees, agents, or attorneys. In addition, the Band and
the Secretary must consent in writing to any settlement CIWMI, as indemnitor,
may make pursuant to or concerning this Indemnification or the Lease.
E. Liability and the requirement to indemnify arises (1) upon demand for
such by the Band; (2) when Hazardous Waste is released or is threatened to be
released, on, in, under, or affecting the Property, or emanates therefrom or
migrates or threatens to migrate to or from the Property, or the discovery
thereof, in violation of any Environmental Requirements; and/or (3) upon the
service or delivery of a Hazardous Waste Claim to or upon the Band or CIWMI.
F. CIWMI shall comply and cause (1) all tenants under any lease or
occupancy agree affecting any portion of the Property and (2) all other persons
or legal entities on or occupying the Property, to comply with all Environmental
Requirements.
G. CIWMI agree to submit annually, if requested by the Band, a report,
satisfactory to the Band, prepared by a consultant approved by the Band,
certifying that the Property is not then being used nor has it been used during
the time CIWMI has leased it, for any activities involving, directly or
indirectly, the delivery, receipt, acceptance, use, storage, release,
generation, transportation, handling, processing, treatment, reduction,
separation, recovery, conversion, recycling, transfer, or disposal of any
Hazardous Waste (other than De Minimis Amounts) in violation of any
Environmental Requirements. The Band reserves the right to retain, at the
Band's expense, an independent professional consultant to review any report
prepared by or for CIWMI and/or to conduct its own investigation of the
Property. CIWMI hereby grants to the Band, and its agents, employees,
consultants, and contractors, the right and license to enter upon the Property
and to perform such tests on the Property as are reasonably necessary to conduct
such a review and/or investigation.
Page 16
4. CIWMI's Remedial Action.
------------------------
A. Until the Lease is performed and paid in full, CIWMI shall promptly
advise the Band in writing of:
(1) any and all Hazardous Waste Claims;
(2) the presence of, and any spill, release, or threat of spill or
release of, any Hazardous Waste (other than De Minimis Amounts) on, in, under,
or affecting the Property, or emanating therefrom, in violation of any
Environmental Requirements;
(3) CIWMI's discovery of the presence of Hazardous Waste (other than De
Minimis Amounts) on, under, or about any real property adjoining the Property;
(4) any remedial action taken by CIWMI in response to any Hazardous Waste
on, in, under, or affecting the Property, or emanating therefrom;
(5) CIWMI's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Property that could cause the Property or
any part thereof to be subject to any restrictions on the ownership, occupancy,
transferability, or use of the Property under any Environmental Requirements;
(6) its receipt of any third party or governmental communication or
notice in connection with any Hazardous Waste on, in, under, or affecting, the
Property or emanating therefrom or migrating or threatening to migrate to or
from the Property, including but not limited to communications or notices that
CIWMI or the Band has been designated as a potentially responsible party in
Page 17
connection with any state or federal superfund list respecting the Property, or
has received a Section 104(E) letter from the United States Environmental
Protection Agency requesting information regarding the Property;
(7) its notice or knowledge of a lawsuit or threat of suit against CIWMI
or the Band or concerning the Property, whether initiated by a governmental
agency or authority, or by a third party (such communication or notice shall be
provided to the Band and be accompanied by a description of CIWMI's proposed
actions to remedy such situation and a time frame therefore); and
(8) any and all Hazardous Waste Claims and any remedial action taken or
Remedial Work done or incurred by CIWMI in response to any Hazardous Waste
Claims. In addition, CIWMI shall immediately provide the Band with copies of
all communications to or from CIWMI with federal, tribal, and state, and local
governments or agencies relating to the Environmental Requirements and all
communications relating to Hazardous Waste Claims.
B. CIWMI shall promptly take any and all necessary remedial action in
response to the presence, use, storage, transportation, discharge, or release or
any Hazardous Waste on, under, or about the Property in violation of
Environmental Requirements; provided, however, that CIWMI shall take such
remedial action in good faith so as to minimize any impairment to the Property.
The remedial action CIWMI shall take hereunder includes but is not limited to
removal of any and all Hazardous Waste from all or any portion of the Property
or any surrounding areas; the taking of precautions to protect against the
release of Hazardous Waste on, in, under, or affecting the Property, or into the
air, any body of water, any other public domain or any surrounding areas; and
compliance, in connection with all or any portion of the Property or any
surrounding areas, with applicable Environmental Requirements. If CIWMI
undertakes any and all remedial action hereunder, including but not limited to
Remedial Work, with respect to any Hazardous Waste on, in, under, or affecting
the Property, CIWMI shall conduct and complete such remedial action (i) in
compliance with all applicable Environmental Requirements; and (ii) in
accordance with the orders and directives of all federal, state, tribal, and
local government authorities. CIWMI shall immediately provide the Band with a
Page 18
copy of its plans for such remedial action and any revision thereto, and with
copies of all communications to or from CIWMI with federal, state, tribal,
and/or local governments relating to such remedial action.
C. CIWMI shall not create or permit to continue in existence any lien
upon the Property imposed pursuant to any Environmental Requirements.
D. The Band shall have the right to join and participate in, as a party
if it so elects, any legal proceedings or actions initiated in connection with
any Hazardous Waste Claims and to have its attorneys' fees in connection
therewith paid by CIWMI.
5. Other Obligations. CIWMI understands, agrees, and acknowledges that:
-----------------
A. The obligations described in this Indemnification are separate and
distinct from, but consistent with, CIWMI's obligations under the Lease. Any
separate action brought to enforce the obligations upon or under this
Indemnification, shall in no way be deemed to be an action on the Lease.
Payments by CIWMI under this Indemnification shall not reduce CIWMI's
obligations and liabilities under the Lease. The Band's right to proceed under
this Indemnification is completely independent of its right or claim under the
Lease.
B. CIWMI's obligations and its liability to the Band pursuant hereto
shall survive the termination or cancellation of the Lease. Any judgment
obtained upon or under this Indemnification shall not be satisfied or
discharged, in whole or part, through any action or judgment on the Lease.
C. The obligations and liability of CIWMI under this Indemnification are
independent of, and shall in no way be limited, or impaired or affected by:
(1) any amounts at any time owing under the Lease;
(2) any modification of the provisions of the Lease;
Page 19
(3) any extensions of time for performance required by the Lease;
(4) the accuracy or inaccuracy of the representations and warranties
made by the Band under the Lease;
(5) the release of CIWMI or any other person from performance or
observance of any of the agreements, covenants, terms, or conditions contained
in the Lease by operation of law, voluntary act, or otherwise; or
(6) The Band's failure to record the Lease.
6. Choice of Action. Notwithstanding any other provisions herein, or in
----------------
the Lease, both parties agree as follows:
A. If there shall be any conflict between the provisions or requirements
of the Lease and of this Indemnification, then the provisions and requirements
of the Indemnification will prevail.
B. Where there are any substantially equivalent requirements or
obligations of the CIWMI in this Indemnification and the Lease, the Band may
not initiate separate proceedings or other steps to enforce both sets of
requirements or obligations but rather shall take such steps or initiate such
proceedings pursuant only to the provisions and requirements of either the Lease
or the Indemnification, but not both.
C. If similar requirements are contained in this Indemnification and in
the Lease for the payment of any monies by CIWMI or for the performance of any
acts or other obligations by CIWMI, the Band may not require that such monies
be paid twice or that such acts or obligations be satisfied twice by CIWMI and,
in such instances, the Band may only require that the payments or the
Page 20
obligations be made or satisfied as required by the terms of either the Lease or
the Indemnification, but not both.
7. California Indemnification. BOTH PARTIES ACKNOWLEDGE THAT THEY HAVE BEEN
--------------------------
ADVISED THEIR RESPECTIVE LEGAL COUNSEL OF THE EXISTENCE OF AND ARE FAMILIAR
WITH, THE PROVISIONS OF CALIFORNIA CIVIL CODE 1592, WHICH PROVIDE AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOUR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
8. Delay or Omission
-----------------
No delay or omission to exercise any right, or power, or remedy accruing under
this Indemnification shall impair such right, power, or remedy, nor shall it be
construed to be a waiver of or acquiescence in a breach of or default under the
Indemnification. Both parties specifically and affirmatively agree not to
construe the conduct, oral statements, delay, or omission of the other party as
altering in any way the parties' agreements as contained herein, and further
agree not to rely upon such conduct, oral statements, delays, or omissions. Any
waiver, permit, or approval of any breach of or default under this
Indemnification must be in writing, and, because this language was negotiated
and intended by both parties to be binding and is not a mere recital, both
parties hereby agree that they will not raise waiver, estoppel, or other similar
arguments as affirmative defenses so as to limit or negate the clear language
and intent of this paragraph. All remedies, either under this Indemnification,
by law, or otherwise afforded to either party shall be cumulative, not
alternative.
Page 21
9. Notice. All notices or demands required or permitted to be hereunder shall
------
be writing and shall be (A) delivered by first class, certified, or registered
mail to the Postal Service of the United States of America, postage prepaid or
(B) hand-delivered by courier or overnight delivery service to the other party,
at the address indicated on the first page of this Indemnification, or at such
other address as such party shall hereafter furnish the other in writing. All
such notices and demands shall be considered to have been given, if in
compliance with this paragraph, on the third day after the date such notice or
demand is postmarked and deposited to the United States Postal Service or, if
the notice or demand is hand-delivered by courier or overnight delivery service,
on the date of actual delivery to the party to whom the notice or demand is
addressed. If Notice is tendered under the provisions of this paragraph and is
refused by the intended recipient of the Notice, the Notice shall nonetheless be
considered to have been given and shall be effective as of the date tendered.
10. Attorneys' Fees. Upon determination of breach or default of this
---------------
Indemnification by one of the parties, the other party shall have the right to
recover all reasonable attorneys' fees, expert witness fees, and court costs
incurred in enforcing its rights hereunder or in successfully defending itself
against the claims by the breaching party.
11. Severability. If any term or provision in this Indemnification shall be
------------
held invalid or unenforceable by a court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other term or provision of this
Indemnification. Nor shall the validity or enforceability of this
Indemnification be affected, invalidated, or rendered unenforceable by the
termination or cancellation of the Lease, or any part thereof.
12. Construction; Contractu Situ. This Indemnification was, and shall be
----------------------------
deemed to have been negotiated and written by both parties. This
Indemnification is made, executed, delivered, and to be performed on the Cortina
Rancheria, in Colusa County, State of California, and shall be construed
according to and governed by applicable federal, state, and tribal law, unless
state law is pre-empted or prohibited by federal or tribal law. Notwithstanding
any provision of this Indemnification to the contrary, and except as pre-empted
Page 22
by federal or tribal law, the parties intend that this Indemnification shall be
construed according to the principles of the contract laws of the State of
California. This provision is not intended, nor shall it be construed, to
incorporate or accede to the applicability of any other laws of the State of
California, including but not limited to environmental or usury laws.
13. Entire Agreement; Modification. This Indemnification and the Lease
------------------------------
constitute the final and entire understanding between the parties, and there is
no agreement or promise on the part of either party to do or omit to do any act
or thing not herein mentioned. This Indemnification and the Lease are intended
as a complete and exclusive statement of the terms and conditions of the
parties' agreement and may not be effectively amended, changed, modified, or
altered without the written consent of both parties.
14. Headings. The headings to the various section of this Indemnification are
--------
inserted only of convenience of reference and are not intended, nor shall they
be construed, to modify, define, limit, or expand the intent of the parties, or
in any way to affect the meaning or interpretation of this Indemnification.
15. Consents; Reasonableness; Good Faith. The parties agree to cooperate fully
------------------------------------
with each other and to act reasonably and in good faith and in an timely manner
in all manners hereunder so that each of them may obtain the benefits to which
they are entitled hereunder and for which they have negotiated. Both parties
agree to negotiate in good faith and without delay as to all matters requiring
negotiation. Neither party shall unreasonably deny, withhold, or delay any
consent or approval required or contemplated for any action or transaction
proposed to be taken or made hereunder, except as otherwise provided herein.
Nothing herein is intended or shall be construed to require the Band to consent
to the storage, handling, treatment, or presence of Hazardous Waste as
specifically prohibited in this Indemnification, or to consent to any assignment
or transfer that is not completely satisfactory to the Band, with or without
good cause or reason.
16. Gender; Number. Any noun or pronoun used herein shall refer to either
--------------
gender and to any number as the context requires or permits.
Page 23
17. Binding Provisions. The provisions of this Indemnification shall be
------------------
binding on the successors and assigns of the parties in like manner as on the
original parties unless modified by mutual written agreement, with the written
consent and approval of the Secretary.
18. Assignment; Transfer. CIWMI shall not assign or transfer all or any part
--------------------
of its interest in this Indemnification, or grant any license or concession for
all or any portion of the Property, without the prior written approval of the
Secretary and the written consent of the Band, and any surety of CIWMI's
obligations. The Band, and the Secretary are not bound by reasonableness or
conventions of good faith in denying their respective consent or approval to any
assignment or transfer, which consents and approvals may be denied in their sole
discretion; provided, however, that with respect to any assignment of transfer
to an entity of which CIWMI is the majority owner, conventions of good faith
and reasonableness shall be applied in connection with the required consents.
Except as otherwise provided in this Indemnification, no assignment, grant, or
transfer shall be valid or binding without said consent and approval, and then
only upon the condition that the assignee or other successor in interest has
agreed in writing to be bound by each and all of the covenants and conditions of
this Indemnification and the Lease. Any assignment or transfer made except as
aforesaid shall be deemed a breach of this Indemnification and an Event of
Default and shall constitute grounds for cancellation of this Indemnification
and/or the Lease, at the Band's sole descretion.
19. Arbitration. If a dispute concerning the construction or enforcement of
-----------
the Indemnification arises between the parties and cannot be resolved, the
parties agree to submit the dispute to arbitration prior to initiating legal
proceedings. Such arbitration shall follow the guidelines set forth in the
Federal Arbitration Act, 9 U.S.C. 1-16, unless the parties agree in writing
otherwise. Selection of the arbitrator(s), and a decision as to the binding or
non-binding effect of such arbitration, will be made only by the mutual
agreement of the parties or, failing that, by a neutral entity agreed to by the
parties. The parties agree to share arbitration fees and costs equally.
Page 24
20. Termination of Federal Trust. Nothing contained in this Indemnification
----------------------------
shall operate to delay or prevent a termination or modification of federal trust
responsibilities with respect to the Property by the issuance of a fee patent of
otherwise during the Term; however, such termination shall not serve to abrogate
the Indemnification or the Lease.
21. CIWMI's Obligations to the Band and the United States. While the Property
-----------------------------------------------------
is owned by the Band and/or held in trust by the United States or subject to a
restriction against alienation imposed by the United States, all of CIWMI's
obligations under this Indemnification, and the obligations of any surety of
CIWMI's obligations, are to the United States as well as to the Band.
22. Interest of Member of Congress. No member of or delegate to Congress, or
------------------------------
resident commissioner, shall be admitted to any share or part of this
Indemnification or to any benefit that may arise herefrom, but this provision
shall not be construed to extend to this Indemnification if made with a
corporation for its general benefit.
23. Tax Immunity. Nothing contained in this Indemnification is intended, or
------------
shall be construed, to constitute a waiver by either party of any applicable
laws that provide tax immunity to trust or restricted Indian property or to any
interest therein or income derived therefrom.
24. Validity. This Indemnification, and any modification of or amendment to
--------
this Indemnification, shall not be valid or binding upon either party unless
approved by the Band and the Secretary.
IN WITNESS WHEREOF, the Parties hereto have hereto set their hands and
seals the day and year first above written.
Page 25
CORTINA INTEGRATED WASTE MANAGEMENT INC.
By:
------------------------------------------
David B. Atkinson, President.
THE CORTINA BAND OF WINTUN INDIANS
By:
------------------------------------------
Frank Frease, Chairperson
Attest:
By:
------------------------------------------
CERTIFICATION OF CORTINA INTEGRATED WASTE MANAGEMENT, INC.
----------------------------------------------------------
I, the undersigned, as President of Cortina Integrated Waste Management
Inc. do hereby certify that the foregoing First Amended and Restated
Environmental Certification and Indemnification was considered and approved by
the Board of Directors at a duly called meeting on the 12th day of October,
2000, at which a quorum was present, that the same was adopted by a unanimous
vote in favour and that David B. Atkinson, as President of Cortina Integrated
Waste Management, Inc., was authorized to sign the First Amended and Restated
Environmental Certification and Indemnification on behalf of Cortina Integrated
Wasted Management, Inc.,
------------------------------------------
David B. Atkinson, President
CERTIFICATION OF CORTINA BAND OF WINTUN INDIANS
-----------------------------------------------
I, the undersigned, as Chairperson of the Cortina Band of Wintun Indians, do
hereby certify that the I have been authorized by the General Council and
Business Council of the Band to enter into this Indemnification.
------------------------------------------
Frank Frease, Chairperson
Attest:
- ------------------------------------------
Page 26
ACKNOWLEDGMENT OF CORTINA INTEGRATED
WASTE MANAGEMENT, INC.
STATE OF CALIFORNIA )
) ss:
COUNTY OF SACRAMENTO )
ON THIS day of , 2000, before me, the undersigned
-------- --------------
Notary Public, personally appeared David B. Atkinson, President of Cortina
Integrated Waste Management, Inc., proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument, and
acknowledged to me that he executed the same in his authorized capacity, and
that, by his signature, Cortina Integrated Waste Management, Inc. executed the
instrument.
WITNESS my hand and official seal.
------------------------------------------
Notary Public
Residing in
------------------------------
My Commission Expires:
-------------------
ACKNOWLEDGMENT OF CORTINA BAND OF WINTUN INDIANS
------------------------------------------------
STATE OF CALIFORNIA )
) ss:
COUNTY OF SACRAMENTO )
ON THIS day of , 2000, before me, the undersigned
--------- --------------
Notary Public, personally appeared Frank Frease, Chairperson of the Cortina Band
of Wintun Indians, proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the within instrument, and acknowledged to me
that he executed the same in his authorized capacity, and that by his signature
on the instrument, the Cortina Band of Wintun Indians executed the instrument.
WITNESS my hand and official seal.
------------------------------------------
Notary Public
Residing in
------------------------------
My Commission Expires:
-------------------
Page 27
UNITED STATES
DEPARTMENT OF THE INTERIOR
Bureau of Indian Affairs
Pacific Region
THE WITHIN Environmental Certification and Indemnification is hereby approved.
Date of Approval: By:
------------------ ---------------------------------
Regional Director
Pursuant to the authority redelegated
by 209 DM 8, Secretary's Order 3150
and 10 BIAM Bulletin 13, as Extended.
Exhibit 4-D
EXHIBIT 4-D TO 20-F REGISTRATION STATEMENT OF
EARTHWORKS INDUSTRIES INC. DATED NOVEMBER 30, 2000
PURCHASE AND SALE AGREEMENT dated March 31, 2000 ("Effective Date").
BETWEEN:
JAMES A. WYSE, of, 230 Manchester Street, Danville, California, U.S.A.
94506
(hereinafter referred to as "Wyse")
OF THE FIRST PART
AND:
DAVID S. BRISCHKE, of 2731 Corey Place, San Ramon, California, U.S.A.
94583
(hereinafter referred to as "Brischke")
OF THE SECOND PART
AND:
THOMAS G. VALENTINO, of 101 Brookvine Circle, Chico, California, U.S.A.
95973
(hereinafter referred to as "Valentino")
OF THE THIRD PART
AND:
SCOTT D. SCHMIDT, of 4540 Cove Lane, Byron, California, U.S.A. 94514
(hereinafter referred to as "Schmidt")
OF THE FOURTH PART
AND:
DOANA WYSE, of 230 Manchester Street, Danville, California, U.S.A. 94506
(hereinafter referred to as "D. Wyse")
OF THE FIFTH PART
Page 2
AND:
PACIFIC WASTE SERVICES, INC., a body corporate, incorporated under the
laws of the State of California, U.S.A., having its Head Office at Suite
1B, 12925 Alcosta Boulevard, in the City of San Ramon, State of
California, U.S.A. 94583
(hereinafter referred to as "PWS")
OF THE SIXTH PART
AND:
EARTHWORKS INDUSTRIES INC., a body corporate, incorporated under the laws
of the Province of British Columbia, having its Registered office at
Suite 1710, 1177 West Hastings Street, in the City of Vancouver, Province
of British Columbia V6E 2L3, Canada
(hereinafter referred to as "EWK")
OF THE SEVENTH PART
W H E R E A S:
A. Wyse, Brischke, Valentino, Schmidt and D. Wyse (herein collectively
referred to as the "Vendors" and, individually, as a "Vendor"), are the legal,
beneficial and registered owners of the numbers of shares in the capital of PWS
set opposite their names below, being the percentage of the total number of
issued shares in the capital of PWS designated:
Vendors Shares of PWS Percentage
Wyse 20,100 78.07%
Brischke 2,172 8.44%
Valentino 2,513 9.76%
Schmidt 861 3.34%
D. Wyse 100 0.39%
--------
25,746
(the said 100% of the issued shares of PWS being hereinafter referred to as the
"PWS Shares").
B. Incentive Stock Options ("ISO") are held by four of the Vendors and Mark
Raust to purchase additional shares in the capital of PWS in the numbers below,
and if such options are fully exercised the shareholders of PWS, and the
percentage of the issued shares of PWS that will then be held by each, will be
as follows:
Page 3
Shares issuable
Shareholders under ISO's Percentage
Wyse 0 58.03%
Brischke 4,000 17.82%
Valentino 3,019 15.97%
Schmidt 1,000 5.37%
D. Wyse 500 1.73%
Mark Raust 375 1.08%
-------- ------
TOTAL 8,894 100%
-------- ------
C. As EWK is a British Columbia reporting issuer and its shares are listed
for trading on the Canadian Venture Exchange ("Exchange") it is subject to the
rules and requirements, and regulatory powers, of the Exchange and the British
Columbia Securities Commission ("Securities Commission") - the Exchange and
Securities Commission being herein referred to as the "Regulatory Authorities".
D. PWS carries on business, from its business offices at #1 - 12925 Alcosta
Boulevard, San Ramon, California, U.S.A. which consists, principally, of
managing and operating waste disposal facilities and garbage collection and
transportation services, and acting as a waste management consultant - and is in
the course of expanding its business and the geographical areas within which
such expanded business might be carried on.
E. Cortina Integrated Waste Management, Inc. ("CIWM"), the wholly owned
subsidiary of EWK, is developing an integrated waste management facility on the
Cortina Rancheria in Colusa County, California, U.S.A. (the "CIWM Project") with
respect to which PWS has in the past, and is currently being, engaged as a
consultant.
F. PWS is the legal and beneficial owner of approximately 355,000 issued
common shares in the capital of EWK (hereinafter called the "PWS
Shareholdings").
G. Pursuant to a Memorandum of Understanding dated September 25, 1996
between PWS and CIWM, as subsequently amended (the "MOU") PWS has agreed to
defer payment for portions of its direct labour expenses and to apply the
accumulated amounts therefrom to the possible exercise of an option to acquire a
percentage interest in the CIWM Project and the total of such deferred amounts
is at the date hereof approximately $260,000 (U.S.) which the parties agree
could be applied by PWS to the acquisition of an approximately 18% interest in
the CIWM Project as of the date hereof (such accrued monies and the interest
that could be acquired in the CIWM Project being hereinafter called the "PWS
Project Interest").
H. The Vendors have represented to EWK that PWS has a value in excess of
that indicated by PWS's current contracts, volume of business and financial
Page 4
statements due to the number of potentially lucrative contracts which PWS is
currently negotiating, pursuing or has signed but which have not yet become
operative, being:
(a) Various contracts which have been signed but which have not yet become
operative or started to produce revenues;
(b) Anticipated contracts which are in the course of negotiations and are
expected to be signed; and
(c) Various preliminary discussions which have occurred which are expected to
be followed by formal negotiations and the signing of agreements;
(all such non-producing contracts or contracts signed in the future on or
before the Acceptance Date being herein called the "PWS Contracts").
I. The Vendors wish to sell the PWS Shares, and EWK wishes to purchase the
PWS Shares, all on the terms and conditions hereinafter set forth.
J. The authorized capital of EWK consists only of voting common shares - the
voting common shares comprising EWK's authorized capital from time to time being
hereinafter called "Shares".
K. It is anticipated that one or more of the PWS Contracts may require the
issuance of shares of PWS.
NOW THEREFORE, in consideration of the premises and the covenants and
agreements, and the sum of $10.00 (U.S.) paid by EWK to each of the Vendors (the
receipt of which is hereby by the Vendors acknowledged) the parties agree as
follows:
1. The Vendors agree to sell the PWS Shares to EWK, and EWK agrees to acquire
the PWS Shares, on the terms and conditions hereinafter set forth.
2. EWK agrees that it will, immediately following the Acceptance Date, issue
and allot 5,000,000 Shares to the Vendors, in partial consideration of the sale
of the PWS Shares to EWK, the certificates for which shall be issued, and
delivered to Tupper Jonsson & Yeadon, EWK's Vancouver, Canada lawyers ("Tupper &
Co" ) to be held by them in escrow.
3. EWK agrees that it will, in further consideration of the aforesaid sale,
issue and allot to the Vendors a further 2,000,000 Shares (hereinafter called
the "Earn-Out Shares"), the issuance and delivery of which shall be subject to
subsequent provisions of this Agreement.
4. EWK agrees that it will, in further consideration of the aforesaid sale,
issue, allot and deliver to the Vendors a further 1,000,000 shares (hereinafter
Page 5
called the "Project Shares"), the issuance and delivery of which shall be
subject to subsequent provisions of this Agreement.
5. The 2,000,000 Earn-Out Shares referred to in Section 3 hereof will be
issued to the Vendors by EWK on the basis of PWS's earnings from the PWS
Contracts on the following basis:
(a) One (1) Earn Out Share will be issued to the Vendors for each $1.00
(U.S.) of Earnings Before Interest, Taxes, Depreciation & Amortization
("EBITDA earnings") of PWS from the PWS Contracts commencing from the
Effective Date;
(b) PWS's EBITDA earnings from the PWS Contracts shall be calculated on a
quarterly basis, unaudited for the first 3 calendar quarters of PWS's fiscal
year and on an audited annual basis;
(c) Within 60 days after the end of each of the first 3 quarters of PWS's
fiscal years a statement of PWS's EBITDA earnings from the PWS Contracts
shall be supplied to EWK certified to be true and correct by a person who is
a director and officer of PWS ("Quarterly Statement");
(d) Within 30 days after its receipt of a Quarterly Statement EWK will issue
the appropriate number of Earn Out Shares to the Vendors divided between them
pro rata according to their proportional holdings of PWS Shares;
(e) Within 90 days after the end of each of PWS's fiscal years EWK shall be
supplied with annual financial statements of PWS, audited according to United
States Generally Accepted Accounting Principles, and a statement certified
correct by the said Auditors of the EBITDA earnings of PWS from the PWS
Contracts during the fiscal year;
(f) Within 60 days of receiving the audited statements required by sub-clause
(e) hereof EWK will issue to the Vendors, divided between them
proportionately, the appropriate number of Earn Out Shares resulting from
PWS's said earnings for the fiscal year less the numbers of Earn Out Shares
which have been already issued based on the first 3 quarters of such fiscal
year.
6. Notwithstanding the provisions of Sections 3 and 5 above, any Earn Out
Shares which have not become issuable to the Vendors as of September 30, 2003
shall cease to be issuable and the number of Earn Out Shares required to be
issued to the Vendors pursuant to Section 3 will be reduced by such number.
7. The issuance of Project Shares shall be dependent upon the commencement of
commercial operations, and the carrying on of such operations, of the CIWM
Project the date of the commencement of the operation of the CIWM Project being
Page 6
hereinafter called the "Project Commencement Date". The Project Shares will be
issued to the Vendors, and divided between them proportionately, on the
following basis and timetable:
(a) The Project Shares will be issued in 8 equal portions of 125,000 Shares
each (each portion being hereinafter called a "Tranche");
(b) The first Tranche will be issued on the last day of the calendar quarter
in which the Project Commencement Date occurs. Thereafter, a Tranche will be
issued on the last day of each calendar quarter in which the CIWM Project is
operated commercially for not less than 60 days (including weekends or
holidays).
8. Notwithstanding the provisions of Sections 4 and 7, any Project Shares
which have not become issuable to the Vendors by the date which is 5 years from
the Project Commencement Date will cease to be issuable to the Vendors and the
number of Project Shares issuable to the Vendors pursuant to Section 4 hereof
will be reduced by such number.
9. Upon the Closing PWS will assign to CIWM, for a nominal consideration of
$10.00 (U.S.) all of PWS's interests in, or rights to receive interests in, the
CIWM Project referred to in Paragraph G.
10. This Agreement and its Closing will be subject to it being accepted for
filing by the Exchange and, in that regard:
(a) EWK will forthwith after the signing of this Agreement, submit it to the
Exchange together with such supporting documentation as is required by the
Exchange and with payment of the Exchange's required fees;
(b) The Vendors and PWS agree to, as promptly as is reasonable under the
circumstances, have prepared and provide to EWK for submission to the
Exchange, such supplemental documents or information as the Exchange may
request including, but not limited, to:
(i) financial statements of PWS for its last two completed fiscal years on
an audited basis and an unaudited statement covering the period between its
last fiscal year-end and March 31, 2000;
(ii) a report describing its business prepared by an independent consultant,
if the same shall be required by the Exchange;
(iii) an evaluation of PWS and its business prepared by an independent
evaluator if the same shall be required by the Exchange;
(iv) Personal Information Forms and Forms 4B as required by the Regulatory
Authorities;
Page 7
(c) EWK shall promptly cause to be prepared and submitted to the Exchange
such further documentation and information as the Exchange may request and
which is within the power of EWK to assemble or produce;
(d) EWK will diligently and bona fide pursue the application to the Exchange
to have this Agreement accepted for filing at the earliest reasonable date;
(e) EWK will pay the costs of acquiring the items specified in sub-clauses
(i), (ii) and (iii) of subclause (b).
11. This Agreement is subject to its being accepted for filing by the Exchange
not later than August 30, 2000; provided that the Parties agree to, to the
extent that it is within their powers, do such things as may be necessary or
appropriate to expedite the review of this Agreement by the Exchange with a view
to having it accepted for filing at the earliest date reasonable under the
circumstances (the date of acceptance by the Exchange being hereinafter called
the "Acceptance Date").
12. If the Acceptance Date shall not have occurred by August 30, 2000 any Party
hereto may at any date thereafter, prior to the occurrence of the Acceptance
Date, give notice to the other Parties terminating this Agreement and in case
such a notice shall be given this Agreement will terminate and be of no further
force or effect except as to the provisions hereof providing for the
requirements of the Parties upon a termination of this Agreement prior to its
Closing.
13. If the Acceptance Date has occurred and this Agreement has not otherwise
terminated the Closing will occur at 3:00 p.m., local time, April 30, 2001 at
1710 - 1177 West Hastings Street, Vancouver, B.C., Canada - or at such other
time, date or place as the Parties may mutually agree (the date of the Closing
being hereinafter called the "Closing Date").
14. At the Closing each of the Parties will deliver to the other Parties all
such documents, share certificates or other instruments as may be necessary to
give effect to the provisions of this Agreement which are required or would, as
a consequence to the provisions hereof, be required to be given or delivered at
the Closing. The Parties will do such other things or deliver such other
documents or instruments as may be required by the terms of this Agreement on
various instances subsequent to the Closing Date. Without limiting the
generality of the foregoing:
(a) EWK will deliver to the Vendors:
(i) a copy of the letter from the Exchange confirming its acceptance of
this agreement for filing;
Page 8
(ii) a copy of Resolutions of the Board of Directors of EWK approving
this Agreement and the issuance of the Shares that are or may become
issuable hereunder and appointing Directors of EWK, and appointing Wyse,
all as required by Section 16(b) below;
(iii) from Tupper & Co the certificates for the 5,000,000 Shares they are
holding in escrow pursuant to Section 2 above; and
(iv) written verification that the financing requirements set out in
Section 15 have been satisfied;
(b) The Vendors will deliver to EWK:
(i) a certificate representing 100% of the PWS shares then issued,
registered in the name of EWK; and
(ii) a copy of Resolutions of the Directors of PWS approving its signing
of this Agreement and transferring 100% of the issued PWS Shares to EWK.
15. It shall be a condition of the obligation of the Vendors to Close this
Agreement that EWK and/or CIWM shall have raised financing in the following
amounts not later than the Closing Date:
(a) At least $5,000,000 by one or both of EWK and CIWM by equity or debt
financing, including the proceeds of share purchase options or share purchase
warrants outstanding at the date of this Agreement; or
(b) at least $3,000,000 raised by CIWM by non-equity financing for
application to the CIWM Project and the incidental costs of CIWM.
16. EWK agrees that it will:
(a) within 10 days of the signing of this Agreement, cause the appointment of
Wyse, or such other Vendor as the Vendors may jointly designate in writing,
to the Board of Directors of EWK so that the said nominee will be 1 member of
the 5-member EWK Board of Directors;
(b) within 10 days of the Acceptance Date, or prior to the Closing Date
whichever shall first occur, cause a Vendor designated by the Vendors in
writing to be appointed a Director of EWK so that such person and the person
appointed pursuant to sub-clause (a) will be 2 Directors on a 5-person EWK
Board of Directors, and to appoint Wyse as the President of EWK.
Page 9
17. Pending the satisfaction of all of the conditions herein contained so that
this Agreement will not terminate, or the termination of this Agreement, the
Vendors and PWS agree that, except with the prior written approval of EWK, which
shall not be unreasonably withheld by EWK, up to the Closing Date:
(a) PWS will be operated on an active basis as it presently is;
(b) no shares in the capital of PWS will be issued other than as anticipated
or described in the premise paragraphs of this Agreement;
(c) no agreements will be entered into which could require either the
issuance of additional shares in the capital of PWS or the sale, transfer or
encumbrancing of any of the PWS Shares held by the Vendors;
(d) none of the shares of PWS held by the Vendors will be transferred;
(e) PWS will not enter into any employment agreements which will not be
terminable of notice of 1 month or less;
(f) PWS will not enter into any agreements which shall create current or long
time liability or indebtedness which shall have the effect of increasing its
current and long term indebtedness existing as at the date of this Agreement
by more than 5%;
(g) PWS will not enter into any employment agreements or amendments of
existing employment agreements with the Vendors which shall be less
favourable than the terms that presently exist and no raises will be granted
which shall amount to the equivalent of more than 5% per annum, and no
bonuses will be agreed to or paid to Vendors;
(h) PWS will not declare any dividends, and will not pay any dividend which
has not been declared prior to the date hereof; Provided however that PWS
may dividend to it's shareholders some or all of the EWK shares presently
held by PWS, or the net proceeds PWS may receive from selling some or all of
the EWK shares it holds.
(i) neither PWS, nor the Vendors as the shareholders of PWS, will pass any
resolutions to amend the incorporation documents of PWS, or to amend the
authorized capital of PWS or the rights or restrictions attaching to any of
the PWS Shares;
(j) PWS will not enter into any agreements to perform any business which is
not in the normal course of its business as it is presently carried on, or
enter into any agreements which shall have the potential to negatively affect
the value of PWS.
Page 10
18. Pending the termination of this Agreement or the satisfaction of all of the
conditions herein contained so that this Agreement will not terminate, the
Vendors and EWK agree that EWK will not except with prior written approval of
PWS, such approval not to be unreasonably withheld:
(a) enter into any agreement to issue any shares in its capital except on
such terms and for such proposed consideration as will satisfy the
requirements of the Exchange;
(b) enter into any employment agreements with any of its existing directors
or officers, or any amendments to the existing agreements, whether written or
otherwise, with its existing directors or officers regarding their
compensation or other benefits receivable from the Company;
(c) enter into any agreement to purchase an asset or a block of assets which
shall have a maximum aggregate cost to it in excess of $50,000 (Cdn.);
(d) grant any share purchase options - other than optional rights which shall
be attached as warrants to shares that it may issue pursuant to efforts to
acquire additional equity financing;
(e) submit to its shareholders for approval any changes in its incorporation
documents or the special rights or restrictions attaching to the Shares,
other than to increase its authorized capital;
(f) apply to have its shares suspended from trading or delisted from the
Exchange;
19. The Shares, when they are issued to the Vendors, will be issued and
allotted as fully paid shares but they shall be subject to such trading or
resale restrictions as may be imposed upon them by the Regulatory Authorities.
If, and to the extent, that the Exchange may require the same the Vendors will
execute pooling or escrow agreements in the forms and containing the terms and
contents designated by the Exchange.
20. The Vendors jointly and severally covenant and warrant in favour of EWK
that:
(a) the unaudited financial statements of PWS prepared to December 31, 1999
attached as Schedule "A" hereto is a true and correct statement of the
Company's financial position as at the said date and a true and correct
statement of the Company's sales and expenses for 1999;
(b) PWS has not suffered any material adverse financial conditions or set-
backs since December 31, 1999;
Page 11
(c) they are the sole legal and beneficial owners of the PWS Shares, free of
any and all liens, charges and encumbrances and that they are unrestricted in
their right to sell the PWS Shares to EWK pursuant to this Agreement;
(d) PWS has no shares issued and outstanding other than the PWS Shares, and
there are no outstanding agreements, court orders or other documents or
instruments of any nature or kind whatsoever which could result in PWS being
obliged to issue any more shares in its capital stock other than as
anticipated by the options referred to in Paragraph B above, nor are there
any securities outstanding which would be convertible into or exchangeable
for shares in its capital stock;
(e) there are no outstanding or threatened court actions, charges or
regulatory proceedings against PWS or any of the Vendors, and PWS is not
subject to any injunctions or other official prohibitions against its
conducting its business;
(f) PWS is a corporation duly incorporated under the laws of the State of
California and that it is a valid and subsisting corporation in good standing
pursuant to all of the applicable laws and regulations;
(g) PWS is up-to-date in the filing of all of its tax filings or Returns with
all taxing authorities having jurisdiction over it, and that there are no
outstanding unpaid assessments of taxes or other levies due to any
governmental or regulatory authority;
(h) the authorized capital of PWS consists of 400,000 shares, of which at the
date hereof 25,746 are issued and outstanding as fully paid shares;
(i) PWS has no subsidiaries or agreements to acquire any subsidiaries;
(j) the corporate, financial and business records of PWS are complete and
accurate;
(k) PWS has all of the necessary power to enter into and perform any
obligations undertaken by it under this Agreement;
(l) this Agreement constitutes legal, valid and binding obligations of PWS
and/or the Vendors as the case may be;
(m) PWS is in compliance with all laws and regulations applicable to it
respecting employment and employment practices and PWS is not involved in, or
under threat of, alleged unfair labour practice and there is no labour
dispute outstanding or threatened against it.
21. EWK covenants and warrants in favour of the Vendors, and where applicable
PWS, that:
Page 12
(a) it is a corporation duly incorporated pursuant to the laws of the
Province of British Columbia, Canada and that it is in good standing and in
full satisfaction of all of its obligations pursuant to the laws and
regulations of British Columbia and Canada including, without limitation, the
corporate and securities laws and regulations of the said Province;
(b) its shares are listed for trading on the Exchange and that is in full
compliance with the various rules and requirements of the Regulatory
Authorities;
(c) there are no proceedings existing, threatened or pending against the
Company by the Regulatory Authorities or by any other governmental
authorities or agencies;
(d) CIWM is its sole subsidiary and that it owns 100% of the issued and
outstanding shares of CIWM;
(e) CIWM is a corporation duly incorporated pursuant to the laws of the State
of California, U.S.A. and that it is in good standing and in full
satisfaction of all of its obligations pursuant to the laws and regulations
of the said State;
(f) its authorized capital consists of 20,000,000 voting common shares
without par value of which at the date hereof 8,120,591 are issued;
(g) it has all of the necessary corporate power to enter into and perform its
obligations under this Agreement;
(h) the financial statements prepared and audited as at its fiscal year-end,
November 30, 1999, attached hereto as Schedule "B", have been prepared in
accordance with Canadian generally accepted accounting principles, and fairly
presents the financial position of the Issuer as at the said date;
(i) the unaudited quarterly financial statement attached hereto as Schedule
"C" has been prepared in accordance with Canadian generally accepted
accounting principles and fairly represents its financial position as at the
date of the said statements;
(j) neither it nor CIWM are parties to, nor threatened with, any actual or
pending court actions or regulatory proceedings of any nature or kind.
(k) there are no outstanding or threatened court actions, charges or
regulatory proceedings against EWK or CIWM and they are not subject to any
injunctions or other official prohibitions against conducting their business;
Page 13
(l) EWK and CIWM are in compliance with all laws and regulations applicable
to them respecting employment and employment practices and they are not
involved in, or under threat of, alleged unfair labour practice and there is
no labour dispute outstanding or threatened against them.
22. It shall be a condition of the Closing of this Agreement that the Vendors,
PWS and the four present Directors of EWK will sign a separate agreement in
which they will agree to cast all of the votes attaching to all of the shares of
EWK which they own or control, directly or indirectly, in favour of the election
of a Board of Directors of EWK which satisfies the provisions of Section 16
above for the period ending June 30, 2003.
23. The warranties granted by various of the Parties to various of the other
Parties in Sections 20 and 21 above are for the benefit of the grantees and may
be waived by the grantees. However, grantees of such warranties may refuse to
close this Agreement if, on the Closing Date, the warranties are not then still
valid and in effect and a grantee of such warranties may, if any of the
warranties are no longer in effect, or have become invalid, prior to the
Closing, give the grantors of the warrants a Notice of Default.
24. EWK will, within 30 days of the signing of this Agreement, submit to the
U.S. Securities and Exchange Commission ("SEC") a 20F Registration Statement and
initiate efforts with appropriate instructions to its lawyers to apply to have
EWK become a United States reporting company and to have its shares quoted for
trading on the NASD OTC Bulletin Board. Included in such efforts will be an
initial submission by EWK of an SEC 10-SB Registration Statement within 60 days
of the signing of this Agreement. Further, EWK will, within 90 days of the
signing of this Agreement, cause the submission by it to the SEC of an SB-1 or
SB-2 Registration Statement. EWK will diligently pursue such filings with all
appropriate instructions to its lawyers and by the payment of required charges
and fees.
25. The Parties each agree that if this Agreement shall terminate for any
reason prior to its Closing, they will each promptly and bona fide make all such
efforts as are necessary to cancel or undo any transfers of assets or benefits
which have occurred between the Parties prior thereto, and any and all files or
other records which properly belong to other Parties hereto shall be returned to
them, all with the objective of as completely and as promptly under the
circumstances, returning all of the Parties hereto to the positions that they
were in prior to the signing of this Agreement.
26. This Agreement will be interpreted according to the laws of the Province of
British Columbia and the laws of Canada applicable in the Province of British
Columbia and the Parties agree to submit to the courts of the Province of
British Columbia.
27. Any dispute, controversy or claim arising out of or relating to this
Agreement or the interpretation of any of the provisions hereof will be finally
settled by arbitration in accordance with the Arbitration Rules of The British
Columbia International Commercial Arbitration Centre ("Centre") in effect on the
date hereof. The Parties agree that:
Page 14
(a) The appointing authority will be the Centre;
(b) The case will be administered by the Centre in accordance with its
"Procedures for Cases under the BCICAC Arbitration Rules";
(c) The place of arbitration will be Vancouver, British Columbia;
(d) The number of arbitrators will be one (1);
(e) The language used in the proceedings will be English;
(f) The arbitrator's fees will be paid by the Parties in equal parts, during
the course of the arbitration. In his final decision the arbitrator shall
assess liability against one or both of the arbitrating parties for the costs
incurred by the parties in the arbitration and for the arbitration costs.
28.(a) Any notice which is required to be given hereunder shall be given in
writing and will be effectively given if the same is:
(i) delivered or mailed by prepaid registered or certified post to the
address of the intended recipient set forth at the top of this
agreement;
(ii) delivered to a director or officer of the intended recipient; or
(iii) sent by fax to the intended recipient at the following numbers:
EWK - (604) 669-3107
PWS - (925) 244-0210
Wyse - (925) 244-0210
Brischke - (925) 244-0210
Valentino - (530) 345-6936
Schmidt - (925) 244-0210
D. Wyse - (925) 244-0210
with a simultaneous copies being sent to:
Carl R. Jonsson
Tupper Jonsson & Yeadon
1710 - 1177 West Hastings Street
Vancouver, B.C., Canada V6E 2L3
Fax: (604) 681-0139
and
Page 15
Charles E. Chase
Chase, Berenstein and Murray
533 Airport Blvd., Suite 501
Burlingame, CA, U.S.A. 94010
Fax: (650) 548-0565
Provided that any Party may give notice to the other Party of new addresses
or new fax numbers to be used for the purpose of this Clause;
(b) any notice which is delivered shall be deemed to have been given on
the date of delivery. Any notice which is sent by fax shall be deemed to be
given on the first weekday following the date upon which the faxed message is
transmitted. Any notice that is sent by prepaid mail shall be deemed to have
been given on the 5th weekday after the date upon which the notice is mailed
from a Post Office in Canada.
29. If any Party (a "Defaulting Party") is in default of any requirement herein
set forth, any Party affected by such default (the "Affected Party") may give a
notice ("Default Notice") to the Defaulting Party specifying the default and,
unless:
(a) within 30 days of the giving of the Default Notice the Defaulting Party
has not cured such default; or
(b) in case the default is not of a nature which can be cured within 30 days,
the Defaulting Party has not within 30 days of the giving of the Default
Notice taken all reasonable steps or other prudent action to commence the
curing of such default, or does not thereafter diligently pursue the curing
of such default until it is cured, subject to a maximum period to cure such
default of 120 days after the giving of the Notice of Default
the Affected Party will be entitled, upon notice to the Defaulting Party to seek
any remedy the Affected Party may have with respect to such default including,
without limitation, terminating this Agreement.
30. Mark Raust, the holder of an Incentive Stock Option, as referred to in
Paragraph B hereof, joins in signing this Agreement for the purpose of
confirming that if the said option is exercised in whole or in part he shall be
bound by the terms of this Agreement and the shares of PWS acquired by him
pursuant to the exercise of his option will forthwith become part of the PWS
Shares and included in that expression wherever used herein, and acknowledges
that he will be bound by the terms of this Agreement as a Vendor to the same
full extent as he would have been if he had owned shares of PWS at the date of
this Agreement.
31. If PWS shall issue any additional shares in it's Capital, other than
pursuant to the outstanding ISO's, or if any holders of PWS Shares shall
transfer any of them, PWS may not issue the shares or register the transfers
without first requiring the allotees or the transferees to sign an
acknowledgement in favour of the parties hereto that they will be bound by the
Page 16
terms of this Agreement as though they were original signatories hereto and
thereafter such allotees or transferees shall be considered "Vendors" pursuant
to this Agreement.
32. All references to monies herein, directly or indirectly, are references to
Canadian Dollars except where otherwise indicated.
33. This Agreement shall enure to the benefit of and be binding upon the
Parties hereto and their respective heirs, successors, administrators and
assigns.
34. The Parties hereto agree to do such further acts and execute such
further documents as may be necessary to carry out the true intent and meaning
of this Agreement.
(This space intentionally left blank)
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as and
from the day and year first above written.
/s/ M. Raust /s/ James A. Wyse
- -------------------------------------- --------------------------------------
Witness James A. Wyse
/s/ James A. Wyse /s/David S. Brischke
- -------------------------------------- --------------------------------------
Witness David S. Brischke
/s/ James A. Wyse /s/ Thomas A. Valentino
- -------------------------------------- --------------------------------------
Witness Thomas G. Valentino
/s/ James A. Wyse /s/ Scott D. Schmidt
- -------------------------------------- --------------------------------------
Witness Scott D. Schmidt
/s/ James A. Wyse /s/ Doana Wyse
- -------------------------------------- --------------------------------------
Witness Doana Wyse
PACIFIC WASTE SERVICES, INC.
Per: /s/ James A. Wyse
- --------------------------------------
James A. Wyse,
President
/s/ James A. Wyse /s/ Mark Raust
- -------------------------------------- --------------------------------------
Witness Mark Raust
EARTHWORKS INDUSTRIES INC.
Per: /s/ David B. Atkinson
- --------------------------------------
David B. Atkinson,
President
Exhibit 4-E
EXHIBIT 4-E TO 20-F REGISTRATION STATEMENT OF
EARTHWORKS INDUSTRIES INC. DATED NOVEMBER 30, 2000
THIS AGREEMENT made and dated the 15th day of February, 2000
BETWEEN:
EARTHWORKS INDUSTRIES INC., a body corporate, incorporated under the
laws of the Province of British Columbia, with Registered Office at
1710 - 1177 West Hastings Street, in the City of Vancouver, Province
of British Columbia
(herein referred to as the "Company")
OF THE FIRST PART
AND:
DAVID B. ATKINSON, of Suite 305, 1545 West 15th Avenue, in the City of
Vancouver, Province of British Columbia V6J 2K5
(herein referred to as the "Optionee")
OF THE SECOND PART
W H E R E A S:
A. The Optionee is a director, officer and employee of the Company.
B. As an incentive to the Optionee to continue to serve the Company, the
Company desires to grant to the Optionee an option to purchase shares in its
capital stock on the terms hereinafter contained;
NOW THEREFORE, in consideration of the premises and covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. The Company hereby grants to the Optionee an option ("Option") to purchase
204,500 shares in its capital, exercisable at any time on or before February 14,
2005 at a price of $0.56 (Cdn.) per share.
Page 2
2. During the term of the Option the Optionee may exercise, from time to time,
the whole or any part of the Option, by paying to the Company the purchase price
for the shares purchased pursuant thereto. Upon receipt of a request for shares
from the Optionee, and payment therefor, the Company shall forthwith issue and
allot to the Optionee the number of shares as shall have been paid for. The
shares will be subject to such retrading restrictions as may be imposed upon
them by the securities laws of the Province of British Columbia and the rules of
the Canadian Venture Exchange - and the certificates will be endorsed with any
required legend.
3. The Option is not assignable by the Optionee; provided however, that if
the Optionee shall die while the Optionee is an employee, officer or Director of
the Company or of a subsidiary of the Company, the Optionee's estate shall be
entitled to exercise the whole or any part of the Option existing at the date of
death, at any time up to 1 year after the date of death.
4. If, at any time during the continued existence of the Option, there shall
be any alteration in the capital stock of the Company, other than an increase or
decrease in its authorized or issued capital, the Option shall attach to an
appropriate number of the shares or securities of the Company which shall have
been created by any such alteration, and the price payable on the exercise of
the Option shall be adjusted proportionately to the change in the shares
resulting from such capital alteration.
5. The Optionee's continued service to the Company is a condition of the
continuance of the option herein granted. Accordingly, if the Optionee shall,
during the term of the within option, cease to be a director, officer or
employee of the Company, the option herein granted to the Optionee shall cease
and terminate 30 days after the date upon which the Optionee last ceases to be a
director, officer or employee of the Company or a subsidiary of the Company.
6. This Agreement and any amendments to any of the terms and conditions hereof
are subject to the approval of the Securities Regulatory authorities, and any
Stock Exchange, having jurisdiction over the affairs of the Company, and, if the
Optionee is an Insider of the Company, as defined in the Securities Act of
British Columbia, is subject to approval at a general meeting of the
shareholders of the Company. The Optionee shall not be entitled to exercise the
Option until such approvals have been obtained.
Page 3
7. The Parties hereto agree to do such further and other acts and execute such
further and other documents as may be necessary to carry out the true intent and
meaning of this Agreement.
8. This Agreement shall enure to the benefit of and be binding upon the
Parties and their permitted heirs, executors, administrators, successors and
assignees.
IN WITNESS WHEREOF the parties have hereunto affixed their hands and seals as of
the day and year first above written.
The Corporate Seal of EARTHWORKS
INDUSTRIES INC. was hereunto affixed
in the presence of:
/s/ David B. Atkinson SEAL
- -------------------------------------
Authorized Signatory
/s/ David F. Andrews
- -------------------------------------
Authorized Signatory
SIGNED, SEALED and DELIVERED by
DAVID B. ATKINSON in the presence of:
of:
/s/ D. Lydon /s/ David B. Atkinson
- ------------------------------------- -------------------------------------
Witness David B. Atkinson
Exhibit 8
EXHIBIT 8 TO 20-F REGISTRATION STATEMENT OF
EARTHWORKS INDUSTRIES INC. DATED NOVEMBER 30, 2000
The only subsidiary of the Company is Cortina Integrated Waste Management, Inc.
- - incorporated in California, U.S.A. July 19, 1994. The Company owns 100% of
the issued shares of the subsidiary.
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the undersigned to sign
this registration statement on its behalf.
EARTHWORKS INDUSTRIES INC.
/s/ David B. Atkinson
----------------------------------------
Per:
David B. Atkinson, Director and
Chief Executive Officer
Date: November 30, 2000.