Document:

Exhibit 4.1

                        AMERICAN SOIL TECHNOLOGIES, INC.

                2000 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN

1.   PURPOSE

     This Incentive and Nonstatutory Stock Option Plan (the "Plan") is intended
to further the growth and financial success of American Soil Technologies, Inc.,
a Nevada corporation (the "Corporation") by providing additional incentives to
selected employees, directors, and consultants to the Corporation or parent
corporation or subsidiary corporation of the Corporation as those terms are
defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended (the "Code") (such parent corporations and subsidiary corporations
hereinafter collectively referred to as "Affiliates") so that such employees and
consultants may acquire or increase their proprietary interest in the
Corporation. Stock options granted under the Plan (hereinafter "Options") may be
either "Incentive Stock Options," as defined in Section 422A of the Code and any
regulations promulgated under said Section, or "Nonstatutory Options" at the
discretion of the Board of Directors of the Corporation (the "Board") and as
reflected in the respective written stock option agreements granted pursuant
hereto.

2.   ADMINISTRATION

     The Plan shall be administered by the Board of Directors of the
Corporation; provided however, that the Board may delegate such administration
to a committee of not fewer than three (3) members (the "Committee"), at least
two (2) of whom are members of the Board and all of whom are disinterested
administrators, as contemplated by Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3"); and provided further, that the
foregoing requirement for disinterested administrators shall not apply prior to
the date of the first registration of any of the securities of the Corporation
under the Securities Act of 1933, as amended.

     Subject to the provisions of the Plan, the Board and/or the Committee shall
have authority to (a) grant, in its discretion, Incentive Stock Options in
accordance with Section 422A of the Code or Nonstatutory Options; (b) determine
in good faith the fair market value of the stock covered by an Option; (c)
determine which eligible persons shall be granted Options and the number of
shares to be covered thereby and the term thereof; (d) construe and interpret
the Plan; (e) promulgate, amend and rescind rules and regulations relating to
its administration, and correct defects, omissions, and inconsistencies in the
Plan or any Option; (f) consistent with the Plan and with the consent of the
optionee, as appropriate, amend any outstanding Option or amend the exercise
date or dates thereof; (g) determine the duration and purpose of leaves of
absence which may be granted to optionholders without constituting termination
of their employment for the purpose of the Plan; and (h) make all other
determinations necessary or advisable for the Plan's administration. The
interpretation and construction by the Board of any provisions of the Plan or of
any Option it shall be conclusive and final. No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option.

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3.   ELIGIBILITY

     The persons who shall be eligible to receive Options shall be employees,
directors, or consultants of the Corporation or any of its Affiliates
("Optionees"). The term consultant shall mean any person who is engaged by the
Corporation to render services and is compensated for such services, and any
director of the Corporation whether or not compensated for such services;
provided that, if the Corporation registers any of its securities pursuant to
the Securities Act of 1933, as amended (the "Act"), the term consultant shall
thereafter not include directors who are not compensated for their services or
are paid only a director fee by the Corporation.

          (a) INCENTIVE STOCK OPTIONS. Incentive Stock Options may only be
issued to employees of the Corporation or its Affiliates. Incentive Stock
Options may be granted to officers, whether or not they are directors, but a
director shall not be granted an Incentive Stock Option unless such director is
also an employee of the Corporation. Payment of a director fee shall not be
sufficient to constitute employment by the Corporation. Any grant of option to
an officer or director of the Corporation subsequent to the first registration
of any of the securities of the Corporation under the Act shall comply with the
requirements of Rule 16b-3. An optionee may hold more than one Option.

          The Corporation shall not grant an Incentive Stock Option under the
Plan to any employee if such grant would result in such employee holding the
right to exercise for the first time in any one calendar year, under all options
granted to such employee under the Plan or any other stock option plan
maintained by the Corporation or any Affiliate, with respect to shares of stock
having an aggregate fair market value, determined as of the date of the Option
is granted, in excess of one hundred thousand dollars ($100,000). Should it be
determined that an Incentive Stock Option granted under the Plan exceeds such
maximum for any reason other than a failure in good faith to value the stock
subject to such option, the excess portion of such option shall be considered a
Nonstatutory Option. If, for any reason, an entire option does not qualify as an
Incentive Stock Option by reason of exceeding such maximum, such option shall be
considered a Nonstatutory Option.

          (b) NONSTATUTORY OPTION. The provisions of the foregoing Section 3(a)
shall not apply to any option designated as a "Nonstatutory Stock Option
Agreement" or which sets forth the intention of the parties that the option be a
Nonstatutory Option.

4.   STOCK

     The stock subject to Options shall be the shares of the Corporation's
authorized but unissued or reacquired Common Stock (the "Stock").

          (a) NUMBER OF SHARES. Subject to adjustment as provided in Paragraph
5(h) of this Plan, the total number of shares of Stock which may be purchased
through exercise of Options granted under this Plan shall not exceed one million
(1,000,000) shares. If any Option shall for any reason terminate or expire, any
shares allocated thereto but remaining unpurchased upon such expiration or
termination shall again be available for the grant of Options with respect
thereto under this Plan as though no Option had been granted with respect to
such shares.

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          (b) RESERVATION OF SHARES. The Corporation shall reserve and keep
available at all times during the term of the Plan such number of shares as
shall be sufficient to satisfy the requirements of the Plan. If, after
reasonable efforts, which efforts shall not include the registration of the Plan
or Options under the Act, the Corporation is unable to obtain authority from any
applicable regulatory body, which authorization is deemed necessary by legal
counsel for the Corporation for the lawful issuance of shares hereunder, the
Corporation shall be relieved of any liability with respect to its failure to
issue and sell the shares for which such requisite authority was so deemed
necessary unless and until such authority is obtained.

5.   TERMS AND CONDITIONS OF OPTIONS

     Options granted hereunder shall be evidenced by agreements between the
Corporation and the respective Optionees, in such form and substance as the
Board or Committee shall from time to time approve. Such agreements need not be
identical, and in each case may include such provisions as the Board or
Committee may determine, but all such agreements shall be subject to and limited
by the following terms and conditions:

          (a) NUMBER OF SHARES: Each Option shall state the number of shares to
which it pertains.

          (b) OPTION PRICE: Each Option shall state the Option Price, which
shall be determined as follows:

               (i) Any Option granted to a person who at the time the Option is
granted owns (or is deemed to own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of
value of all classes of stock of the Corporation, or of any Affiliate, ("Ten
Percent Holder") shall have an Option Price of no less than one hundred ten
percent (110%) of the fair market value of the common stock as of the date of
grant; and

               (ii) Incentive Stock Options granted to a person who at the time
the Option is granted is not a Ten Percent Holder shall have an Option price of
no less than one hundred percent (100%) of the fair market value of the common
stock as of the date of grant.

               (iii) Nonstatutory Options granted to a person who at the time
the Option is granted is not a Ten Percent Holder shall have an Option Price
determined by the Board as of the date of grant.

          For the purposes of this paragraph 5(b), the fair market value shall
be as determined by the Board, in good faith, which determination shall be
conclusive and binding; provided however, that if there is a public market for
such stock, the fair market value per share shall be the average of the bid and
asked prices (or the closing price if such stock is listed on the NASDAQ
National Market System) on the date of grant of the Option, or if listed on a
stock exchange, the closing price on such exchange on such date of grant.

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          (c) MEDIUM AND TIME OF PAYMENT: To the extent permissible by
applicable law, the Option price shall be paid, at the discretion of the Board,
at either the time of grant or the time of exercise of the Option (i) in cash or
by check, (ii) by delivery of other common stock of the Corporation, provided
such tendered stock was not acquired directly or indirectly from the
Corporation, or, if acquired from the Corporation, has been held by the Optionee
for more than six (6) months, (iii) by the Optionee's promissory note in a form
satisfactory to the Corporation and bearing interest at a rate determined by the
Board, in its sole discretion, but in no event less than 6% per annum, or (iv)
such other form of legal consideration permitted by State law as may be
acceptable to the Board.

          (d) TERM AND EXERCISE OF OPTIONS: Any Option granted to an Employee of
the Corporation shall become exercisable over a period of no longer than ten
(10) years, and no less than twenty percent (20%) of the shares covered thereby
shall become exercisable annually. No Option shall be exercisable, in whole or
in part, prior to one (1) year from the date it is granted unless the Board
shall specifically determine otherwise, as provided herein. In no event shall
any Option be exercisable after the expiration of ten (10) years from the date
it is granted. Unless otherwise specified by the Board or the Committee in the
resolution authorizing such option, the date of grant of an Option shall be
deemed to be the date upon which the Board or the Committee authorizes the
granting of such Option.

          Each Option shall be exercisable to the nearest whole share, in
installments or otherwise, as the respective option agreements may provide.
During the lifetime of an Optionee, the Option shall be exercisable only by the
Optionee and shall not be assignable or transferable by the Optionee, and no
other person shall acquire any rights therein. To the extent not exercised,
installments (if more than one) shall accumulate, but shall be exercisable, in
whole or in part, only during the period for exercise as stated in the option
agreement, whether or not other installments are then exercisable.

          (e) TERMINATION OF STATUS AS EMPLOYEE, DIRECTOR, OR CONSULTANT: If
Optionee's status as an employee, director, or consultant shall terminate for
any reason other than Optionee's death, then the Optionee (or if the Optionee
shall die after such termination, but prior to exercise, Optionee's personal
representative or the person entitled to succeed to the Option) shall have the
right to exercise any vested Options, in whole or in part, at any time within
thirty (30) days after such termination (or in the event Optionee's termination
was caused by permanent disability (within the meaning of Section 22(e)(3) of
the Code) this 30-day period shall be extended to six (6) months) or the
remaining term of the Option, whichever is the lesser; provided, however, that
with respect to Nonstatutory Options, the Board may specify such longer period,
not to exceed six (6) months, for exercise following termination as the Board
deems reasonable and appropriate. The Option may be exercised only with respect
to installments that the Optionee could have exercised at the date of
termination of employment. Nothing contained herein or in any Option granted
pursuant hereto shall be construed to affect or restrict in any way the right of
the Corporation to terminate the employee of an Optionee with or without cause.

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          (f) DEATH OF OPTIONEE: If an Optionee dies while employed or engaged
as a director or consultant by the Corporation or an Affiliate, the portion of
such Optionee's Option or Options which were exercisable at the date of death
may be exercised, in whole or in part, by the estate of the decedent or by a
person succeeding to the right to exercise such Option or Options, at any time
within the remaining term of the Option, but only to the extent, that Optionee
could have exercised the Option as of the date of Optionee's death; provided, in
any case, that the Option may be so exercised only to the extent that the Option
has not previously been exercised by Optionee.

          (g) NONTRANSFERABILITY OF OPTION: No Option shall be transferable by
the Optionee, except by will or by the laws of descent and distribution.

          (h) RECAPITALIZATION: Subject to any required action by the
stockholders, the number of shares of common stock covered by each outstanding
Option, and the price per share thereof set forth in each such Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of common stock of the Corporation resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, or any other
increase or decrease in the number of such shares affected without receipt of
consideration by the Corporation.

          Subject to any required action by the stockholders, if the Corporation
shall be the surviving entity in any merger or consolidation, each outstanding
Option thereafter shall pertain to and apply to the securities to which a holder
of shares of common stock equal to the shares subject to the Option would have
been entitled by reason of such merger or consolidation. A dissolution or
liquidation of the Corporation or a merger or consolidation in which the
Corporation is not the surviving entity shall cause each outstanding Option to
terminate on the effective date of such dissolution, liquidation, merger or
consolidation. In such event, if the entity which shall be the surviving entity
does not tender to Optionee an offer, for which it has no obligation to do so,
to substitute for any unexercised Option a stock option or capital stock of such
surviving entity, as applicable, which on an equitable basis shall provide the
Optionee with substantially the same economic benefit as such unexercised
Option, then the Board may grant to such Optionee, but shall not be obligated to
do so, the right for a period commencing thirty (30) days prior to and ending
immediately prior to such dissolution, liquidation, merger or consolidation or
during the remaining term of the Option, whichever is the lesser, to exercise
any unexpired Option or Options, without regard to the installment provisions of
Paragraph 5(d) of this Plan; provided, that any such right granted shall be
granted to all Optionees not receiving an offer to substitute on a consistent
basis, and provided further, that any such exercise shall be subject to the
consummation of such dissolution, liquidation, merger or consolidation.

          In the event of a change in the common stock of the Corporation as
presently constituted, which is limited to a change of all of its authorized
shares without par value into the same number of shares with a par value, the
shares resulting from any such change shall be deemed to be the common stock
within the meaning of this Plan.

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          To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided in this Paragraph 5(h), the Optionee shall have no
rights by reason of any subdivision or consolidation of shares of stock or any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class, and the number or price of shares of
common stock subject to any Option shall not be affected by, and no adjustment
shall be made by reason of, any dissolution, liquidation, merger or
consolidation, or any issue by the Corporation of shares of stock of any class
or securities convertible into shares of stock of any class.

          The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Corporation to make any adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve, or liquidate or to sell or
transfer all or any part of its business or assets.

          (i) RIGHTS AS A STOCKHOLDER: An Optionee shall have no rights as a
stockholder with respect to any shares covered by an Option until the date of
the issuance of a stock certificate to Optionee for such shares. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date is prior to the date such stock certificate is issued, except as
expressly provided in Paragraph 5(h) hereof.

          (j) MODIFICATION, ACCELERATION, EXTENSION, AND RENEWAL OF OPTIONS:
Subject to the terms and conditions and within the limitations of the Plan, the
Board may modify an Option, or once an Option is exercisable, accelerate the
rate at which it may be exercised, and may extend or renew outstanding Options
granted under the Plan or accept the surrender of outstanding Options (to the
extent not theretofore exercised) and authorize the granting of new Options in
substitution for such Options, provided such action is permissible under Section
422A of the Code and state law.

          Notwithstanding the foregoing provisions of this Paragraph 5(j),
however, no modification of an Option shall, without the consent of the
Optionee, alter to the Optionee's detriment or impair any rights or obligations
under any Option theretofore granted under the Plan.

          (k) INVESTMENT INTENT: Unless and until the issuance and sale of the
shares subject to the Plan are registered under the Act, each Option under the
Plan shall provide that the purchases of stock thereunder shall be for
investment purposes and not with a view to, or for resale in connection with,
any distribution thereof. Further, unless the issuance and sale of the stock
have been registered under the Act, each Option shall provide that no shares
shall be purchased upon the exercise of such Option unless and until (i) any
then applicable requirements of state and federal laws and regulatory agencies
shall have been fully complied with to the satisfaction of the Corporation and
its counsel, and (ii) if requested to do so by the Corporation, the person
exercising the Option shall (i) give written assurances as to knowledge and
experience of such person (or a representative employed by such person) in
financial and business matters and the ability of such person (or
representative) to evaluate the merits and risks of exercising the Option, and
(ii) execute and deliver to the Corporation a letter of investment intent, all
in such form and substance as the Corporation may require. If shares are issued
upon exercise of an Option without registration under the Act, subsequent

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registration of such shares shall relieve the purchaser thereof of any
investment restrictions or representations made upon the exercise of such
Options.

          (l) EXERCISE BEFORE EXERCISE DATE: At the discretion of the Board, the
Option may, but need not, include a provision whereby the Optionee may elect to
exercise all or any portion of the Option prior to the stated exercise date of
the Option or any installment thereof. Any shares so purchased prior to the
stated exercise date shall be subject to repurchase by the Corporation upon
termination of Optionee's employment as contemplated by Paragraphs 5(e), 5(f)
and 5(g) hereof prior to the exercise date stated in the Option and such other
restrictions and conditions as the Board or Committee may deem advisable.

          (m) OTHER PROVISIONS: The Option agreements authorized under this Plan
shall contain such other provisions, including, without limitation, restrictions
upon the exercise of the Options, as the Board or the Committee shall deem
advisable. Shares shall not be issued pursuant to the exercise of an Option, if
the exercise of such Option or the issuance of shares thereunder would violate,
in the opinion of legal counsel for the Corporation, the provisions of any
applicable law or the rules or regulations of any applicable governmental or
administrative agency or body, such as the Act, the Securities Exchange Act of
1934, the rules promulgated under the foregoing or the rules and regulations of
any exchange upon which the shares of the Corporation are listed.

6.   AVAILABILITY OF INFORMATION

     During the term of the Plan and any additional period during which an
Option granted pursuant to the Plan shall be exercisable, the Corporation shall
make available, not later than one hundred and twenty (120) days following the
close of each of its fiscal years, such financial and other information
regarding the Corporation as is required by the bylaws of the Corporation and
applicable law to be furnished in an annual report to the stockholders of the
Corporation.

7.   EFFECTIVENESS OF PLAN; EXPIRATION

     Subject to approval by the stockholders of the Corporation, this Plan shall
be deemed effective as of the date it is adopted by the Board. The Plan shall
expire on March 1, 2010, but such expiration shall not affect the validity of
outstanding Options.

8.   AMENDMENT AND TERMINATION OF THE PLAN

     The Board may, insofar as permitted by law, from time to time, with respect
to any shares at the time not subject to Options, suspend or terminate the Plan
or revise or amend it in any respect whatsoever, except that without the
approval of the stockholders of the Corporation, no such revision or amendment
shall (i) increase the number of shares subject to the Plan, (ii) decrease the
price at which Options may be granted, (iii) materially increase the benefits to
Optionees, or (iv) change the class of persons eligible to receive Options under
this Plan; provided, however, no such action shall alter or impair the rights
and obligations under any Option outstanding as of the date thereof without the
written consent of the Optionee thereunder. No Option may be granted while the
Plan is suspended or after it is terminated, but the rights and obligations
under any Option granted while the Plan is in effect shall not be impaired by
suspension or termination of the Plan.

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9.   INDEMNIFICATION OF BOARD

     In addition to such other rights or indemnifications as they may have as
directors or otherwise, and to the extent allowed by applicable law, the members
of the Board and the Committee shall be indemnified by the Corporation against
the reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any claim, action, suit or
proceeding, or in connection with any appeal thereof, to which they or any of
them may be a party by reason of any action taken, or failure to act, under or
in connection with the Plan or any Option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Corporation) or paid by them in
satisfaction of a judgment in any such claim, action, suit or proceeding, except
in any case in relation to matters as to which it shall be adjudged in such
claim, action, suit or proceeding that such Board member is liable for
negligence or misconduct in the performance of his or her duties; provided that
within sixty (60) days after institution of any such action, suit or Board
proceeding the member involved shall offer the Corporation, in writing, the
opportunity, at its own expense, to handle and defend the same.

10.  APPLICATION OF FUNDS

     The proceeds received by the Corporation from the sale of common stock
pursuant to the exercise of Options will be used for general corporate purposes.

11.  NO OBLIGATION TO EXERCISE OPTION

     The granting of an Option shall impose no obligation upon the Optionee to
exercise such Option.

12.  NOTICES

     All notice, requests, demand, and other communications pursuant this Plan
shall be in writing and shall be deemed to have been duly given on the date of
service if served personally on the party to whom notice is to be given, or on
the third day following the mailing thereof to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid.

13.  FINANCIAL STATEMENTS

     Optionees under this Plan shall receive financial statements annually
regarding the Corporation during the period the options are outstanding. The
financial statements provided need not comply with Title 10, Section 260.613 of
the Nevada Code of Regulations.

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                                    * * * * *

     The foregoing Incentive and Nonstatutory Stock Option Plan was duly adopted
and approved by the Board of Directors on September 14, 2000, subject to
shareholder ratification within twelve months.

                                        ----------------------------------------
                                        Ken Lew, Secretary

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                        AMERICAN SOIL TECHNOLOGIES, INC.

                       NONSTATUTORY STOCK OPTION AGREEMENT

     THIS STOCK OPTION AGREEMENT is made and entered into as of this ____ day of
______________, ____, by and between American Soil Technologies, Inc., a Nevada
corporation ("Company"), and ________________________________ (referred to
herein as the "Optionee"), with reference to the following recitals of facts:

     WHEREAS, the Board has authorized the granting to Optionee of a
nonstatutory stock option ("Option") to purchase shares of common stock of the
Company (the "Shares") upon the terms and conditions hereinafter stated; and

     WHEREAS, the Board and stockholders of the Company have heretofore adopted
a 2000 Incentive and Nonstatutory Stock Option Plan (the "Plan"), pursuant to
which this Option is being granted;

     WHEREAS, it is the intention of the parties that this Option be a
Nonstatutory Stock Option;

     NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto agree as follows:

     1. SHARES; PRICE. The Company hereby grants to Optionee the right to
purchase, upon and subject to the terms and conditions herein stated,
___________ Shares for cash (or other consideration acceptable to the Board of
Directors of the Company, in their sole and absolute discretion) at the price of
$____ per Share, such price being determined in accordance with the Plan.

     2. TERM OF OPTION; CONTINUATION OF EMPLOYMENT. This Option shall expire,
and all rights hereunder to purchase the Shares shall terminate, ten (10) years
from the date hereof. This Option shall earlier terminate subject to Paragraphs
5 and 6 hereof if, and as of the date, Optionee ceases to be an employee,
director, or consultant of the Company. Nothing contained herein shall be
construed to interfere in any way with the right of the Company to terminate the
employment or engagement, as applicable, of Optionee or to increase or decrease
the compensation of Optionee from the rate in existence at the date hereof.

     3. VESTING OF OPTION. Subject to the provisions of Paragraphs 5 and 6
hereof, this Option shall vest and become exercisable during the term of
Optionee's employment or engagement in whole or in part beginning on the date of
this Agreement.

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     4. EXERCISE. This Option shall be exercised by delivery to the Company of
(a) a written notice of exercise stating the number of Shares being purchased
(in whole shares only) and such other information set forth on the form of
Notice of Exercise attached hereto as Appendix A, (b) a check or cash in the
amount of the purchase price of the Shares covered by the notice, and (c) a
written statement as provided for in Paragraph 11 hereof. This Option shall not
be assignable or transferable, except by will or by the laws of descent and
distribution, and shall be exercisable only by Optionee during his or her
lifetime.

     5. TERMINATION OF EMPLOYMENT OR ENGAGEMENT. If Optionee shall cease to
serve as an employee, director, or consultant of the Company for any reason,
whether voluntarily or involuntarily, other than by his or her death or the
conclusion of the term of a written consulting agreement, provided such term
exceeds one year, Optionee shall have the right at any time within thirty (30)
days after date Optionee ceases to be an employee, director, or consultant of
the Company, or the remaining term of this Option, whichever is the lesser, to
exercise in whole or in part this Option to the extent, but only to the extent,
that this Option was exercisable as of the last day of employment or engagement,
as applicable, and had not previously been exercised; provided, however, that if
Optionee's termination of employment or engagement was caused by permanent
disability disabled (within the meaning of Section 22(e)(3) of the Code), the
foregoing thirty (30) day period shall be extended to six (6) months.

     Notwithstanding anything herein to the contrary, all rights under this
Option shall expire in any event on the date specified in Paragraph 2 hereof.

     6. DEATH OF OPTIONEE. If the Optionee shall die while an employee,
director, or consultant of the Company, Optionee's personal representative or
the person entitled to Optionee's rights hereunder may at any time during the
remaining term of this Option, exercise this Option and purchase Shares to the
extent, but only to the extent, that Optionee could have exercised this Option
as of the date of Optionee's death; provided, in any case, that this Option may
be so exercised only to the extent that this Option has not previously been
exercised by Optionee.

     7. NO RIGHTS AS STOCKHOLDER. Optionee shall have no rights as a stockholder
with respect to the Shares covered by any installment of this Option until the
date of the issuance of a stock certificate to Optionee, and no adjustment will
be made for dividends or other rights for which the record date is prior to the
date such stock certificate or certificates are issued except as provided in
Paragraph 8 hereof.

     8. RECAPITALIZATION. Subject to any required action by the stockholders of
the Company, the number of Shares covered by this Option, and the price per
Share thereof, shall be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a subdivision or consolidation of
shares or the payment of a stock dividend, or any other increase or decrease in
the number of such shares affected without receipt of consideration by the
Company; provided however that the conversion of any convertible securities of
the Company shall not be deemed having been "effected without receipt of
consideration by the Company."

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     In the event of a proposed dissolution or liquidation of the Company, a
merger or consolidation in which the Company is not the surviving entity, or a
sale of all or substantially all of the assets of the Company, this Option shall
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board. The Board may, at its sole and absolute
discretion and without obligation, declare that this Option shall terminate as
of a date fixed by the Board and grant Optionee the right for a period
commencing thirty (30) days prior to and ending immediately prior to such date,
or during the remaining term of this Option, whichever occurs sooner, to
exercise this Option as to all or any part of the Shares, without regard to the
installment provision of Paragraph 3; provided, however, that such exercise
shall be subject to the consummation of such dissolution, liquidation, merger,
consolidation or sale.

     Subject to any required action by the stockholders of the Company, if the
Company shall be the surviving entity in any merger or consolidation, this
Option thereafter shall pertain to and apply to the securities to which a holder
of Shares equal to the Shares subject to this Option would have been entitled by
reason of such merger or consolidation, and the vesting provisions of Section 3
shall continue to apply.

     In the event of a change in the Shares of the Company as presently
constituted, which is limited to a change of all of its authorized Shares
without par value into the same number of Shares with a par value, the Shares
resulting from any such change shall be deemed to be the Shares within the
meaning of this Agreement.

     To the extent that the foregoing adjustments relate to shares or securities
of the Company, such adjustments shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as hereinbefore
expressly provided, Optionee shall have no rights by reason of any subdivision
or consolidation of share of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class, and the number and price of shares subject to this Option shall not
be affected by, and no adjustments shall be made by reason of, any dissolution,
liquidation, merger or consolidation, or any issue by the Company of shares of
stock of any class or securities convertible into shares of stock of any class.

     The grant of this Option shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
in its capital or business structure or to merge, consolidate, dissolve or
liquidate or to sell or transfer all or any part of its business or assets.

     9. TAXATION UPON EXERCISE OF OPTION. Optionee understands that, upon
exercise of this Option, Optionee may recognize income, for federal and state
income tax purposes, in an amount equal to the amount by which the fair market
value of the Shares, determined as of the date of exercise, exceeds the exercise
price. The acceptance of the Shares by Optionee shall constitute an agreement by
Optionee to report such income in accordance with then applicable law and to
cooperate with Company in establishing the amount of such income and
corresponding deduction to the Company for its income tax purposes. Withholding
for federal or state income and employment tax purposes will be made, if and as
required by law, from Optionee's then current compensation, or, if such current
compensation is insufficient to satisfy withholding tax liability, the Company
may require Optionee to make cash payment to cover such liability as a condition
of the exercise of this Option.

                                        3
<PAGE>
     10. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. The Board may modify,
extend or renew this Option or accept the surrender thereof (to the extent not
theretofore exercised) and authorize the granting of a new option in
substitution therefore (to the extent not theretofore exercised), subject at all
times to the Plan. Notwithstanding the foregoing provisions of this Paragraph
10, no modification shall, without the consent of the Optionee, alter to the
Optionee's detriment or impair any rights of Optionee hereunder.

     11. INVESTMENT INTENT; RESTRICTIONS ON TRANSFER. Optionee represents and
agrees that if Optionee exercises this Option in whole or in part, Optionee will
in each case acquire the Shares upon such exercise for the purpose of investment
and not with a view to, or for resale in connection with, any distribution
thereof; and that upon such exercise of this Option in whole or in part,
Optionee (or any person or persons entitled to exercise this Option under the
provisions of Paragraphs 5 and 6 hereof) shall furnish to the Company a written
statement to such effect, satisfactory to the Company in form and substance. The
Company, at its option, may include a legend on each certificate representing
Shares issued pursuant to any exercise of this Option, stating in effect that
such Shares have not been registered under the Securities Act of 1933, as
amended (the "Act"), and that the transferability thereof is restricted. If the
Shares represented by this Option are registered under the Act, either before or
after the exercise of this Option in whole or in part, the Optionee shall be
relieved of the foregoing investment representation and agreement and shall not
be required to furnish the Company with the foregoing written statement.

     Optionee further represents that Optionee has had access to the financial
statements or books and records of the Company, has had the opportunity to ask
questions of the Company concerning its business, operations and financial
condition, and to obtain additional information reasonably necessary to verify
the accuracy of such information, and further represents that Optionee has
either such experience and knowledge in investment, financial and business
matters or has investments similar to the stock of the Company such that
Optionee is capable of evaluating the merits and risks thereof and has the
capacity to protect his or her own interest in connection therewith.

                                        4
<PAGE>
     12. REGISTRATION RIGHTS.

          a. PIGGYBACK REGISTRATION RIGHTS. If the Company at any time proposes
to register any of its securities under the Act, including under an S-8
Registration Statement, an SB-2 Registration Statement or otherwise, it will
each such time give written notice to all holders of outstanding or exercised
options of its intention so to do. Upon the written request of a holder or
holders of any such outstanding or exercised options given within thirty (30)
days after receipt of any such notice, the Company will use its best efforts to
cause all such outstanding or exercised options, the holders of which shall have
so requested registration thereof, to be registered under the Act (with the
securities which the Company at the time propose to register), all to the extent
requisite to permit the sale or other disposition by the prospective Sellers of
the outstanding or exercised options so registered; provided, however, that the
Company may, as a condition precedent to its effecting such registration,
require each prospective Seller to agree with the Company and the managing
underwriter or underwriters of the offering to be made by the Company in
connection with such registration that such Seller will not sell any securities
of the same class or convertible into the same class as those registered by the
Company (including any class into which the securities registered by the Company
are convertible) for such reasonable period after such registration becomes
effective as shall then be specified in writing by such underwriter or
underwriters if in the opinion of such underwriter or underwriters the Company's
offering would be materially adversely affected in the absence of such an
agreement.

          b. PROCEDURES. In connection with the registration of any securities
pursuant to Section 12.a. hereof, the Company and the Optionee covenant and
agree as follows:

               (i) The Company shall pay all costs, fees, and expenses incurred
by the Company and the Optionee in connection with the Registration Statement
and the offering thereunder including, without limitation, the Company's legal
fees and expenses of counsel, accounting fees, printing expenses, and blue sky
fees and expenses (but excluding discounts or selling commissions of any
underwriter or broker dealer acting on behalf of the company or the Optionee).

               (ii) The Company  shall take all necessary  action which may be
reasonably required in qualifying or registering the securities included in the
Registration Statement for offering and sale under the securities or blue sky
laws of all states reasonably requested by Optionee, provided that the Company
shall not be obligated to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.

               (iii) The Company  shall  indemnify  Optionee and each  person,
if any, who controls Optionee within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"),
against all loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Act, the Exchange
Act or otherwise, arising from the Registration Statement.

               (iv) The Company shall, as soon as practicable after the
effective date of the Registration Statement, and in any event within fifteen
(15) months thereafter, make "generally available to its security holders"

                                        5
<PAGE>
(within the meaning of Rule 158 under the Act) an earnings statement (which need
not be audited) complying with Section 11(a) of the Act and covering a period of
at least twelve (12) consecutive months beginning after the effective date of
the Registration Statement.

               (v) The Company shall (A) deliver promptly to Optionee and its
counsel, upon request, copies of all correspondence between the Commission and
the Company, its counsel, or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to the Registration Statement; and
(B) permit Optionee and its counsel to perform such investigation, upon
reasonable advance notice, with respect to information contained in or omitted
from the Registration Statement, as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. Such investigation shall include, but not be limited to, access to
financial and accounting information and opportunities to discuss the business
of the Company with the Company's officers and independent auditors, all to such
reasonable extent, at such reasonable times and as often as Optionee and its
counsel shall reasonably request.

               (vi) The Company shall cause all securities of Optionee
registered pursuant to a Registration Statement to be listed on any national
securities exchange or quoted on any automated quotation system on which similar
securities of the Company are listed or quoted.

     13. STAND-OFF AGREEMENT. Optionee agrees that in connection with any
registration of the Company's securities, that upon the request of the Company
or any underwriter managing an underwritten offering of the Company's
securities, that Optionee shall not sell, short any sale of, loan, grant an
option for, or otherwise dispose of any of the Shares (other than Shares
included in the offering) without the prior written consent of the Company or
such managing underwriter, as applicable, for a period of at least one hundred
eighty (180) days following the effective date of registration of such offering.

     14. NOTICES. Any notice required to be given pursuant to this Option or the
Plan shall be in writing and shall be deemed to be delivered upon receipt or, in
the case of notices by the Company, five (5) days after deposit in the US. mail,
postage prepaid, addressed to Optionee at the address last provided to the
Company by Optionee for his or her employee records.

     15. AGREEMENT SUBJECT TO PLAN; APPLICABLE LAW. This Agreement is made
pursuant to the Plan and shall be interpreted to comply therewith. A copy of
such Plan is available to Optionee, at no charge, at the principal office of the
Company. Any provision of this Agreement inconsistent with the Plan shall be
considered void and replaced with the applicable provision of the Plan. This
Agreement has been granted, executed and delivered in the State of California,
and the interpretation and enforcement shall be governed by the laws thereof and
subject to the exclusive jurisdiction of the courts therein.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                        AMERICAN SOIL TECHNOLOGIES, INC.

                                        /s/ Neil C. Kitchen
                                        --------------------------------
                                        By:  Neil C. Kitchen
                                        Its: President, Chief Executive Officer

                                        ----------------------------------------
                                                                      , Optionee

                                        6
<PAGE>
                                   Appendix A

                               NOTICE OF EXERCISE

American Soil Technologies, Inc.
215 N. Marengo, Suite 110
Pasadena, CA 91101

                              --------------------
                                     (date)

                          Re: Nonstatutory Stock Option

     Notice is hereby given pursuant to Section 4 of my Nonstatutory Stock
Option Agreement that I elect to purchase the number of shares set forth below
at the exercise price set forth in my option agreement:

     Stock Option dated:                 _____________________

     Number of shares being purchased:   _____________________

     Option Exercise Price:             $_____________________

     A check in the amount of the aggregate price of the shares being purchased
is attached.

     I hereby confirm that such shares are being acquired by me for my own
account for investment purposes, and not with a view to, or for resale in
connection with, any distribution thereof.

     Further, I understand that, as a result of this exercise of rights, I will
recognize income in an amount equal to the amount by which the fair market value
of the Shares exceeds the exercise price. I agree to report such income in
accordance with then applicable law and to cooperate with Company in
establishing the withholding and corresponding deduction to the Company for its
income tax purposes.

     I agree to provide to the Corporation such additional documents or
information as may be required pursuant to the Corporation's 2000 Incentive and
Nonstatutory Stock Option Plan.

                                        ----------------------------------------
                                                      (Signature)

                                        ----------------------------------------
                                                  (Name of Optionee)
<PAGE>
                        AMERICAN SOIL TECHNOLOGIES, INC.

                        INCENTIVE STOCK OPTION AGREEMENT

     THIS INCENTIVE STOCK OPTION AGREEMENT is made and entered into as of this
____ day of ______________, 2000, by and between American Soil Technologies, a
Nevada corporation ("Company"), and ________________________________ (referred
to herein as the "Optionee"), with reference to the following recitals of facts:

     WHEREAS, the Board has authorized the granting to Optionee of an incentive
stock option ("Option") to purchase shares of common stock of the Company (the
"Shares") upon the terms and conditions hereinafter stated; and

     WHEREAS, the Board and stockholders of the Company have heretofore adopted
a 2000 Incentive and Nonstatutory Stock Option Plan (the "Plan"), pursuant to
which this Option is being granted;

     WHEREAS, it is the intention of the parties that this Option be an
Incentive Stock Option (a Qualified Stock Option);

     NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto agree as follows:

     1. SHARES; PRICE. The Company hereby grants to Optionee the right to
purchase, upon and subject to the terms and conditions herein stated, _______
Shares for cash (or other consideration acceptable to the Board of Directors of
the Company, in their sole and absolute discretion) at the price of $____ per
Share, such price being not less than the fair market value per share of the
Shares covered by these Options as of the date hereof and as determined by the
Board of Directors of the Company.

     2. TERM OF OPTION; CONTINUATION OF EMPLOYMENT. This Option shall expire,
and all rights hereunder to purchase the Shares shall terminate, ten (10) years
from the date hereof. This Option shall earlier terminate subject to Paragraphs
5 and 6 hereof if, and as of the date, Optionee ceases to be an employee of the
Company. Nothing contained herein shall be construed to interfere in any way
with the right of the Company to terminate the employment or engagement, as
applicable, of Optionee or to increase or decrease the compensation of Optionee
from the rate in existence at the date hereof.

     3. VESTING OF OPTION. Subject to the provisions of Paragraphs 5 and 6
hereof, this Option shall vest and become exercisable during the term of
Optionee's employment or engagement in whole or in part beginning on the date of
this Agreement.

     4. EXERCISE. This Option shall be exercised by delivery to the Company of
(a) a written notice of exercise stating the number of Shares being purchased
(in whole shares only) and such other information set forth on the form of
Notice of Exercise attached hereto as Appendix A, (b) a check or cash in the
amount of the purchase price of the Shares covered by the notice, and (c) a

                                        1
<PAGE>
written statement as provided for in Paragraph 11 hereof. This Option shall not
be assignable or transferable, except by will or by the laws of descent and
distribution, and shall be exercisable only by Optionee during his or her
lifetime.

     5. TERMINATION OF EMPLOYMENT OR ENGAGEMENT. If Optionee shall cease to
serve as an employee of the Company for any reason, whether voluntarily or
involuntarily, other than by his or her death or the conclusion of the term of a
written consulting agreement, provided such term exceeds one year, Optionee
shall have the right at any time within thirty (30) days after date Optionee
ceases to be an employee of the Company, or the remaining term of this Option,
whichever is the lesser, to exercise in whole or in part this Option to the
extent, but only to the extent, that this Option was exercisable as of the last
day of employment or engagement, as applicable, and had not previously been
exercised; provided, however, that if Optionee's termination of employment or
engagement was caused by permanent disability (within the meaning of Section
22(e)(3) of the Code), the foregoing thirty (30) day period shall be extended to
six (6) months; or

     Notwithstanding anything herein to the contrary, all rights under this
Option shall expire in any event on the date specified in Paragraph 2 hereof.

     6. DEATH OF OPTIONEE. If the Optionee shall die while an employee of the
Company, Optionee's personal representative or the person entitled to Optionee's
rights hereunder may at any time during the remaining term of this Option,
exercise this Option and purchase Shares to the extent, but only to the extent,
that Optionee could have exercised this Option as of the date of Optionee's
death; provided, in any case, that this Option may be so exercised only to the
extent that this option has not previously been exercised by Optionee.

     7. NO RIGHTS AS STOCKHOLDER. Optionee shall have no rights as a stockholder
with respect to the Shares covered by any installment of this Option until the
date of the issuance of a stock certificate to Optionee, and no adjustment will
be made for dividends or other rights for which the record date is prior to the
date such stock certificate or certificates are issued except as provided in
Paragraph 8 hereof.

     8. RECAPITALIZATION. Subject to any required action by the stockholders of
the Company, the number of Shares covered by this Option, and the price per
Share thereof, shall be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a subdivision or consolidation of
shares or the payment of a stock dividend, or any other increase or decrease in
the number of such shares affected without receipt of consideration by the
Company; provided however that the conversion of any convertible securities of
the Company shall not be deemed having been "effected without receipt of
consideration by the Company."

     In the event of a proposed dissolution or liquidation of the Company, a
merger or consolidation in which the Company is not the surviving entity, or a
sale of all or substantially all of the assets of the Company, this Option shall
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board. The Board may, at its sole and absolute
discretion and without obligation, declare that this Option shall terminate as
of a date fixed by the Board and grant Optionee the right for a period
commencing thirty (30) days prior to and ending immediately prior to such date,
or during the remaining term of this Option, whichever occurs sooner, to

                                        2
<PAGE>
exercise this Option as to all or any part of the Shares, without regard to the
installment provision of Paragraph 3; provided, however, that such exercise
shall be subject to the consummation of such dissolution, liquidation, merger,
consolidation or sale.

     Subject to any required action by the stockholders of the Company, if the
Company shall be the surviving entity in any merger or consolidation, this
Option thereafter shall pertain to and apply to the securities to which a holder
of Shares equal to the Shares subject to this Option would have been entitled by
reason of such merger or consolidation, and the vesting provisions of Section 3
shall continue to apply.

     In the event of a change in the Shares of the Company as presently
constituted, which is limited to a change of all of its authorized Shares
without par value into the same number of Shares with a par value, the Shares
resulting from any such change shall be deemed to be the Shares within the
meaning of this Agreement.

     To the extent that the foregoing adjustments relate to shares or securities
of the Company, such adjustments shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as hereinbefore
expressly provided, Optionee shall have no rights by reason of any subdivision
or consolidation of share of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class, and the number and price of shares subject to this Option shall not
be affected by, and no adjustments shall be made by reason of, any dissolution,
liquidation, merger or consolidation, or any issue by the Company of shares of
stock of any class or securities convertible into shares of stock of any class.

     The grant of this Option shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
in its capital or business structure or to merge, consolidate, dissolve or
liquidate or to sell or transfer all or any part of its business or assets.

     9. TAXATION UPON EXERCISE OF OPTION. Optionee understands that, upon
exercise of this Option, Optionee may recognize income, for federal and state
income tax purposes, in an amount equal to the amount by which the fair market
value of the Shares, determined as of the date of exercise, exceeds the exercise
price. The acceptance of the Shares by Optionee shall constitute an agreement by
Optionee to report such income in accordance with then applicable law and to
cooperate with Company in establishing the amount of such income and
corresponding deduction to the Company for its income tax purposes. Withholding
for federal or state income and employment tax purposes will be made, if and as
required by law, from Optionee's then current compensation, or, if such current
compensation is insufficient to satisfy withholding tax liability, the Company
may require Optionee to make cash payment to cover such liability as a condition
of the exercise of this Option.

     10. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. The Board may modify,
extend or renew this Option or accept the surrender thereof (to the extent not
theretofore exercised) and authorize the granting of a new option in
substitution therefore (to the extent not theretofore exercised), subject at all
times to the Plan. Notwithstanding the foregoing provisions of this Paragraph
10, no modification shall, without the consent of the Optionee, alter to the
Optionee's detriment or impair any rights of Optionee hereunder.

                                        3
<PAGE>
     11. INVESTMENT INTENT; RESTRICTIONS ON TRANSFER. Optionee represents and
agrees that if Optionee exercises this Option in whole or in part, Optionee will
in each case acquire the Shares upon such exercise for the purpose of investment
and not with a view to, or for resale in connection with, any distribution
thereof; and that upon such exercise of this Option in whole or in part,
Optionee (or any person or persons entitled to exercise this Option under the
provisions of Paragraphs 5 and 6 hereof) shall furnish to the Company a written
statement to such effect, satisfactory to the Company in form and substance. The
Company, at its option, may include a legend on each certificate representing
Shares issued pursuant to any exercise of this Option, stating in effect that
such Shares have not been registered under the Securities Act of 1933, as
amended (the "Act"), and that the transferability thereof is restricted. If the
Shares represented by this Option are registered under the Act, either before or
after the exercise of this Option in whole or in part, the Optionee shall be
relieved of the foregoing investment representation and agreement and shall not
be required to furnish the Company with the foregoing written statement.

     Optionee further represents that optionee has had access to the financial
statements or books and records of the Company, has had the opportunity to ask
questions of the Company concerning its business, operations and financial
condition, and to obtain additional information reasonably necessary to verify
the accuracy of such information, and further represents that Optionee (either
such experience and knowledge in investment, financial and business matters in
investments similar to the stock of the Company that Optionee is capable of
evaluating the merits and risks thereof and has the capacity to protect his or
her own interest in connection therewith.

     12. REGISTRATION RIGHTS.

          a. PIGGYBACK REGISTRATION RIGHTS. If the Company at any time proposes
to register any of its securities under the Act, including under an S-8
Registration Statement, an SB-2 Registration Statement or otherwise, it will
each such time give written notice to all holders of outstanding or exercised
options of its intention so to do. Upon the written request of a holder or
holders of any such outstanding or exercised options given within thirty (30)
days after receipt of any such notice, the Company will use its best efforts to
cause all such outstanding or exercised options, the holders of which shall have
so requested registration thereof, to be registered under the Act (with the
securities which the Company at the time propose to register), all to the extent
requisite to permit the sale or other disposition by the prospective Sellers of
the outstanding or exercised options so registered; provided, however, that the
Company may, as a condition precedent to its effecting such registration,
require each prospective Seller to agree with the Company and the managing
underwriter or underwriters of the offering to be made by the Company in
connection with such registration that such Seller will not sell any securities
of the same class or convertible into the same class as those registered by the
Company (including any class into which the securities registered by the Company
are convertible) for such reasonable period after such registration becomes
effective as shall then be specified in writing by such underwriter or
underwriters if in the opinion of such underwriter or underwriters the Company's
offering would be materially adversely affected in the absence of such an
agreement.

                                        4
<PAGE>
          b. PROCEDURES. In connection with the registration of any securities
pursuant to Section 12.a. hereof, the Company and the Optionee covenant and
agree as follows:

               (i) The Company shall pay all costs, fees, and expenses incurred
by the Company and the Optionee in connection with the Registration Statement
and the offering thereunder including, without limitation, the Company's legal
fees and expenses of counsel, accounting fees, printing expenses, and blue sky
fees and expenses (but excluding discounts or selling commissions of any
underwriter or broker dealer acting on behalf of the company or the Optionee).

               (ii) The Company shall take all necessary action which may be
reasonably required in qualifying or registering the securities included in the
Registration Statement for offering and sale under the securities or blue sky
laws of all states reasonably requested by Optionee, provided that the Company
shall not be obligated to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.

               (iii) The Company shall indemnify Optionee and each person, if
any, who controls Optionee within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"),
against all loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Act, the Exchange
Act or otherwise, arising from the Registration Statement.

               (iv) The Company shall, as soon as practicable after the
effective date of the Registration Statement, and in any event within fifteen
(15) months thereafter, make "generally available to its security holders"
(within the meaning of Rule 158 under the Act) an earnings statement (which need
not be audited) complying with Section 11(a) of the Act and covering a period of
at least twelve (12) consecutive months beginning after the effective date of
the Registration Statement.

               (v) The Company shall (A) deliver promptly to Optionee and its
counsel, upon request, copies of all correspondence between the Commission and
the Company, its counsel, or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to the Registration Statement; and
(B) permit Optionee and its counsel to perform such investigation, upon
reasonable advance notice, with respect to information contained in or omitted
from the Registration Statement, as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. Such investigation shall include, but not be limited to, access to
financial and accounting information and opportunities to discuss the business
of the Company with the Company's officers and independent auditors, all to such
reasonable extent, at such reasonable times and as often as Optionee and its
counsel shall reasonably request.

                                        5
<PAGE>
               (vi) The Company shall cause all securities of Optionee
registered pursuant to a Registration Statement to be listed on any national
securities exchange or quoted on any automated quotation system on which similar
securities of the Company are listed or quoted.

     13. STAND-OFF AGREEMENT. Optionee agrees that in connection with any
registration of the Company's securities, that upon the request of the Company
or any underwriter managing an underwritten offering of the Company's
securities, that Optionee shall not sell, short any sale of, loan, grant an
option for, or otherwise dispose of any of the Shares (other than Shares
included in the offering) without the prior written consent of the Company or
such managing underwriter, as applicable, for a period of at least one hundred
eighty (180) days following the effective date of registration of such offering.

     14. NOTICES. Any notice required to be given pursuant to this Option or the
Plan shall be in writing and shall be deemed to be delivered upon receipt or, in
the case of notices by the Company, five (5) days after deposit in the US. mail,
postage prepaid, addressed to Optionee at the address last provided to the
Company by Optionee for his or her employee records.

     15. AGREEMENT SUBJECT TO PLAN; APPLICABLE LAW. This Agreement is made
pursuant to the Plan and shall be interpreted to comply therewith. A copy of
such Plan is available to Optionee, at no charge, at the principal office of the
Company. Any provision of this Agreement inconsistent with the Plan shall be
considered void and replaced with the applicable provision of the Plan. This
Agreement has been granted, executed and delivered in the State of California,
and the interpretation and enforcement shall be governed by the laws thereof and
subject to the exclusive jurisdiction of the courts therein.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                        AMERICAN SOIL TECHNOLOGIES, INC.

                                        /s/ Neil C. Kitchen
                                        --------------------------------
                                        By:  Neil C. Kitchen
                                        Its: President, Chief Executive Officer

                                        ----------------------------------------
                                                                      , Optionee

                                        6
<PAGE>
                                   Appendix A

                               NOTICE OF EXERCISE

American Soil Technologies, Inc.
215 N. Marengo, Suite 110
Pasadena, CA 91101

                              --------------------
                                     (date)

Re: Incentive Stock Option

     Notice is hereby given pursuant to Section 4 of my Incentive Stock Option
Agreement that I elect to purchase the number of shares set forth below at the
exercise price set forth in my option agreement:

     Stock Option dated:                 _____________________

     Number of shares being purchased:   _____________________

     Option Exercise Price:             $_____________________

     A check in the amount of the aggregate price of the shares being purchased
is attached.

     I hereby confirm that such shares are being acquired by me for my own
account for investment purposes, and not with a view to, or for resale in
connection with, any distribution thereof.

     Further, I understand that, as a result of this exercise of rights, I will
recognize income in an amount equal to the amount by which the fair market value
of the Shares exceeds the exercise price. I agree to report such income in
accordance with then applicable law and to cooperate with Company in
establishing the withholding and corresponding deduction to the Company for its
income tax purposes.

     I agree to provide to the Corporation such additional documents or
information as may be required pursuant to the Corporation's 2000 Incentive and
Nonstatutory Stock Option Plan.

                                        ----------------------------------------
                                                      (Signature)

                                        ----------------------------------------
                                                   (Name of Optionee)<PAGE>   1
                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT ("AGREEMENT"), dated as of October 1, 2000 (the
"COMMENCEMENT DATE"), is between Zindart Limited, a corporation organized under
the laws of Bermuda (the "COMPANY"), and Peter A.J. Gardiner, a natural person
("EMPLOYEE").

     WHEREAS, an affiliate of the Company is a Hong Kong-based manufacturer of
die-cast collectibles, injection-molded products and scale models with
operations in the People's Republic of China;

     WHEREAS, an affiliate of the Company is the owner of the Corgi brand,
business and operations in the United Kingdom;

     WHEREAS, an affiliate of the Company is a P.R.C.-based manufacturer or
pop-up, specialty books and packaging; and

     WHEREAS, the sole shareholder of the Company ("ZHK") has American
Depositary Shares representing Ordinary Shares of ZHK listed on the Nasdaq
National Market.

     NOW, THEREFORE, in consideration of the premises and mutual convenants and
agreements contained herein, and intending to be legally bound, the parties
hereto hereby agree as follows:

     Section 1. EMPLOYMENT. The Company hereby employs Employee, and Employee
hereby accepts employment, upon the terms and subject to the conditions set
forth herein.

<PAGE>   2

     Section 2. DUTIES.

          (a) POSITION. Employee shall be employed as Chief Executive Officer of
the Company. Employee shall have such responsibilities and duties as are
determined by the Board of Directors of ZHK (the "Board") and are consistent
with his position as described in section 2(b).

          (b) RESPONSIBILITIES. It is the intention of the parties that, subject
to the authority of the Board, Employee shall be responsible for overseeing the
investment of ZHK in its subsidiaries and supervising the Asian and European
operations of ZHK, including, without limitation:

               (i) advice regarding the formulation and implementation of ZHK's
business and strategic planning, including advice as to what line or lines of
business to pursue, strategic partnerships, joint ventures, potential mergers,
acquisitions and/or other corporate reorganizations or restructuring, formation
of subsidiaries and/or affiliates, and advice concerning the general direction
of ZHK;

               (ii) subject to the final approval of the Board, advice
concerning the identification, retention and termination of personnel and ZHK's
professional advisors, including the determination of salary and fringe benefits
to be paid to the executive officers of ZHK and its subsidiaries; and

               (iii) overall supervision of all accounting, administrative and
legal matters within the ordinary course of ZHK's business.

          (c) BOARD MEMBERSHIP. During the term of Employee's employment
hereunder, the Company shall use its best efforts to cause Employee to be a
member of the Board, with all rights and privileges attendant thereto.

          (d) OBLIGATIONS.

               (i) Except as otherwise provided herein, Employee agrees to
devote his full working time, attention and energies to the performance of his
duties for the Company.

                                        2
<PAGE>   3

               (ii) It shall not be a violation of this Agreement for Employee,
with the Board's consent, to (a) serve on corporate, civic or charitable boards
or committees, (b) deliver lectures, fulfill speaking engagements or teach at
educational institutions, or (c) manage personal investments, so long as such
activities do not significantly interfere with the performance of Employee's
responsibilities to the Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that the such activities have
been conducted by Employee prior to the Commencement Date, the continued conduct
of such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Commencement Date shall not thereafter be deemed to
interfere with the performance of the Employee's responsibilities to the
Company. Employee hereby represents and warrants to the Company that Employee's
current engagements in and commitments to the activities described in the
previous sentence do not and shall not interfere with Employee's ability to
comply with Section 2(d)(i).

               (iii) Notwithstanding any other provision of this Agreement,
Employee shall have the right to make a written request to the Board in advance
for a written statement that a proposed business, position or activity is not in
violation of this Agreement, which determination the Board shall make in its
sole discretion. If Employee receives such statement or, if within 60 days of
making the request, he receives no reply, he may assume that the business,
position or activity is not competing or otherwise in violation of this
Agreement, and he may proceed with such business, position or activity without
such business, position or activity being considered to be violating any
provision of this Agreement. However, if thereafter, the Board determines in its
sole discretion that Employee's conduct of such business, position or activity
is in violation of this Agreement, it may notify him in writing of such
determination and Employee shall cease such business, position or activity
within 60 days of receipt of such notice.

          (e) LOCATION. Employee's primary duties shall be performed in Hong
Kong and the United Kingdom. Employee acknowledges and agrees that Employee may
be required to undertake a reasonable amount of travel in connection with the
fulfillment of his duties to the Company hereunder.

                                        3
<PAGE>   4

     Section 3. TERM. The initial term of Employee's employment shall commence
on the Commencement Date and shall continue until September 30, 2003 (the
"INITIAL TERM"), unless earlier terminated pursuant to section 6 below, and
shall be renewed automatically for additional one (1) year terms thereafter
(each, a "RENEWAL TERM") unless terminated by either party on written notice to
the other given at least 180 days prior to the expiration of the Initial Term or
any subsequent Renewal Term.

     Section 4. COMPENSATION AND BENEFITS. Until the termination of the
Employee's employment hereunder, in consideration for the services of Employee,
the Company shall compensate Employee as follows:

          (a) BASE SALARY. The Company shall pay Employee, in accordance with
ZHK's then-current payroll practices and schedule, a base salary ("BASE
SALARY"). The Base Salary to be paid Employee during the period from the
Commencement Date until the first anniversary of the Commencement Date shall be
HK$2,340,000 per annum. The Company shall not object if Employee desires his
compensation to be paid in another currency. This Base Salary shall be reviewed
at least annually by the Board, and any increase will be effective on the next
anniversary of the Commencement Date. The date of the annual performance review
will be established by the Board. The Board may review and increase Employee's
Base Salary at any time and in any amount as it so decides in its sole
discretion.

          (b) BONUS AND INCENTIVE COMPENSATION. The Company agrees to pay
Employee during the term of his employment an annual bonus of up to 100% of his
Base Salary within 60 days of the end of each fiscal year in an amount to be
determined by the Board, based on criteria to be mutually agreed between
Employee and the Company, and subject to the approval of ZHK, within 60 days of
the date hereof, which criteria shall be attached as Schedule A hereto.

          (c) VACATION. Employee shall be entitled to twenty-five (25) days of
paid vacation per year of employment, which shall accrue in equal amounts on the
last day of each fiscal quarter following the Commencement Date.

                                        4
<PAGE>   5

          (d) INSURANCE, ETC. The Company shall provide, or shall cause to be
provided by ZHK, accident, disability, life and health insurance (the
"BENEFITS") at its expense to Employee and his spouse, under group accident,
travel, disability, life and health insurance plans (if any) maintained by ZHK
for its full-time, salaried, senior officer level employees (pursuant to the
terms and conditions of such plans) as such employment benefits may be modified
from time to time by the Board for all full-time, salaried, senior officer level
executives. The amount and extent of such coverage shall be subject to the
discretion of the Board. The Company will also provide, or will cause to be
provided by ZHK, Employee with term life insurance with a death benefit of
$2,000,000.

          (e) GRANT OF OPTIONS. Within 10 business days of the Commencement
Date, Employee shall be granted an option or options to purchase American
Depositary Shares ("ADSs") representing up to 500,000 Ordinary Shares of ZHK at
an exercise price of US$2.50 per ADS. At the sole discretion of the Board,
Employee may from time to time be granted additional options to purchase ADSs.
To the extent permitted by applicable law, the Company shall procure ZHK to
cause such options to qualify for treatment as "incentive stock options" within
the meaning of the U.S. Internal Revenue Code of 1986, as amended, to the
maximum extent allowed thereby or by other applicable law. The amounts and terms
of any such stock options will be specified in a stock option agreement or
agreements between Employee and ZHK.

          (f) INDEMNIFICATION. Employee, in connection with his employment and
his service as an officer and/or director of the Company or any of its
subsidiaries or other Affiliates, shall be indemnified under the laws of the
jurisdiction in which each of the relevant entities is incorporated to the same
extent as other senior executives of ZHK and the Company are so indemnified. For
the purpose of this Agreement, "Affiliate" means any person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the person specified. At all times during
Employee's employment, the Company or ZHK, as appropriate, shall maintain
directors' and officers' liability insurance coverage covering Employee.

     Section 5. EXPENSES.

                                        5
<PAGE>   6

          (a) The Company shall reimburse Employee for all reasonable business
expenses in accordance with ZHK's policies, including, without limitation,
telecommuncations, travel, and entertainment expenses incurred by Employee in
connection with the business of the Company or ZHK, upon the presentation by
Employee of appropriate documentation. Air travel by Employee shall be on a
Business Class basis or, where approved by the Board, reasonably necessary or
reasonably appropriate, First Class. Employee shall furnish documentation
concerning such expenses to the Company or ZHK in a manner and form as required
by the Company or ZHK.

          (b) The Company agrees to provide, or to cause ZHK to provide, to
Employee at its sole expense:

               (i) A luxury class automobile and all reasonable applicable
insurance, maintenance and other operating costs thereof, or reimbursement to
Employee of related costs, provided that the lease payments on such automobile
payable or reimbursable by the Company hereunder shall not exceed HK$9,750 per
month in the aggregate.

               (ii) A reserved parking place to the extent practicable, provided
that the Company shall reimburse, or cause ZHK to reimburse, to Employee his
parking expenses if the Company or ZHK is unable to provide such parking place.

               (iii) An annual physical examination for Employee and his spouse
by a physician chosen by the Company or ZHK.

               (iv) All membership fees in any professional societies,
associations or bodies appropriate to Employee's position.

          (c) The Company agrees to reimburse to Employee the reasonable
professional fees and expenses of legal counsel incurred by Employee in
connection with the negotiation and drafting of this Agreement, not in excess of
US$7,000.

     Section 6. TERMINATION. Employee's employment shall commence on the
Commencement Date and continue until the expiration of the Initial Term or any
Renewal Term, except if the employment of Employee shall earlier terminate as
follows:

                                        6
<PAGE>   7

          (a) TERMINATION FOR CAUSE. For purposes of this Agreement, the term
"Cause" shall mean any one or more of the following, as determined by the Board
(excluding any vote of Employee):

               (i) Employee shall have committed an act of misappropriation,
embezzlement, fraud, or other similar intentional misconduct with respect to the
Company's or ZHK's business, or

               (ii) Employee shall have been convicted by a court of competent
jurisdiction of, or have pleaded guilty or nolo contendere to, any felony or a
misdemeanor involving moral turpitude, either of which materially affects the
ability of Employee to perform his duties, obligations and responsibilities as
set forth herein or the good name, goodwill or reputation of the Company or ZHK;
or

               (iii) Employee shall have materially breached any one or more
provisions of this Agreement and such breach shall not have been cured for a
period of thirty (30) days after written notice to Employee specifying the
breach in reasonable detail; provided, however, that the foregoing opportunity
to cure shall not apply if the Board reasonably determines that Employee's
breach is not capable of cure; or

               (iv) Employee takes any action or omits to take any action, which
act or omission Employee knew or reasonably should have known would likely be
materially adverse to the business of the Company, ZHK or any of its
subsidiaries; or

               (v) gross negligence by Employee in the performance of, or
willful disregard by Employee of, his employment obligations or authority as set
forth herein; or

               (vi) Employee shall have refused to obey any lawful resolution or
direction of the Board that is consistent with his duties hereunder, and such
refusal shall have continued for a period of ten (10) days after written notice
to Employee specifying such refusal in reasonable detail.

          (b) RESIGNATION FOR GOOD REASON. For purposes of this Agreement, "Good
Reason" shall mean any one or more of the following:

                                        7
<PAGE>   8

               (i) a material breach of this Agreement by the Company, which
breach shall have continued for a period of thirty (30) days after written
notice by Employee to the Board specifying the breach in reasonable detail; or

               (ii) a material and substantial reduction in the authority,
duties or responsibilities of Employee to a level below those associated with
the position as described in section 2 hereof, or material adverse change in
Employee's job title, or a detrimental alteration of the terms, conditions or
scope of Employee's employment, as described in that section, or a demotion or
replacement of Employee, whether or not undertaken following a sale, merger,
acquisition, consolidation or restructuring, and whether or not accompanied by a
change in title or a reduction in salary or benefits; or

               (iii) any reduction in Employee's then-current Base Salary or
other benefits provided hereunder, unless such reduction is consistent with
Section 4(d); or

               (iv) the failure of the Company to obtain an agreement reasonably
satisfactory to Employee from any successor to assume and agree to perform this
Agreement, as contemplated in section 15(e) hereof or, if the business for which
Employee's services are principally performed is sold or transferred, the
failure of the Company to obtain such an Agreement from the purchaser or
transferee of such business; or

               (v) the failure of ZHK to provide sufficient funding to the
Company so as to enable the Company to make the salary and benefit payments set
forth in this Agreement.

          (c) DEATH OR DISABILITY. Employee's employment will be terminated
immediately upon Employee's death. In the event of Employee's Disability, the
Company agrees to continue payment of Employee's Base Salary; provided, however,
Employee's employment may be terminated in accordance with applicable law by a
vote of a majority of the Board if Employee remains Disabled for a period of
more than six (6) months during any twelve (12) month period ("Disability").
Employee shall be Disabled if he has a physical or mental impairment as a result
of which he is unable to perform the essential functions of his job. In the
event Employee's employment is terminated due to Employee's death or Disability,
as provided

                                        8
<PAGE>   9

in this section, Employee shall not be entitled to receive any further
compensation or payments from the Company (except for any Base Salary due
Employee for his services performed prior to the date Employee's employment with
the Company terminates and/or any previously awarded but unpaid bonus). Any
vested options owned by Employee as of his death may pass to his heirs in
accordance with and subject to applicable law, subject to such restrictions on
exercise, transfer and the like as were applicable to Employee.

          (d) NOTIFICATION OF TERMINATION. Any termination by the Company
(which, for purposes of this Section and Section 7 shall be deemed to include a
termination by the Board) for Cause, or by Employee for Good Reason, shall be
communicated by Notice of Termination to the other party given in accordance
with section 14(a) of this Agreement. For purposes of this Agreement, a "Notice
of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment under the provision so indicated and (iii)
specifies the termination date (which date, in the case of termination for Good
Reason, shall be not more than thirty (30) days after the giving of such
notice). The failure by Employee or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of Employee or the Company,
respectively, or preclude Employee or the Company, respectively, from asserting
such fact or circumstance in enforcing Employee's or the Company's rights.

          In addition, Employee shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to Employee a copy of a
resolution duly adopted by the Board at a meeting of the Board called and held
for such purpose (after reasonable notice to Employee and an opportunity for
Employee to be heard before the Board), finding that in the good faith opinion
of the Board, Employee was engaged in the conduct set forth in section 6(a)(i),
(ii), (iii), (iv), (v) or (vi).

     Section 7. CERTAIN CONSEQUENCES OF TERMINATION.

          (a) TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON. If
employment shall be terminated by the Company for Cause pursuant to section 6(a)
or by

                                        9
<PAGE>   10

Employee's resignation without Good Reason prior to the end of the Initial Term
or any Renewal Term, the Company shall pay Employee his Base Salary and provide
his Benefits only through the date of termination. No compensation or benefits
will accrue or be owed to Employee for any period after the effective date of
termination. The Company will not accrue liability of any kind on account of
such termination.

          (b) TERMINATION WITHOUT CAUSE; RESIGNATION FOR GOOD REASON. If
employment shall be terminated by the Company without Cause or by Employee for
Good Reason, the Company shall provide the following benefits, regardless of any
income received by Employee pursuant to any new employment of Employee during
the period of payment of any severance payments under this paragraph (b):

               (i) pay Employee his Base Salary through the date of termination
and, in addition, severance pay equal to one year of his Base Salary. All of the
foregoing payments of severance shall be payable in accordance with the
Company's standard payroll schedule;

               (ii) continue to provide the Benefits (with an appropriate "gross
up" sufficient to result in Employee's having no net income tax liability for
such Benefits) for a period equal to that during which severance payments
continue to be made under this section, to the extent Employee is not eligible
for similar coverage under the plan of another Employer;

               (iii) provide Employee with a pro rata portion of any cash bonus
he would have received under section 4(b) had he not been terminated without
Cause or Good Reason; and

               (iv) subject to applicable law, accelerate to the date of
Employee's termination the vesting of Employee's stock options that would have
vested during the one year period immediately following the effective date of
the termination of his employment.

     Section 8. CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges
that certain assets of the Company and its Affiliates constitute Confidential
Information. The term "Confidential Information" as used in this Agreement shall
mean non-public information concerning financial data, strategic business plans,
product development (or

                                       10
<PAGE>   11

other proprietary product data), customer lists, marketing plans and other
non-public, proprietary and confidential information of the Company or its
Affiliates that is not otherwise available to the public (including, without
limitation, information regarding clients, customers, pricing policies, methods
of operation, proprietary computer programs, sales, products, profits, costs,
markets, key personnel, formulae, product applications, technical processes, and
trade secrets). Employee shall not, during or after his term of employment,
disclose all or any part of the Confidential Information to any person, firm,
corporation, association, or any other entity for any reason or purpose
whatsoever, directly or indirectly, except as may be required pursuant to his
employment hereunder, unless and until such Confidential Information becomes
publicly available other than as a consequence of the breach by Employee of his
confidentiality obligations hereunder. In the event of the termination of his
employment, whether voluntary or involuntary and whether by the Company or
Employee, or at any time upon the request of the Board, Employee shall return to
the ZHK all property belonging to the Company or its Affiliates that are in
Employee's (or Employee's heirs' or personal representatives') possession or
control. In addition, Employee shall deliver to the ZHK all documents and
materials containing Confidential Information and shall not take with him any
documents, materials or data of any kind or any reproductions (in whole or in
part) or extracts of any items relating to the Confidential Information.

     Notwithstanding the foregoing, in the event that Employee receives a
request or is required (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process) to disclose all or any
part of the Confidential Information, Employee agrees to (a) immediately notify
the Company and ZHK of the existence, terms and circumstances surrounding such
request or requirement, (b) consult with the Company and its Affiliates on the
advisability of taking legally available steps to resist or narrow such request
or requirement, and (c) assist the Company and its Affiliates in seeking a
protective order or other appropriate remedy. In the event that such protective
order or other remedy is not obtained or that the Company and ZHK waive
Employee's compliance with the provisions hereof, (i) Employee may disclose to
any tribunal only that portion of the Confidential Information that Employee, as
advised by counsel, is legally required to be disclosed and shall exercise his
best efforts to obtain assurance that the disclosure will be treated
confidentially and (ii) Employee

                                       11
<PAGE>   12

shall not be liable for such disclosure unless disclosure to any such tribunal
was caused by or resulted from a previous disclosure by Employee not permitted
by this Agreement.

     Section 9. NON-COMPETITION. During all periods of Employee's employment
hereunder, Employee agrees that, without the prior written consent of the Board,
he will not, directly or indirectly, either as a principal, manager, agent,
consultant, officer, stockholder, partner, investor, employee or in any other
capacity, carry on, be engaged in or have any financial interest in, any
business entity that engages in (1) the production or marketing of die-cast or
injection-molded products or scale models or books and specialty packaging or
(2) any logical horizontal or vertical extensions of the production or marketing
of such products, in each case in anywhere in the world where the Company or its
Affiliates' products are sold or distributed (the "Business"); provided that
Employee may own, directly or indirectly, solely as a passive investment,
securities of any entity traded on any national securities exchange or automated
quotation system if Employee is not a controlling Person of, or a member of a
group which controls, such entity and does not, directly or indirectly,
"beneficially own" (as defined in Rule 13d-3 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), without regard to the 60 day period
referred to in Rule 13d-3(d)(1)(i)) 5% or more of any class of securities of
such entity. Employee hereby acknowledges and agrees that the foregoing
restrictive covenant is reasonable in terms of temporal, geographic and subject
matter scope.

     Section 10. NON-SOLICITATION. Employee acknowledges that, because of the
nature of Employee's work for the Company, Employee's solicitation, serving or
retention of certain customers, clients, vendors, suppliers, distributors or
consultants (each such person or entity, a "Customer or Supplier") or employees
related to Employee's work for the Company and its Affiliates relating to the
Business would necessarily involve the unauthorized use or disclosure of
Confidential Information, and the proprietary relationships and goodwill of the
Company and its Affiliates. Accordingly, for a period of two years following the
termination of Employee's employment with the Company, Employee shall not, with
respect to the Business, directly or indirectly, solicit, provide services to or
retain any Customer or Supplier of the Company or its Affiliates with which the
Company or its Affiliates engaged in business transactions during the two-year
period prior to termination of Employee's employment with the Company, provided
that the restrictions contained in this sentence shall only apply to those

                                       12
<PAGE>   13

activities described in clauses (1) and (2) of Section 9. Employee further
agrees that for a period of two years following the termination of Employee's
employment with the Company, Employee shall not, directly or indirectly,
solicit, induce, or attempt to solicit or induce, any Customer or Supplier or
employee to terminate his, her or its relationship with the Company (including
its Affiliates) relating to the Business for any purpose, including the purpose
of associating with or becoming a Customer or Supplier or employee, whether or
not exclusive, of Employee or any entity of which Employee is or becomes a
partner, stockholder, principal, member, officer, director, principal, agent,
trustee or consultant, or otherwise solicit, induce, or attempt to solicit or
induce any such Customer or Supplier or employee to terminate his, her or its
relationship with the Company relating to the Business for any other purpose or
no purpose.

     Section 11. DISCOVERIES AND WORKS. All Discoveries and Works made or
conceived by Employee during his employment by the Company, jointly or with
others, that relate to the business of the Company or its Affiliates, shall be
owned by ZHK. The term "Discoveries and Works" includes, without limitation,
trade secrets and other confidential information, patents and patent
applications, trademarks and trademark registrations and applications, service
marks and service mark registrations and applications, trade names, copyrights
and copyright registrations and applications. Employee shall (a) promptly
notify, make full disclosure to, and execute and deliver any documents requested
by, ZHK, to evidence or better assure title to Discoveries and Works in ZHK, as
so requested, (b) renounce any and all claims, including, but not limited to,
claims of ownership and royalty, with respect to all Discoveries and Works and
all other property owned or licensed by the Company or its Affiliates, (c)
assist the Company and its Affiliates in obtaining or maintaining for itself at
its own expense patents, copyrights, trade secret protection or other protection
of any and all Discoveries and Works, and (d) promptly execute, whether during
his employment with the Company or thereafter, all applications or other
endorsements necessary or appropriate to maintain patents and other rights for
the Company and its Affiliates and to protect the title of the Company and its
Affiliates thereto, including, but not limited to, assignments of such patents
and other rights. Employee acknowledges that all Discoveries and Works shall be
deemed "works made for hire" under the U.S. Copyright Act of 1976, as amended.

                                       13
<PAGE>   14

               (a) Employee has provided on Schedule B hereto a list describing
all inventions, original works of authorship, developments, improvements, and
trade secrets which were made by Employee prior to employment with the Company,
which belong to Employee alone or jointly with others, which relate to the
Company's or its Affiliates' business, products or research and development, and
which are not assigned to the Company or its Affiliates. If "none" is stated on
Schedule B, Employee therefore represents that there are no such inventions,
works of authorship, developments, improvements or trade secrets.

               (b) Employee understands that the provisions of this Agreement
requiring assignment to the Company or its Affiliates do not apply to any
invention made by an employee of the Company which qualifies fully under the
provisions of Section 2870 of the California Labor Code which provides:

          (a) Any provision in an employment agreement which provides that an
          employee shall assign, or offer to assign, any of his or her rights in
          an invention to his or her employer shall not apply to an invention
          that the employee developed entirely on his or her own time without
          using the employer's equipment, supplies, facilities, or trade secret
          information except for those inventions that either: (1) Relate at the
          time of conception or reduction to practice of the invention to the
          employer's business, or actual or demonstrably anticipated research or
          development of the employer; or (2) Result from any work performed by
          the employee for the employer. (b) To the extent a provision in an
          employment agreement purports to require an employee to assign an
          invention otherwise excluded from being required to be assigned under
          Subdivision (a), the provision is against the public policy of this
          state and is against the public policy of this state and is
          unenforceable.

Employee agrees to advise the Company and ZHK promptly in writing of any
inventions that he believes meet the criteria of Section 2870 of the California
Labor Code, and will also provide at that time to the Company and ZHK in writing
all evidence necessary to substantiate that belief. the Company will keep in
confidence and will not disclose to third parties without Employee's consent any
confidential information disclosed in writing to the Company relating to
inventions that qualify fully under the provisions of Section 2870 of the
California Labor Code.

     Section 12. REMEDIES. Employee agrees that any breach of the covenants
contained in Section 9, 10, or 11 would irreparably injure the Company.
Accordingly, the Company may, in addition to pursuing any other remedies it may
have in law or in equity, obtain

                                       14
<PAGE>   15

an injunction against Employee from any court having jurisdiction over the
matter, restraining any threatened or further violation of Section 9, 10 or 11
by Employee.

     Section 13. ARBITRATION. Subject to Section 10, the parties agree that any
dispute arising out of or relating to Employee's employment and its termination
(except for injunctive relief as set forth in Section 12), including but not
limited to claims of employment discrimination, shall be subject to binding,
mandatory arbitration in San Francisco, California before a single, neutral
arbitrator, under the National Rules for the Resolution of Employment Disputes
of the American Arbitration Association (the "AAA") then in effect. the Company
shall be responsible for paying all of the AAA's administrative fees and
arbitrator's fees, except that Employee shall be responsible for paying an
amount equal to the applicable court filing fee. In all other respects, the
parties shall bear their own attorney's fees and costs. The parties shall have
the right to conduct discovery which provides them with access to documents and
witnesses that are essential to the dispute, as determined by the arbitrator.
the Company may seek injunctive relief in the appropriate court necessary to
protect its trade secrets, confidential business information, or to prevent
solicitation of its employees, customers or other relationships in violation of
any legal obligation or contractual agreement between the parties ("Unfair
Competition Claims.") Except for such injunctive relief, Unfair Competition
Claims are subject to arbitration under this Agreement. The arbitrator's written
award shall include the essential findings and conclusions upon which the award
is based. To the extent permitted by applicable law, the prevailing party shall
be entitled to recover its reasonable attorney's fees and non-arbitration costs.

     Section 14. GENERAL.

          (a) NOTICES. All notices and other communications hereunder shall be
in writing, and shall be deemed to have been duly given if delivered personally
or if sent by overnight courier or by certified mail, return receipt requested,
postage prepaid, or transmitted by facsimile transmission, to the other party at
the address sent forth below:

     If to the Company, to:       Conyers Dill & Pearman
                                  Clarendon House
                                  P.O. Box HM 666
                                  Hamilton, Bermuda HM CX

                                       15
<PAGE>   16

                                  Facsimile: (441) 296-2603

     With a copy to:              Skadden, Arps, Slate, Meagher & Flom LLP
                                  525 University Avenue, Suite 220
                                  Palo Alto, CA 94301
                                  Tel: 650-470-4500
                                  Fax 650-470-4570

     If to Employee, to:          Peter A. J. Gardiner
                                  Linden Park
                                  Hawick TD985U
                                  Roxburghshire, Scotland
                                  Tel: 01450-376430
                                  Fax: 01450-370275

     with a copy to:              McCutchen Doyle Brown & Enersen, LLP
                                  355 South Grand Avenue
                                  Los Angeles, California 90071-1560
                                  Attention: Ronald J. Cooke

Any such notice shall be effective (i) if delivered personally, when received,
(ii) if sent by overnight courier, when receipted for, (iii) if mailed, five (5)
days after mailing and (iv) if by facsimile, when electronically confirmed by
the sender.

          (b) SEVERABILITY. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect under any law, the validity,
legality or enforceability of the remaining provisions hereof shall not in any
way be affected or impaired.

          (c) WAIVERS. No delay or omission by either party hereto in exercising
any right, power, or privilege hereunder shall impair such right, power, or
privilege, nor shall any single or partial exercise of any such right, power, or
privilege preclude any further exercise thereof or the exercise of any other
right, power, or privilege.

          (d) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                                       16
<PAGE>   17

          (e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Company's successors and Employee's personal or
legal representatives, executors, administrators, heirs, distributees, devisees
and legatees. This Agreement shall not be assignable by Employee, it being
understood and agreed that this is a contract for Employee's personal services.
This Agreement shall not be assignable by the Company except in connection with
a Change of Control or a transaction involving the succession by a third party
to all or substantially all of the Company's business and/or assets (whether
direct or indirect and whether by purchase, merger, consolidation, liquidation
or otherwise), in which case the Company shall require any such successor to
assume this Agreement and expressly agree to perform this Agreement in the same
manner and to the same extent as the Company would be required to perform it in
the absence of a succession. For all purposes under this Agreement, the term
"Employer" shall include any successor to the Company's business and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

     For purposes of this Agreement "Change of Control" shall mean (a) the
acquisition of 50 percent or more of each class of the outstanding shares of the
Company by a third party which is not an Affiliate of the Company, (b) a merger,
consolidation or other reorganization of the Company (other than
reincorporation), if after giving effect to such merger, consolidation, or other
reorganization, the shareholders of the Company immediately prior to such
merger, consolidation, or other reorganization do not represent a majority in
interest of the holders of voting securities (on a fully diluted basis) with the
ordinary power to elect directors of the surviving entity after such merger,
consolidation or other reorganization, or (c) the sale of all or substantially
all of the assets of the Company to a third party who is not an Affiliate of the
Company.

          (f) SURVIVORSHIP. The respective rights and obligations of the parties
hereunder, including but not limited to Employee's obligations under Section 9,
10 and 11 above, shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.

                                       17
<PAGE>   18

          (g) EACH PARTY THE DRAFTER. This Agreement and the provisions
contained in it shall not be construed or interpreted for or against any party
to this Agreement because that party drafted or caused to be drafted any of its
provisions.

          (h) CURRENCY EQUALIZATION. In the event the Hong Kong dollar should
devalue relative to the U.S. dollar during the term of this Agreement,
Employee's salary shall be increased accordingly.

          (i) HEADINGS. All descriptive headings to sections and paragraphs in
this Agreement are intended solely for convenience, and no provision of this
Agreement is to be construed by reference to the heading of any section or
paragraph.

          (j) ENTIRE AGREEMENT. This Agreement, the undertaking of ZHK in the
form attached as Schedule C, the Stock Option Agreement dated the date hereof
between ZHK and Employee, and the other applicable agreements contain the entire
understanding of the parties, supersede all prior agreements and understandings
relating to the subject matter and shall not be amended except by a written
instrument hereafter signed by each of the parties.

                                       18
<PAGE>   19

          IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused this Agreement to be duly executed as of the date and
year first above written.

                                        /s/ PETER A.J. GARDINER
                                        ----------------------------------------
                                        PETER A.J. GARDINER

                                        ZINDART LIMITED,
                                        A BERMUDA CORPORATION

                                        By: /s/ LEO PAUL KOULOS
                                           -------------------------------------
                                           Leo Paul Koulos
                                           attorney-in-fact

                                       19

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