Document:

CARBON DEVELOPEMENT AGREEMENT

THIS AGREEMENT is dated January 14, 2011

BETWEEN:

BIO-CARBON SOLUTIONS INTERNATIONAL INC

A Nevada corporation having an address at:

123 Queen St East, suite 202

Sault Ste Marie, Ontario,

Canada P6A 2Z5

As “BCSI”

AND:

BASIA HOLDINGS, INC.

A Tennessee corporation having an address at:

18 East Sunrise Highway  ̃ Suite 311  ̃ Freeport, NY 11520

As “BASIA”

WHEREAS:

BCSI  is a carbon project development  firm with exclusive know how for the quantification, management, monitoring and sale of carbon credits or environmental benefits “Carbon credits”;

AND WHEREAS

BASIA is a coal resource development company with the exclusive ownership of lands which cover 9,000 acres of heavily forested lands in Grundy County, Tennessee and which contains approximately 52,000,000 tons of recoverable coal that may be extracted by surface and underground mining methods “The Project”.

AND WHEREAS

Carbon credits can be generated from various methodologies and generated from using a broad spectrum of technologies or methodologies that reduce the emissions of greenhouse warming gases, which include the type of activities that are pertinent to The Project;

AND WHEREAS

BCSI and BASIA wish to collaborate for the development and sale of carbon credits that may be derived from the Project;

AND WHEREAS

BCSI and BASIA wish to enter into this Carbon Development Agreement  (the “CDA”) which grants to BCSI the exclusive rights for the development of the carbon credits derived from The Project.

NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants herein, the parties hereto (the “Parties”, or individually the “Party”) agree as follows:

PART I

AGREEMENT

2.1                      This CDA grants exclusive rights to BCSI for the development of carbon credits or carbon offsets or environmental benefits derived from the Project including projects developed by BASIA’s subsidiaries.

 

PART 2

TERMINATION

3.1                      This CDA shall be effective upon the date hereof, and shall continue in full force and effect unless  the other Party becomes bankrupt.

 

  

 

  

 

3.2                      The Parties acknowledge and agree that the rights and obligations of any Party that have accrued prior to the expiration of this Agreement or which are expressed to survive such expiration  shall not be affected by the termination of this CDA.

PART 3

COMPENSATION

BASIA shall pay BCSI 20 % of the net Cash Flow from the sale of carbon credits generated by BCSI on behalf of BASIA.  Payment is due on December 31 of each year.

 

PART 4

INTELLECTUAL PROPERTY

Except with agreed specifically in writing, BCSI Inc and BASIA shall retain ownership and title of all their respective assets, intellectual property related to technologies, business know-how, trademarks, business contacts, access to government capital and loans for business development including future improvements and modifications.

PART 5

CONFIDENTIALITY

	
5.1

	
Each Party shall treat as confidential information this CDA, the subject matter hereof, and all other discussions, draft agreements, agreements, information, reports, data, test results, marketing, product and cost information, business opportunities, know-how, research and analyses related to the Parties’ Technologies or this CDA the “Confidential Information”).  The standard of care to be used in protecting the Confidential Information hereunder shall be the same degree of care the Parties use to protect their own confidential information, but in any event, shall not be less than a reasonable degree of care practised by diligent and prudent persons in similar circumstances.

	
5.2

	
Confidential Information shall be used by the receiving Party only for purposes of the actions specifically contemplated by this CDA and shall be promptly returned to the disclosing Party on the written request of the disclosing Party. Each Party shall restrict the disclosure of Confidential Information to those of its employees and agents who have a need to know such information relative to this CDA and shall only disclose such Confidential Information to those persons who have agreed to receive, hold and use such information subject to the terms and restrictions of this CDA.

	
5.3

	
Notwithstanding the above, this section  imposes no obligation on the receiving Party with respect to information that:

	
  

	
(a)

	
is or becomes a matter of public knowledge through no fault of the receiving Party,

	
  

	
(b)

	
is rightfully received by the receiving Party from a third party without a duty of confidentiality,

	 	
(c)

	
is required to be disclosed by law, or

	
  

	
(d)

	
is disclosed by the receiving Party with the disclosing Party's prior written consent.

PART 6

COVENANTS, REPRESENTATIONS & WARRANTIES

	
6.1

	
Each Party represents and warrants that it has all corporate approvals and the independent right and power to enter into this CDA.

	
6.2

	
BASIA and BCSI agree that BCSI offer no guaranty regarding the eligibilty of the project with respect to carbon credits.  BCSI will exert best efforts to secure carbon credit benefits to BASIA.

	
6.3

	
BASIA agrees that BCSI is a carbon development company and has carbon development agreements with other parties who may or may not compete with BASIA.

PART 7

LIMITATION OF LIABILITY

Except with respect to obligations of confidentiality and restrictions on use set forth herein, neither Party will be liable for any indirect, special, incidental or consequential damages of any kind, including lost profits, lost revenues, lost business opportunities, failure to realize expected savings, or other commercial or economic losses of any kind arising out of, in connection with, or resulting from their performance under this Agreement, even if the other Party has been advised of the possibility of such damage.

  

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PART 8

DISPUTE RESOLUTION

Except for applications for injunctions or restraining orders, any disputes arising out of or in connection with any binding provisions of this CDA or in respect of any defined legal relationship associated therewith or derived therefrom will be, insofar as lawfully possible, referred to and finally resolved or determined by arbitration in Ontario, Canada and each party shall be responsible for its own fees.

PART 9

NOTICES

Any notice to be given by either Party to the other under this CDA will be in writing and may be delivered personally, by facsimile or by first class prepaid mail to the following addresses:

If to BCSI:

Bio-Carbon Solutions International Inc

123 March Street, Suite 202

Sault Ste Marie, On P6A 2Z5 Canada

	
Attention: 

	
Luc C Duchesne

	
Facsimile: 

	
705 253 9572

	
Email: 

	
ce0@bio-carb.com

If to BASIA HOLDINGS, INC

Basia Holdings, Inc.

18 East Sunrise Highway, Suite 311

Freeport, NY  11520 USA

	
Attention: 

	
Neal R. Bruckman

	
Facsimile: 

	
516 546 6220

	
Email: 

	
fintekusa@gmail.com

or to such other address as may be designated by written notice given by either Party to the other Party.

Notices delivered in person or by facsimile will be effective on the date of such delivery. Notices issued by mail will be effective on the third business day following the date that the envelope containing the notice is post-marked unless between the time of mailing and the time the notice is deemed effective there is an interruption in postal service, in which case, the notice will not be effective until actually received. In the event of a postal strike or lockout, notices or demands under this CDA must be delivered personally or by facsimile.

PART 10

GENERAL PROVISIONS

	
10.1

	
Partnership: Nothing in this CDA is intended to imply the existence of a partnership, joint venture, or agency relationship between the Parties.

	
10.2

	
Time of Essence: Time is of the essence with respect to this CDA and the performance of each obligation of each Party hereunder unless otherwise expressly stated.

	
10.3

	
Amendments: No modifications, waivers or amendments to this CDA shall be effective unless in writing and signed all Parties.

	
10.4

	
Assignment: Neither Party may assign or transfer this Agreement or any of its rights or obligations under this CDA, without the prior written consent of the other party.

	
10.5

	
Governing Law: This CDA will be governed by and interpreted exclusively in accordance with the laws of the Province of Ontario, Canada and the Parties hereby irrevocably attorn to the jurisdiction of the courts of the Province of Ontario for matters which are not properly the subject of Part 9.

 

  

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10.6

	
Costs: Each Party will be responsible for its own costs in relation to any activities covered by this CDA and the negotiation of the Commercial Agreements, unless otherwise indicated.

	
10.7

	
Further Assurances: Each Party will execute and deliver such further and other agreements, documents and instruments and do such further acts and things as are within its power and as may be necessary or desirable to fully implement and carry out the terms of this CDA that are expressed to be legally enforceable as and from the time of execution hereof.

	
10.8

	
Entire Agreement: This CDA supersedes any prior understandings, agreements or proposals (written or oral) between the Parties as to the subject matter of this CDA.

IN WITNESS WHEREOF, the Parties executed this CDA as of the date first above written.

BIO-CARBON SOLUTIONS INTERNATIONAL INC

	
By:

	
Luc C Duchesne

	  	  
	
Signature:

	 
/s/ Luc C Duchesne

	  	  
	
Title:

	
CEO

	  	  
	
BASIA HOLDINGS, INC

	  	  
	
By:

	
Neal R. Bruckman

	  	  
	
Signature:

	 
/s/ Neil Bruckman

	  	  
	
Title:

	
 
President  

  

A-4BIO-CARBON SOLUTIONS ITERNATIONAL INC.

 

STOCK OPTION PLAN

 

January 11, 2011

1.           PURPOSE:  The purpose of this Stock Option Plan (the “Plan”) is to enable Bio-Carbon Solutions International Inc. (the “Corporation”) and its subsidiaries or affiliates (if any) to attract and retain directors, officers, employees, Consultants (as defined below) and advisors who will contribute to the Corporation's success by their ability, ingenuity and industry, and to enable such persons to participate in the long-term success and growth of the
Corporation by giving them a proprietary interest in the Corporation in the form of options to purchase common shares (the “Shares”) of the Corporation (the “Stock Options”).

2.           DEFINITIONS AND ELIGIBILITY:

	
(a)

	
For the purposes of this Plan, “Consultant” has the meaning given to such term in Division 4 of the National Instrument 45-106, as adopted in Ontario, Canada and as may be amended from time to time.

 

	
(b)

	
"Insider" is used in relation to the Company, and means;

 

	
  

	
(i)

	
a director or senior officer of the Company,

	
  

	
(ii)

	
every director or senior officer of a company that is itself an insider or subsidiary of the Company,

	
  

	
(iii)

	
any person or company who beneficially owns , directly or indirectly, voting securities of the Company or who exercises control or direction over voting securities of the Company or a combination of both carrying more than  10% of the voting rights attaching to all voting securities to the Company for the time being outstanding other than voting securities held by the person or company as an underwriter in the course of a distribution, or the Company itself if it holds any of its own securities;

	
(c)

	
Stock Options may be granted under the Plan to:

	
  

	
(i)

	
directors, officers or bona fide employees, whether full or part time, of the Corporation or of any person or company that controls or is controlled by the Corporation or that is controlled by the same person or company that controls the Corporation (an “Affiliated Entity”);

	
  

	
(ii)

	
bona fide Consultants or advisors to the Corporation or to an Affiliated Entity, and such other service providers as may be permitted by regulatory authorities; or

	
  

	
(iii)

	
the permitted assigns (the “Permitted Assigns”) of the persons identified in subsections 2(c)(i) and 2(c)(ii) above, namely:

	
  

	
(A)

	
trustees, custodians or administrators acting on behalf, or for the benefit, of persons identified in subsections 2(c)(i), 2(c)(ii) above and 2(c)(iii)(D) below;

	
  

	
(B)

	
persons or companies controlled by persons identified in subsections 2(c)(i), 2(c)(ii) above and 2(c)(iii)(D) below;

 

  

  

  

 

	
  

	
(C)

	
Registered Retirement Savings Plans or Registered Retirement Income Funds of persons identified in subsections 2(c)(i), 2(c)(ii) above and 2(c)(iii)(D) below; and

	
  

	
(D)

	
a spouse of the person;

(collectively, the “Eligible Persons”) provided, however, that Stock Options may be conditionally granted to persons who are prospective directors, officers or employees of, or Consultants, advisors or service providers to, the Corporation or an Affiliated Entity, or to their Permitted Assigns, but no such grant shall become, by its terms, effective earlier than the date as on which the Board of Directors of the Corporation approves the grant or the date as of which the prospective Eligible Persons becomes a director, officer or employee of, or a Consultant or advisor to (as the case may be), the Corporation.

The Corporation acknowledges that employees or Consultants who may be granted Stock Options under the Plan must be bona fide employees or Consultants.

	
(c)

	
For the purposes of this section 2, a person or company shall be considered to control another person or company if the first person or company provides, directly or indirectly, the principal direction or influence over the business and affairs of the second person or company by virtue of (i) ownership or direction of voting securities of the second person or company, (ii) a written agreement or indenture, (iii) being or controlling the general partner of a limited partnership, or (iv) being a trustee of a trust.

3.           ADMINISTRATION:  The Plan shall be administered by the Board of Directors of the Corporation or any committee of the Board of Directors of the Corporation appointed for that purpose (the “Board”), who shall have full authority to interpret the Plan and to make such rules and regulations and establish such procedures as they deem appropriate for the administration of the Plan.  A decision of the majority of persons comprising the Board in respect of any matter hereunder shall be binding and conclusive for
all purposes and upon all persons.  The Board is authorized and directed to do all things and execute and deliver all instruments, undertakings and applications as they in their absolute discretion consider necessary for the implementation of the Plan.

4.           SHARES SUBJECT TO THE PLAN:  The total number of Shares which are at any one time reserved and set aside for issuance under this Plan, and under all other management options outstanding and employee stock purchase plans, if any, shall not in the aggregate exceed a number of Shares equal to 7,000,000  Shares.  All Shares issued upon the exercise of Stock Options granted pursuant to the Plan will be issued as fully paid Shares, subject
to receipt of any required payment and of all necessary regulatory approvals.  The maximum number of Shares which are reserved and set aside for issuance under this Plan may be subsequently increased with the approval of the Board of Directors of the Corporation as further Shares are issued by the Corporation, or by further approval of the shareholders of the Corporation.  Any Stock Options granted under the Plan which are cancelled, terminated or expire, will remain available for granting under the Plan at the current Market Price (as defined in section 7(b), below), subject to regulatory approval.

5.           PARTICIPATION: Stock Options shall be granted under the Plan only to Eligible Persons as shall be designated from time to time by the Board and shall be subject to the approval of such regulatory authorities as may have jurisdiction.  Approval of the Plan also constitutes shareholder approval of Stock Options that may be granted under the Plan as provided herein.

 

  

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6.           OPTION AGREEMENTS:  Each Stock Option shall be evidenced by a written agreement (an “Option Agreement”), containing such terms and conditions, not inconsistent with the Plan, as the Board may, in its discretion, determine. Each Option Agreement shall be executed by the Corporation and the optionee.  Option Agreements may differ among optionees.

7.           TERMS AND CONDITIONS OF OPTIONS:  Subject to the provisions of section 11 herein, the terms and conditions of each Stock Option granted under the Plan shall include the following, as well as such other provisions, not inconsistent with the Plan as may be deemed advisable by the Board:

	
(a)

	
Number of Shares:  At no time shall the number of Shares reserved for issuance to any one optionee under Stock Options granted, within any twelve (12) month period, under the Plan or otherwise, exceed five (5%) percent of the outstanding Shares at the time of granting, or such greater amount as may be permitted pursuant to the rules of any regulatory authority (including a stock exchange) having jurisdiction, unless an ordinary resolution of disinterested shareholders of the Corporation provides otherwise.

	
(b)

	
Exercise Price:   The exercise price of a Stock Option granted under the Plan shall be fixed by the Board of Directors but shall be not less than the Market Price (as defined herein) of the Shares at the time the Stock Option is granted, or such lesser price as may be permitted pursuant to the rules of any regulatory authority having jurisdiction over the Shares issued which rules may include provisions for certain discounts in respect to the exercise price.  For the purpose of this paragraph, the “Market Price” at any date in respect of the Shares shall mean the greater of:

	
  

	
(i)

	
the closing price of such Shares on a stock exchange on which the Shares are listed and posted for trading or a quotation system for a published market upon which the price of the Shares is quoted, as may be selected for such purpose by the Board (the “Market”), on the last trading day prior to the date the Stock Option is granted, less an allowable discount of no greater than twenty-five percent (25%); and

	
  

	
(ii)

	
the closing price of such Shares on the Market on the date on which the Stock Option is granted.

In the event that such Shares did not trade on such trading day, the Market Price shall be the average of the bid and ask prices in respect of such Shares at the close of trading on such trading day as reported thereof.  In the event that such Shares are not listed and posted for trading or quoted on any Market, the Market Price shall be the fair market value of such Shares as determined by the Board in its sole discretion.

	
(c)

	
Reduction in Exercise Price:  The exercise of a Stock Option granted under the Plan to an Insider of the Corporation (as defined in section 2(b)) shall not be reduced without prior approval from the disinterested shareholders of the Corporation.

	
(d)

	
Payment:  The full purchase price payable for Shares issuable pursuant to the exercise of Stock Options shall be paid in cash or certified funds upon the exercise thereof.  A holder of a Stock Option shall have none of the rights of a shareholder until the Shares are paid for and issued.

	
(e)

	
Term of Option:  Stock Options may be granted under this Plan for a period not exceeding five (5) years.  Any Stock Options granted pursuant hereto, to the extent not validly exercised, will terminate on the date of expiration specified in the option agreement, subject to earlier termination as provided in sections 8, 10 and 11 below.

 

  

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(f)

	
Vesting: Unless the Board determines otherwise at its discretion, a Stock Option shall vest immediately upon being granted.

	
(g)

	
Exercise of Option:  Subject to the provisions contained in sections 8, 10 and 11 below, no Stock Option may be exercised unless the optionee is at the time of exercise an Eligible Person (as defined in section 2, above).  This Plan shall not confer upon the optionee any right with respect to continuation of employment by the Corporation.  Absence on leave approved by an officer of the Corporation authorized to give such approval shall not be considered an interruption of employment for any purpose of the Plan.  Subject to the provisions of the Plan, a Stock Option may be exercised from time to time by delivery to the Corporation of written notice of exercise specifying the number of shares with respect to which the Stock Option is being exercised and accompanied by payment in full, by cash or certified cheque, of the purchase price of the Shares then being purchased.

	
(h)

	
Non-transferability of Stock Option:  No Stock Option shall be assignable or transferable by the optionee, except to a personal holding corporation of the optionee, other than by will or the laws of descent and distribution.

	
(i)

	
Applicable Laws or Regulations:  The Corporation's obligation to sell and deliver Shares upon the exercise of each Stock Option is subject to such compliance by the Corporation and any optionee as the Corporation deems necessary or advisable with regards to any laws, rules and regulations applying to the authorization, issuance, listing or sale of securities and is also subject to the acceptance for listing of the Shares which may be issued upon the exercise thereof by each stock exchange upon which Shares of the Corporation are then listed for trading.

8.           TERMINATION OF EMPLOYMENT, DISABILITY AND DEATH:  Unless the Option Agreement provides otherwise, all Stock Options will terminate:

	
(a)

	
in the case of Stock Options granted to an employee or Consultant employed or retained to provide investment relations services, thirty (30) days after the optionee ceases to be employed or retained to provide investment relations services;

	
(b)

	
in the case of Stock Options granted to other employees, Consultants, directors, or officers, ninety (90) days following (i) the termination by the Corporation, with or without cause, of the optionee's employment or other relationship with the Corporation or an Affiliated Entity, or (ii) the termination by the optionee of any such relationship with the Corporation or an Affiliated Entity; or

	
(c)

	
in the case of death or permanent and total disability of the optionee, all Stock Options will terminate twelve (12) months following the death or permanent and total disability of the optionee, and the deceased optionee's heirs or administrators may exercise all or a portion of the Stock Option during that period.

Such period or periods may be set forth in the Option Agreement evidencing such Stock Option.

 

  

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9.           ADJUSTMENTS IN SHARES SUBJECT TO THE PLAN:  The aggregate number and kind of Shares available under the Plan and the exercise price of any Stock Options granted under the Plan shall be appropriately adjusted in the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering or any other change in the corporate structure or shares of the Corporation. In any of such events, the Board may determine the adjustments to be made in the number and kind of Shares covered by Stock Options theretofore granted or to be
granted and in the exercise price for said Stock Options.

10.         AMENDMENT AND TERMINATION OF PLAN:  Subject to the approval of regulatory authorities having jurisdiction, the Board may from time to time amend or revise the terms of the Plan, or may terminate the Plan at any time, provided however that no such action shall, in any manner adversely affect the rights of any optionee under any Stock Option theretofore granted under the Plan without said optionee's prior consent. Upon the mutual consent of the optionee and the Board, the terms of an Option Agreement may be amended, subject to regulatory approval and shareholder approval as may be required from
time to time.

11.         CORPORATE TRANSACTIONS:  In the event of the Shares being exchanged for securities, cash or other property of any other corporation or entity as the result of a reorganization, merger or consolidation in which the Corporation is not the surviving corporation, the dissolution or liquidation of the Corporation, or the sale of all or substantially all the assets of the Corporation, the Board or the board of directors of any successor corporation or entity may, in its discretion, as to outstanding Stock Options: (a) upon written notice to the holders thereof, accelerate the exercise date or dates
of such Stock Options;  (b) provided that the Stock Options have been accelerated pursuant to item (a) above, terminate all such Stock Options prior to consummation of the transaction unless exercised within a prescribed period following written notice to the holders thereof;  (c) provide for payment of an amount equal to the excess of the Market Price, as determined by the Board or such board of directors of any successor corporation or entity, over the exercise price of such Shares as of the date of the transaction, in exchange for the surrender of the right to exercise such Stock Options; or (d) provide for the assumption of such Stock Options, or the substitution therefor of new Stock Options, by the successor corporation or entity.

12.         ADDITIONAL RESTRICTIONS:

Unless an ordinary resolution of disinterested shareholders of the Corporation provides otherwise, the number of Stock Options which may be granted under the Plan, together with any other share compensation arrangements of the Corporation, is subject to the following additional restrictions:

	
  

	
(a)

	
at no time shall the number of Shares reserved for issuance under Stock Options granted to the Eligible Persons exceed 10% of the Outstanding Issue;

	
  

	
(b)

	
at no time shall the Eligible Persons be granted, within any twelve-month period, Stock Options exercisable to purchase a number of Shares exceeding 10% of the Outstanding Issue; and

	
  

	
(c)

	
at no time shall any one optionee be granted, within any twelve-month period, Stock Options exercisable to purchase a number of Shares exceeding 5% of the Outstanding Issue.

13.         EFFECTIVE DATE AND DURATION OF PLAN:  This Plan shall be effective as at January 11, 2011, upon approval to be given by a resolution passed by the Board.  The Plan shall remain in full force and effect thereafter from year to year until amended or terminated and for so long thereafter as Stock Options remain outstanding in favour of any optionee.

APPROVED by the Board of Directors: January 11, 2011.

 

  

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