UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of report: November 6, 1998 and November 30, 1998
RIGID AIRSHIP USA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Nevada 88-0410474
- --------------------------------------------------------------------------------
(STATE OR OTHER (COMMISSION (I.R.S. EMPLOYER
JURISDICTION FILE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION)
1800 East Sahara Avenue
Suite 107
Las Vegas, Nevada 89104
Telephone Number 702-939-0390
Fax Number (702) 734-7500
- --------------------------------------------------------------------------------
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
Synfuel Technology, Inc.
3631 Seneca Lane
Las Vegas, Nevada 89109
(Former Name or Former Address, of change since last address.
<PAGE>
Item 1. CHANGES IN CONTROL OR REGISTRANT.
On November 9, 1998 the company completed a reverse stock split of all
the outstanding shares of common stock, par value One Tenth of a Cent ($.001)
per share, on a one (1) share for three (3) share basis.
On November 9, 1998 Rigid Holding NV a Curacoa corporation, acquired
26,000,000 shares of common stock and 20,000,000 of preferred stock of the
company. These shares represented approximately (89.89)% of the total
outstanding stock of the Company and effectively constituted a majority
stockholding position.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 9, 1998 the Company disposed of all of its assets and
liabilities under an Agreement the company agreed to transfer all of its
existing assets and business to San Pedro Securities whereby company paid San
Pedro Securities the sum of $200,000, in exchange for the assumption of any and
all liabilities of the company, in order for the company to explore new business
opportunities.
On November 9, 1998 the company entered into an agreement to License
the USA rights to the Rigid Airship design concept, in exchange for the transfer
of 26,000,000 (twenty six million shares) shares of common stock and 20,000,000
of preferred stock and a Royalty of 3% of the gross revenues of the company, and
the company
<PAGE>
has exclusive License agreement for the USA to manufacture, operate for its own
account or market to third parties the unique design concept of the Rigid
Airship. A copy of which is incorporated herein as exhibit X.
Item 3. BANKRUPTCY OR RECEIVERSHIP.
Not Applicable.
Item 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
Item 5. OTHER MATERIALLY IMPORTANT EVENTS.
On November 9, 1998 the company placed an order with Rigid Airship
Design NV of the Netherlands for the design and production of two 180 airships
of Rigid structure, each measuring 180 meters in length. The Purchase order
provides for a purchase price of NLG 120,000,000 therefore NLG 60,000,000 per
airship. The Purchase price shall be payable as to a deposit of $4,000,000 upon
completion of a Second Private Placement of the company's stock to be undertaken
during the first quarter of 1999. The balance of the purchase price shall be
affected in accordance with the payment schedule as provided for in the Purchase
Agreement the terms and conditions of which are more fully described in the
Purchase and Sale agreement which is attached hereto as Exhibit X and
incorporated herein by reference.
<PAGE>
Item 6. RESIGNATIONS AND APPOINTMENT OF REGISTRANT'S PRESIDENT, SECRETARY,
VICE PRESIDENT AND DIRECTORS
On November 6th 1998 pursuant to a special meeting of the directors of
the company, Joseph Mikacevich, President/Director, Laura Olson,
Secretary/Director and Ligita Pavars, Vice President/Directors tendered by
resignation from the company and nominated Anne ME Greyling as President,
Secretary and sole Director.
Resignation and Appointment of Registrant's Secretary and Directors.
On November 16, 1998 pursuant to a special meeting of the directors of
the company, Anne ME Greyling President, Secretary and Director tendered her
resignation from the company and nominated Dow Stewart as President/Director and
Elenora Shumski Secretary.
Item 7. FINANCIA1 STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibit 'A' License and Royalty Agreement
Exhibit 'B' Purchase and Sale Agreement
Item 8. CHANGE IN FISCAL YEAR.
Not Applicable.
<PAGE>
SYNFUEL TECHNOLOGY, INC.
FINANCIAL STATEMENTS AND REPORT
OF INDEPENDENT CERTIFIED PUBLIC- ACCOUNTANTS
November 30, 1997, December 31, 1996, and December 31, 1995
ANDERSEN ANDERSEN & STRONG, L.C.
Certified Public Accountants and Business Consultants
.Member SEC Practice Section of the AICPA
================================================================================
o CPA Letter
o Balance Sheet
o Statement of Operations
o Statement of Changes in Stockholders Equity
o Statement of Cash Flows
o Notes to Financial Statements
o Synfuel Home Page
<PAGE>
SYNFUEL TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
NOVEMBER 30, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
NOVEMBER 30, DECEMBER 31,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ -- $ --
Accounts receivable 15,724 6,700
Total Current Assets 15,724 6,700
FURNITURE AND EQUIPMENT -
net of accumulated depreciation - Note 2 29,743 23,173
OTHER ASSETS
Real property - Note 3 1,509,840 957,697
Coal lease - Note 4 16,900 16,520
Equitable securities - Note 5 26,148 --
Available-for-sale securities - Note 6 9,375 9,600
Art - Note 7 201,180 201,180
1,763,443 1,184,997
$ 1,808,910 $ 1,214,870
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - current - Note 8 22,436 20,728
Accounts payable 391,558 370,567
Total Current Liabilities 413,994 391,295
</TABLE>
<PAGE>
SYNFUEL TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS (continued)
NOVEMBER 30, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
NOVEMBER 30, DECEMBER 31,
1997 1996
----------- -----------
<S> <C> <C>
LONG TERM LIABILITIES
Notes payable - long term - Note 8 124,562 81,444
Total Liabilities 538,556 472,739
STOCKHOLDERS' EQUITY
Preferred stock
20,000,000 cumulative shares authorized at
$0.01 par value; 35 shares outstanding
Common stock -
50,000,000 shares authorized, at $0.001 par
value; 916,377 shares issued and outstanding
at November 30; 220,029 at December 31 916 220
Capital in excess of par value 7,536,378 6,213,934
Common stock subscribed - Note 9 34,000
Less - common stock subscriptions receivable - Note 10 $(3,344,739) $(2,633,706)
Deficit accumulated during the development stage $(2,956,201) $(2,838,317)
Total Stockholders'Equity 1,270,354 742,131
----------- -----------
$ 1,808,910 $ 1,214,870
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
ANDERSEN ANDERSEN & STRONG, L.C. 941 East 3300 South, Suite 202
Certified Public Accountants
and Business Consultants Salt Lake City, Utah 84106
MEMBER SEC PRACTICE SECTION OF THE AICPA Telephone 801 486-0096
Fax 901 486-0098
E-mail KAndersen @msn.com
ACCOUNTANTS' REVIEW REPORT
Board of Directors
Synfuel Technology, Inc.
Salt Lake City, Utah
We have reviewed the accompanying balance sheets of Synfuel Technology, Inc. at
November 30, 1997 and December 31, 1996, and the statements of operations,
stockholders' equity, and cash flows for the eleven months ended November 30,
1997 and the years ended December 31, 1996 and 1995, and the period from
September 22, 1983 (date of inception) to November 30, 1997 in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. All information included in
these financial statements is the representation of the board of directors of
Synfuel Technology, Inc.
The review consists principally of inquiries of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has been in the development stage since it's
inception and has suffered recurring losses from operations, which raises
substantial doubt about it's ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 11. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Salt Lake City, Utah
December 15, 1997
A member of ACF International with affiliated offices worldwide
================================================================================
<PAGE>
<TABLE>
<CAPTION>
SYNFUEL TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1997 AND THE
YEARS ENDED DECEMBER 31, 1996 AND 1995 AND THE PERIOD FROM
SEPTEMBER 22, 1993 (DATE OF INCEPTION) TO NOVEMBER 30, 1997
SEPTEMBER 22, 1983
(DATE OF INCEPTION)
1997 1996 1995 TO NOVEMBER 30, 1997
---- ---- ---- --------------------
CASH FLOWS FROM OPERATING
<S> <C> <C> <C> <C>
Net loss (117,884) (1,096,451) (377,089) (2,956,201)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization 7,154 5,840 11,927 63,484
Loss prepaid advertising -- 500,000 -- 500,000
(Increase) in accounts receivable (8,574) (1,700) (5,000) (15,274)
Decrease in trade credits 78,967 -- -- 78,967
Increase in accounts payable 80,767 123,598 60,872 377,714
Capital stock issued for:
Expenses and services 30,350 497,863 276,156 1,377,939
Net Cash from Operations 70,780 29,150 (33,134) (573,371)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of securities (25,943) (9,600) -- (35,543)
Purchase of real property and leases (60,162) (6,600) (66,762)
Purchase of equipment (13,725) (5,000) (3,802) (22,527)
(99,830) (21,200) (3,802) (124,832)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock subscribed 44,000 -- -- 44,000
Proceeds from stock issued -- -- 37,000 495,862
(Payments) proceeds from notes
payable (14,950) (8,014) -- 158,341
29,050 (8,014) 37,000 698,203
Net Increase (Decrease) in Cash -- (64) 64 --
Cash at Beginning of Period 64 --
Cash at End of Period $ 0 $ 0 $ 64 $ 0
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SYNFUEL TECHNOLOGY, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS (Continued)
Period from September 22, 1983 (Date of Inception) to November 30,1997
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
<TABLE>
<CAPTION>
STATED IN POST SPLIT-SHARES
<S> <C> <C>
Issuance of 28 common shares for shares in Fruitee, Inc. - 1984 8,400
Issuance of 38 common shares for payment of debt - 1986 110,500
Issuance of 36 common shares for mining claims - 1988 169,920
Issuance of 69 preferred shares for payment of debt - 1988 54,906
Issuance of 177 common shares for rights for magnetic devise - 1989 53,000
Issuance of 373 common shares for services and expenses - 1990 111,899
Issuance of 300 common shares for assets, payment of debt,
services, & expenses - 1991 99,000
Issuance of 14 common shares for assets, payment of debt,
and services - 1992 10,500
Issuance of 1,081 common shares for services 1994 3,244
Issuance of 500 common shares for services 1995 1,500
Issuance of 2,959 common shares for assets, services,
and expenses - 1995 975,835
Issuance of 1,956 common shares for services - 1996 523,800
Issuance of 500 common shares for prepaid telephone time - 1996 20,000
Issuance of 3,967 common shares for coal leases
- Sheridan county, Wyo. - 1996 16,520
Issuance of 7,500 common shares for 24,000 preferred shares -1996 2,400,000
Issuance of 1,210 common shares for Itex Trade Credits - 1196 318,354
Issuance of 140,000 common shares for real
property - Dickinson, Tx - 1996 180,000
Issuance of 5,982 common shares for equity
in real property - Louisiana - 1996 660,912
Issuance of 218 common shares for advertising - 1997 4,350
Issuance of 1,250 common shares for stock
subscription receivable - 1997 800,000
Issuance of 130 common shares for services - 1997 26,000
Issuance of 194,750 common shares for real
property - Plaquermine Ps - 1997 7,790
Issuance of 100,000 common shares for real
property - Provo, Ut -1997 485,000
The accompanying notes are an integral part of these financial statements.
</TABLE>
ANDERSEN ANDERSEN & STRONG, L.C.
<PAGE>
SYNFUEL TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Company was incorporated on September 22, 1983 under the laws of the state
of Utah with authorized common capital stock of 50,000,000 shares at $0.001 par
value with the name of Charter Resources, Inc. On April 7, 1988 the articles of
incorporation were amended to authorize 20,000,000 shares of cumulative
preferred stock at $0.01 par value.
On January 13, 1995 the Company changed its domicile to the state of Nevada in
connection with a name change to CTRI, Inc. and on April 20, 1995 the name was
changed to Synfuel Technology, Inc.
Starting in April 1989 through August 1997 the Company completed four reverse
stock splits of its common capital stock and it's preferred capital stock. This
report has been prepared showing after stock split shares from inception.
Since inception the Company has been in the development stage and has been
engaged in seeking business opportunities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING: METHODS
The Company recognizes income and expenses based on the accrual method of
accounting.
DIVIDEND POLICY
The Company has not yet adopted a policy regarding payment of dividends.
INCOME TAX
At December 31, 1996, the Company had a net operating loss carry forward of
$2,838,317. The tax benefit from the loss carry forward has been fully offset by
a valuation reserve because the use of the future tax benefit is doubtful since
the Company has no operations and there has been a substantial change in
stockholders,
DEPRECIATION
Mobile homes and office equipment owned by the company are shown at cost less
accumulated depreciation. Equipment is being depreciated on the straight line
method over five and seven years and the mobile homes are depreciated on the
straight line method over fifteen years.
<PAGE>
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding after the stock splits.
FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments, which include the assets and
liabilities, are considered by management to be their estimated fair values.
These values are not necessarily indicative of the amounts that the Company
could realize in a current market exchange.
ESTIMATES AND ASSUMPTIONS
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
3. REAL PROPERTY
During 1996 the Company purchased the real property listed below by the issuance
of its common shares and the assumption of installment obligations. The
properties were recorded at their fair values, which was considered to be the
more clearly evident value for the purchases, except for those noted.
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
28.05 acres - Church Point, Louisiana - estimated fair value of
$15,000 per acre - subject to 8% note payable of $24,143 - monthly
payments of $546.47 $424,741 $420,000
10 unit apartment - Town of Plaquemine, Louisiana - estimated fair
value $30,000 per unit - needs remodeling - not occupied - subject
to 8% discounted note payable of $41,211 - monthly
payments of $500 308,600 306,000
Residence - sold 1997 - 7,165 - 7,165
14.6 acres including old buildings - Rosedale, Louisiana - estimated
fair value of $34,000 per acre - needs remodeling for use by
potential tenant - not occupied - lease purchase agreement provides
for the issuance of 2,435 common shares of the Company and the
assumption of a discounted note payable of $43,832 with 42 monthly
payments of $1,200 with an assumed interest rate of 8% - the lease
purchase contract of the predecessor provides for an option price of
$1 at the end of the lease, however it is unclear whether that
provision can be assigned to the Company - for reporting purposes
the value shown is the amount of the discounted note payable of
$48,832 plus the par value of the stock issued. 43,932 43,932
10 acres including buildings - Town of Plaquemine, Louisiana
estimated fair value $40,000 per acre - lease purchase agreement
provides for the issuance of 194,750 common shares of the Company
and the assumption of a discounted note payable of $59,777 with 240
monthly payments of $500 with an assumed interest rate of 8% - the
lease purchase contract of the predecessor provides for an option
price of $1 at the end of the lease, however it is unclear whether
that provision can be assigned to the Company - for reporting
purposes the value shown is the amount of the discounted note
payable of $59,777 plus the par value of the stock issued. 67,567 -
<PAGE>
Mobile home Park including 10 mobile homes - Dickinson, Texas
recorded at an estimated fair value and is shown at net of
depreciation - contains 15 mobile home spaces - the present net cash
flow averages $1,000 per month 180,000 180,000
11.7 acres - Provo Utah - 2 acres approved for subdivision -
recorded at an estimated fair value 485,000 -
$1,509,840 $957,697
---------- --------
</TABLE>
4. COAL LEASE
On April 22, 1996 the company purchased, non renewable, ten year coal leases,
starting March 2, 1996, known as the Ranchester North Property containing 1,292
acres located in Sheridan County, Wyoming by the issuance of 3,967 restricted
common shares of the Company. The leases are subject to royalties of 12 1/2% for
surface mining and 8% for underground mining and $0.04 per ton with a minimum
yearly lease payment of $2,000 per year after two years and $1 yearly per acre
for the first five years and $2 yearly per acre for the next five years. The
state of Wyoming has the right to increase the rate per acre, from $ 1, after
the second year, if no mining activity has been started. The property contains
estimated coal reserves of 19,125,000 surface tons and 40,169,300 tons below
ground.
Management estimates the cost to begin mining operations to be $2,000,000.
The leases were purchased by the Company from a related party and have been
valued for reporting purposes at the predecessor cost.
5. EQUITABLE SECURITIES
The equitable securities consist of 26,148 shares of Arlin Geophysical Services
which are reported at cost. There is no active trading market for these shares
and therefore the fair value is considered to be the cost.
6. AVAILABLE FOR-SALE-SECURITILES
The available-for-sale securities consists of 4,000 shares of Gold Coast
Resources. At the report date there was a limited trading market for these
shares at $3 per share and therefore the fair value is considered by management
to be the cost.
7. ART
The Company issued its common shares in October and November 1995 in exchange
for pieces of artwork. The art consists of two statues and two lithographs which
were recorded at appraised values less the cost to sell the works through art
galleries.
The statues are copies of the OUTLAW by Frederick Remington, caste from solid
silver with each containing 1000 troy ounces, with an approximate weight of 150
lbs. They were recorded at a value of $96,000 each.
The lithographs are by Salvador Dali and were recorded at $4,590 each.
The management intends to use the art in future trades.
<PAGE>
<TABLE>
<CAPTION>
8. NOTES PAYABLE
Balances
--------------
<S> <C> <C>
T.J. Richard - purchase of equity in 28.05 acres - Church Point, Louisiana - 1997 1996
---- -----
60 payments of $546.47 per month - 8% interest 19,603 23,612
Little Old Corp. - purchase of equity in IO unit apartment - Town of
Plaquemine, Louisiana - 40,069 41,211
120 payments of $500 per month - assumed 8% interest
lberville Parish School Board - lease purchase of 14.6 acres with old buildings -
Rosedale Louisiana -42 payments of $1,200 - assumed 8% interest 27,549 37,349
Iberville Parish School Board - Lease purchase of 10 acres with
buildings - Plaquemine, Louisiana - 240 payments of $500 - assumed 8% interest 59,777 ---
------ ------
146,998 102,172
Less current portion 22,436 20,728
------- -------
124,562 81,444
</TABLE>
9. COMMON STOCK SUBSCRIBED
The Company has received $34,000 for the purchase of 3,400 shares of it's common
stock. At the report date the shares had not been issued.
10. COMMON STOCK SUBSCRIPTIONS RECEIVABLE
Included under stock subscriptions receivable are the following assets which are
considered to be uncompleted transactions and therefore are reported as a
subtraction from the equity section of the balance sheet:
<TABLE>
<CAPTION>
<S> <C> <C>
Itex Trade Credits 1997 1996
- ------------------ ------ -----
1996 the company purchased Itex trade credits by the exchange
of it's common stock. For reporting purposes the trade credits remaining to be
used at the report date are valued at 60% of their face amount and are
considered to be an unrealized asset until used. 154,739 233,706
CAPITAL STOCK
On June 26, 1997 the Company purchased 24,000 6% preferred shares of Atlantic
American Holding Company (St Kitts) Limited (a St. Kitts and Nevis Corporation)
with a face value of $250 per share in exchange for 7,500 shares of the
Company's common stock. Part of the quarterly dividends due have been received
by the Company, however, on the report date there were $150,500 in arrears. A
provision included in the subscription agreement for the purchase of the
preferred shares, provides for a return of the Company stock, at the option of
the Company, in the event of default. The amount shown is management's "good
faith" estimate of the fair value of the shares at the date of the exchange.
2,400,000 2,400,000 Stock subscription receivable On April 1, 1997 the Company
issued 1,250 shares of it's common stock for a stock subscription agreement of
$800,000. At the report date $10,000 had been received. 790,000 $3,344,739
$2,633,706
</TABLE>
11. GOING CONCERN
See notes3, 4 and 8 for the installment amounts due under various contracts. At
the report date the Company did not have sufficient capital to meet those
obligations.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes VAII accomplish this objective through additional
equity funding, and long term financing, which will enable the Company to
operate in the future.
Management recognizes that, if it is unable to raise additional capital, the
Company will lose it's investment in many of its assets.
12. CONTINGENT LIABILITIES
On April 20, 1988 the Company issued 69 (post split) preferred shares,
designated as series A, as payment for debt. On December 1, 1991 the board of
directors approved the retirement of the preferred stock by the issuance of
common stock at the rate of one share of common for two shares of preferred, and
during December 1991 and January 1992, 34 shares of the preferred stock were
retired. Since that time the Company has been unable to locate the remaining
owners' of the preferred shares and has reserved 17 shares of it's common stock
to make the exchange. If the exchange cannot be made the liquidation value of
the preferred shares still outstanding could amount to $117,000.
<PAGE>
SYNFUEL TECHNOLOGY, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1997 AND THE
YEARS ENDED DECEMBER 31, 1996, AND 1995, AND THE PERIOD
SEPTEMBER 22, 1983 (DATE OF INCEPTION) TO NOVEMBER 30, 1997
<TABLE>
<CAPTION>
SEPT 22, 1983
(DATE OF INCEPTION) TO
1997 1996 1995 NOVEMBER 30,1997
---- ---- ---- ----------------
<S> <C> <C> <C> <C>
REVENUES $55,515.00 73,275 $ - $ 128,790.00
EXPENSES 173,399 $ 1,169,726 377,049 3,084,991
NET LOSS $(117,884) $(1,096,451) $(377,089) $ (2,956,201)
NET LOSS PER COMMON $ (0.13) $ (4.98) $ (6.58)
SHARE
</TABLE>
The accompanying notes are an integral part of these financial statements.
ANDERSEN ANDERSEN & STRONG, L.C.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: 12/8/98 By: /s/ Dow Stewart
-------------------------------------
Dow Stewart, Director and President
Date: 12/10/98 By: /s/ Eleanora Shumski
-------------------------------------
Eleanora Shumski, Secretary
LICENCE AGREEMENT
between
RIGID AIRSHIP HOLDINGS N.V.
SYNFUEL TECHNOLOGY, INC.
IMPERIAL AIRSHIPS N.V.
<PAGE>
2
TABLE OF CONTENTS
Page
----
Article 1. Representations by Rigid 4
Article 2. Representations by SNFL 4
Article 3. License 5
Article 4. Consideration 6
Article 5. Use of the License 7
Article 6. Term 7
Article 7. Accounting and Payments 8
Article 8. No Right to Sublicense 9
Article 9. Infringement 9
Article 10. Improvements 10
Article 11. Confidentiality 11
Article 12. Liability and Indemnification 12
Article 13. Governing Law, Jurisdiction 12
Article 14. Notices 13
Article 15. Covenant of SNFL 14
Article 16. Integration 14
Article 17. Recitals 14
Article 18. Amendments and Waiver 15
Article 19. Severability 15
Article 20. Assignability 15
Article 21. Limitations 15
Article 22. Successors and Assigns 16
Article 23. Independent Contractor 16
Article 24. Further Assurances 16
Article 25. Counterparts 17
<PAGE>
3
LICENSE AGREEMENT
The undersigned:
1. RIGID AIRSHIP HOLDINGS N.V. ("RIGID"), a company organized under the
laws of The Netherlands Antilles, having its registered office in
Curacao, N.A. at Scharlooweg 81, and
2. SYNFUEL TECHNOLOGY INC. ("SNFL"), a company organized under the laws of
the State of Nevada USA, having its registered office in Salt Lake
City, Utah, United States of North America,
3. IMPERIAL AIRSHIPS N.V. ("IA"), a company organized under the laws of
The Netherlands Antilles, and having office in Willemstad, Curacao,
Netherlands Antilles on the Garipitoweg 9,
parties 1, 2 and 3 jointly and individually referred to as "PARTIES" and
"PARTY";
WHEREAS:
A. Rigid has bought a concept for the design, construction and development
of airships (jointly the "AIRSHIPS" and individually an "AIRSHIP"), the
design which is a hydrocarbon powered LTA vehicle, having a fabric
covered structure comprised of longitudinal girders and polygonal
transverse frames having control surfaces situated at the rear and
having its unpressurised lifting gas content divided into separate
cellular units (hereinafter referred to as the "RIGID AIRSHIP
CONCEPT");
<PAGE>
4
B. SNFL desires to obtain from Rigid the exclusive right (the "EXCLUSIVE
RIGHT") to exploit the Rigid Airship Concept within the United States
of North America ("USA");
C. In this license agreement (the "AGREEMENT") Parties wish to agree on
the terms and conditions under which SNFL is granted the Exclusive
Right,
HAVE AGREED AS FOLLOWS:
ARTICLE 1. REPRESENTATIONS BY RIGID
Rigid represents that:
a. it has the right to enter into this Agreement;
b. it has executed no other agreements which conflict herewith and has not
granted any other person or entity any right, license or privilege with
respect to Rigid Airship Concept which conflicts with any rights
granted hereunder; and
c. it is in a position to enter into and perform this Agreement without
any conflicts of interest or interference from any other commitments.
ARTICLE 2. REPRESENTATIONS BY SNFL
SNFL represents that:
a. it has the right to enter into this Agreement;
b. it will devote sufficient time and effort to the exploitation of the
Exclusive Right granted hereunder; and
<PAGE>
5
c. it is in a position to enter into and perform this Agreement without
any conflicts of interest or interference from any other commitments.
ARTICLE 3. LICENSE
3.1 This Agreement grants SNFL the Exclusive Right to
i. exploit (such as but not limited to construction, production,
marketing, sale, trade, rent, lease and/or operation) the Rigid Airship
Concept;
ii. utilize the (intellectual property) rights and know how with respect to
the Rigid Airship concept (such as but not limited to copyrights,
patent rights, design rights (whether registered or not) and all
relevant documentation and information) provided by Rigid to SNFL for
the purpose of the exploitation of the Rigid Airship Concept.
3.2 SNFL is allowed to construct, produce and/or have constructed and/or
have produced Airships on the basis of the Rigid Airship Concept in the
USA. SNFL shall construct and produce and/or have constructed and have
produced at least 4 (four) Airships on the basis of the Rigid Airship
Concept per year, starting two years from the date mentioned in article
5 of this Agreement.
3.3 Rigid will provide and/or will have provided by third parties to SNFL
pilot training, technical training, technical support, complete design
and specification manuals as well as operating manuals upon mutually
agreeable (financial) terms.
3.4 Rigid will do its best efforts to obtain a certification of
airworthiness for the Airship and if necessary, assist SNFL to obtain
such certification in the USA. If any (additional) certification in the
USA is necessary, it will be the sole responsibility of SNFL to obtain
such certification.
<PAGE>
6
ARTICLE 4. CONSIDERATION
4.1 As consideration for the Exclusive Right from the date hereof SNFL
shall pay to IA a royalty fee of two percent (2%) and to Rigid a
royalty fee of one percent (1%) (I) of the realized turnover (sales) as
the result of the sale of an Airship in the event that SNFL sells an
Airship to a third party or (ii) of the selling/market value of an
Airship in the event SNFL will not sell such airship and will use such
Airship itself or will lease, rent to third parties or otherwise
exploit the Airship (iii) any and all revenues generated on a yearly
basis with any other exploitation of the Rigid Airship Concept.
4.2 In addition SNFL agrees to purchase from Rigid Airship Design N.V. in
Holland two Airships to be constructed by Rigid Airship Design N.V. for
a purchase price (the"PURCHASE PRICE") of NLG 120,000,000. -- (one
hundred and twenty million Netherlands Guilders), which respective
purchase prices shall be paid as described in article 2.2 of the Sale
and Purchase Agreement.
4.3 Rigid Airship Design N.V. will use its best efforts to complete the two
Airships to be purchased by SNFL within two years after Rigid Airship
Design N.V. has obtained the certification of airworthiness of the
competent airworthiness authority with regard to the first prototype of
an Airship.
4.4 SNFL shall pay US$1,000,000. -- (one million US dollars) and issue to
Rigid 26,000,000 (twenty-six million) common shares and 20,000,000
(twenty million) preferred shares.
<PAGE>
7
ARTICLE 5. USE OF THE LICENSE
SNFL shall not in any way make use of the License on or before the date on which
Rigid has formally and in writing notified SNFL that it can collect the first of
the Airships to be constructed for SNFL.
ARTICLE 6. TERM
6.1 This Agreement and the Exclusive Right granted hereunder shall remain
in effect for (15) fifteen years from the date hereof and thereafter
may be extended for an additional (15) fifteen years term upon the
mutual agreement of the Parties. Notwithstanding anything to the
contrary, Rigid may terminate this Agreement and by doing so terminate
the Exclusive Right immediately upon written notice to SNFL:
a. if any payment due on the basis of this Agreement or the Sale and
Purchase Agreement between SNFL and Rigid Airship Design N.V. is not
made when due, provided however, that SNFL shall have 20 (twenty) days
from the giving of written notice of such default to cure such default;
b. if SNFL defaults in its performance of any term or condition of this
Agreement and the default is not cured with thirty (30) days, after
notice is given to SNFL;
c. if SNFL is adjudged bankrupt, declared insolvent, files a petition of
voluntary or involuntary bankruptcy, enters into an assignment of
assets for the benefit of creditors, or has a receiver appointed; or,
d. if SNFL shall at any time cease to carry on a material part of its
existing business or becomes subject to the direct or indirect control
of any third party or group of parties other than those at present
controlling it, which is in competition (whether direct or otherwise)
with Rigid;
<PAGE>
8
e. if SNFL does not act in accordance with and/or violates treaties, laws,
regulations, directives applicable in the USA and/or any of its States,
including, but not limited to any and all state and federal USA
Securities Laws and Regulations.
f. If Rigid Airship Design N.V. has not received payment of the full
Purchase Price of NLG 120,000,000 (one hundred and twenty million
Netherlands guilders) on or before the date which occurs 30 (thirty)
days upon the date on which Rigid Airship Design N.V. has formally and
in writing notified SNFL that it can collect the second Airship
constructed and to be purchased by SNFL.
6.2 In the event of termination or expiration for what ever reason and
regardless on which ground:
i. SNFL shall return immediately to Rigid all the information and
documentation with regard to the Rigid Airship Concept provided by
Rigid to SNFL and all the other information and documentation SNFL has
obtained as a result of the exploitation of the Rigid Airship Concept;
ii. SNFL shall assign to Rigid all its (intellectual property) rights
(whether registered or not) and know how SNFL has obtained as a result
of the exploitation of the Rigid Airship Concept.
ARTICLE 7. ACCOUNTING AND PAYMENTS
7.1 All royalty fee payments due hereunder to Rigid and IA shall be paid
within 60 (sixty) days after receipt of the (sale) price (turnover)
with respect to the sale of an airship or after putting into use an
airship or any other exploitation of the Rigid Airship Concept.
7.2 SNFL shall make and keep full and accurate accounting books and records
in sufficient detail to enable payments due to Rigid to be determined.
Within thirty days after the end of each fiscal quarter during the term
hereof, a statement of accounting with regard
<PAGE>
9
to the respective fiscal quarter shall be presented to Rigid signed by
officer of SNFL attesting to the total revenues generated by SNFL from
the exploitation of the Rigid Airship Concept or any portion thereof
and the payment due to Rigid and IA as a result thereof.
7.3 SNFL further agrees that during the term and for five (5) years
thereafter, Rigid and/or it designees shall be permitted, from time to
time but no more than once with respect to each calendar year at
Rigid's expense, to inspect such books and records as contain data
pertinent to the computation of the turnovers and the royalties.
7.4 In the event that after such inspection as referred to in article 9.3
it appears that SNFL has paid less royalty fees than SNFL had to pay
according to its books and records, SNFL shall pay immediately the
outstanding royalty fees and all the costs of Rigid and its designees
with regard to the inspection.
ARTICLE 8. NO RIGHT TO SUBLICENSE
SNFL shall have no rights to sublicense any of the rights granted hereunder.
ARTICLE 9. INFRINGEMENT
9.1 Each party shall promptly notify the other party if it becomes aware of
any infringement or potential infringement of the rights granted
hereunder and of any alleged claim of a third party that the
exploitation of the Rigid Airship Concept infringes upon its rights.
Parties shall thereupon promptly confer together as to what actions are
to be taken to stop or prevent any infringement determined by the
parties hereto to be illegal.
9.2 If Rigid decides to commence proceedings, SNFL shall be notified in
writing and the parties will share equally all reasonable costs,
expenses and attorney's fees associated with such litigation and will
share equally any and all damages recovered.
<PAGE>
10
9.3 Should Rigid decide not to commence proceedings, SNFL will be permitted
to do so in its own name, provided Rigid is notified in writing. If
Licensee commences such an action, SNFL will bear all costs, expenses
and attorney's fees associated with such litigation. All damages
recovered from such litigation will belong to SNFL, provided that any
damage amount in excess of reasonable costs, expansion and attorneys'
fees will be subject to the royalty provision of paragraph 3 of this
Agreement.
9.4 Rigid and SNFL each at the request of the other, shall assist each
other and cooperate in any action taken, other than direct financial
assistance, against an alleged infringer or potential infringer.
9.5 In the event that a third party claim that the exploitation of the
Rigid Airship Concept infringes and as a result such claim is honored
by a judgment of a Court, Arbitration or in a settlement agreement,
Rigid will exert its best efforts to:
i. obtain a license of the third party;
ii. modify the Rigid Airship Concept in such manner that it does not
infringe upon the rights of the third party; in order to continue the
exploitation of the Rigid Airship Concept by SNFL.
ARTICLE 10. IMPROVEMENTS
10.1 If, during the term of this Agreement, Rigid makes any improvements in
the Rigid Airship Concept or the mode of using the Rigid Airship
Concept, or becomes the owner of any improvement either through patents
or otherwise, then Rigid shall make available to SNFL full information
regarding the improvement and, if additional terms (financial and
otherwise) shall be agreed upon by the parties hereto, such improvement
shall be included in any grant made hereunder.
<PAGE>
11
10.2 If during the term of this Agreement SNFL makes any improvements or
modifications to the Rigid Airship Concept SNFL will immediately inform
about and provide Rigid full access and technical information regarding
such improvements or modifications and will request the approval of
Rigid prior to implementing such improvements or modifications. If such
modifications or improvements made by SNFL can be protected by
intellectual property rights (such as design rights and patent rights),
SNFL shall apply for registration and/or register for such (design or
patent) rights in due time in the USA with respect to the improvement
or modification. If such application and/or registration is made SNFL
shall inform Rigid immediately by written notice hereof and shall grant
Rigid the right to apply for the registration of and register these
rights on its own name as the rightful owner in all the other countries
in the world, besides the USA.
ARTICLE 11. CONFIDENTIALITY
11.1 All the information and documentation provided by Rigid or by third
parties on the request of Rigid to SNFL shall be considered
confidential, unless Rigid explicitly states otherwise. SNFL will keep
this confidential information strictly confidential as well as all the
information, documentation and know how with regard to the
(modifications and improvements) of the Rigid Airship concept SNFL will
obtain.
11.2 SNFL ensures that its staff concerned with the exploitation of the
Rigid Airship concept, its subcontractors and their employees are aware
of and observe the provisions of this clause, both during the existence
of this License Agreement and thereafter.
ARTICLE 12. LIABILITY AND INDEMNIFICATION
12.1 Rigid's liability towards SNFL for damages as a result of non
compliance with the terms and conditions of this agreement are limited:
<PAGE>
12
i. to direct damages in a year; and,
ii. to a maximum amount per year, regardless whether suffered as a result
of one or more breaches, equal to the amount paid by SNFL as royalty
fee to Rigid in that respective year.
12.2 SNFL indemnifies, defends and holds harmless Rigid, Rigid's officers,
directors, subcontractors, related parties and employees against all
third party claims and expenses, including costs resulting from the
law, fees for lawyers, which result from the exploitation of the Rigid
Airship Concept by SNFL.
ARTICLE 13. GOVERNING LAW, JURISDICTION
This Agreement shall be governed by and construed in accordance with the laws of
the Netherlands Antilles. The parties consent to the jurisdiction of the
competent court in the Netherlands Antilles for the resolution of all disputes
arising out of this Agreement or the negotiations thereof, notwithstanding the
right of Rigid to institute proceedings (summary proceedings for injunctive
relief) against SNFL in any state of the USA.
<PAGE>
13
ARTICLE 14. NOTICES
Any notices or other communications required or permitted hereunder to be
effective shall be in writing and shall be deemed to have been duly given or
made when personally delivered or, in the case of registered or certified mail,
postage prepaid, two or three days after being sent, or, in the case of
overnight courier or prepaid telegram, one business day after being sent by such
overnight delivery service or by prepaid telegram, addressed in each case as
follows:
If to Rigid: Scharlooweg 81
Willemstad, Curacao
Netherlands Antilles
fax: 00 5999 461 8130
If to SNFL: Salt Lake City, Utah
U.S.A.
If to IA: Garipitoweg 9
Willemstad, Curacao
Netherlands Antilles
fax: 00 5999 869 0121
Any party may change its address for the purpose of the Agreement by giving
written notice thereof to the other parties.
<PAGE>
14
ARTICLE 15. COVENANT OF SNFL
a. SNFL agrees to mark permanently all documents utilized in its business
hereunder as being marketed or sold by it under this Agreement; and
b. SNFL agrees to comply with conditions and requirements set forth in
writing from time to time by Rigid with respect to the usage of the
Rigid names, the Rigid marks, service marks, if any; and,
c. SNFL agrees that all of its exploitation (construction, marketing and
sales) efforts hereunder shall be of the highest quality and character
and that SNFL will diligently pursue its exploitation of the rights
granted hereunder.
ARTICLE 16. INTEGRATION
This Agreement contains the entire agreement among the parties with respect to
the subject matter hereof, superseding all prior agreements, whether oral or
written, between the parties hereto with respect to such subject matter.
ARTICLE 17. RECITALS
Each recital hereof is a material part of this Agreement, is incorporated herein
and is a material inducement to the parties entering into this Agreement.
<PAGE>
15
ARTICLE 18. AMENDMENTS AND WAIVERS
This Agreement may be amended, or any provision of this Agreement may be waived,
provided that no such amendment or waiver shall be valid unless set forth in a
writing executed by the parties hereto or, in the case of a waiver, by the party
waiving such provision. The waiver by any party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any other
breach.
ARTICLE 19. SEVERABILITY
If any one or more or any portion of the provisions of this Agreement is deemed
to be invalid or unenforceable in any respect for any reason, the parties shall
negotiate in good faith to revise the terms of this Agreement to adjust for the
invalidity or unenforceability of such provisions and the validity and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
ARTICLE 20. ASSIGNABILITY
The rights granted hereunder shall not be assignable by SNFL.
ARTICLE 21. LIMITATIONS
The License shall apply to Rigid Airships built by SNFL within the Continental
United States of America.
a. The License will not be assignable to third parties.
b. All liabilities, direct or consequential, incurred by airships
constructed by SNFL shall be borne exclusively by SNFL.
<PAGE>
16
ARTICLE 22. SUCCESSORS AND ASSIGNS
This Agreement and the rights and obligations hereunder shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
ARTICLE 23. INDEPENDENT CONTRACTOR
The Parties to this Agreement recognize and agree that each is operating under
this Agreement as an independent contractor and not as an agent, distributor, or
representative of the other. Nothing contained in this Agreement shall be deemed
to constitute the parties as a partnership or joint venture with each other or
any person or entity, and neither party may be bound by the other to any
contract, arrangement or understanding except as specifically stated herein.
ARTICLE 24. FURTHER ASSURANCES
Subsequent to the date of hereof, each party hereto agrees to take such actions
and to execute and deliver such documents as shall be reasonably necessary to
effectuate the purposes of this Agreement.
<PAGE>
17
ARTICLE 25. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
This agreement was signed in threefold on [______] 1998 in [__________]
On behalf of Rigid Airship Holdings N.V.:
- -------------------------
(name)
- -------------------------
(title)
- -------------------------
(signature)
On behalf of SynFuel Technology Inc.:
- --------------------------
(name)
- --------------------------
(title)
- --------------------------
(signature)
On behalf of Imperial Airships N.V.
- --------------------------
(name)
- --------------------------
(title)
- --------------------------
(signature)
SALE AND PURCHASE AGREEMENT
between
RIGID AIRSHIPS DESIGN N.V.
as Seller
SYNFUEL TECHNOLOGY, INC.
as Buyer
- --------------------------------------------------------------------------------
CARON & STEVENS/BAKER & MCKENZIE
LEIDSEPLEIN 29
1017 PS AMSTERDAM
THE NETHERLANDS
- --------------------------------------------------------------------------------
<PAGE>
2
TABLE OF CONTENTS
PAGE
Article 1. Definitions 4
Article 2. Agreement to Sell and Payment 6
Article 3. Collection 7
Article 4. Condition of Airships 8
Article 5. Ground Inspection 8
Article 6. Demonstration Flight 9
Article 7. Discrepancies Correction 9
Article 8. Indemnification 10
Article 9. Assignable Warranties 11
Article 10. Conditions Precedent 11
Article 11. Representations and Warranties 11
Article 12. Limits to Liability of Rigid 12
Article 13. Taxes 12
Article 14. Compliance with Export Regulations 13
Article 15. Termination Events 13
Article 16. Notices 15
Article 17. Assignment 16
Article 18. Miscellaneous 16
Schedule 1 Specification of the Airships 18
<PAGE>
3
SALE AND PURCHASE AGREEMENT
The undersigned:
1. the public limited company RIGID AIRSHIP DESIGN N.V. ("RIGID"),
incorporated in the Netherlands and having its registered office in
(3512 BL) Utrecht, The Netherlands at Janskerkhof 12, represented by
its managing director Mr. J.C. Taverne;
and
2. the company existing under the laws of the state of Nevada, United
States of North America, SYNFUEL TECHNOLOGY, INC. ("BUYER"), having its
registered office in Salt Lake City, Utah, United States of America;
parties 1 and 2 jointly and individually referred to as "Parties" and "Party";
WHEREAS:
A. Rigid designs, produces and sells airships of a rigid structure;
B. Buyer has requested Rigid to design and produce two airships (THE
"AIRSHIPS") of a rigid structure;
C. Rigid will produce the "Airships", the technical details of which will
substantially be in accordance with the Specification set out in
Schedule 1 and subsequently wishes to sell to Buyer the Airships on the
terms and conditions set out in this agreement (the "Agreement");
<PAGE>
4
D. Buyer wishes to purchase the Airships from Rigid on the terms and
conditions set out in the Agreement;
HAVE AGREED AS FOLLOWS:
ARTICLE 1. DEFINITIONS
In the Agreement and the Schedule which is an integral part thereof and to which
the Agreement refers the following terms are defined below:
o Acceptance Certificate: a certificate in which Buyer acknowledges
acceptance of the Airships, the terms and conditions of which
certificate will be agreed upon by Parties at a later date;
o Agreement: this agreement;
o Airships: rigid type Airships with a length of 180 meters, which is
identified in SCHEDULE 1;
o Buyer: Synfuel Technology, Inc.;
o Certificate of Airworthiness: a valid certificate of airworthiness as
granted by the aviation authorities;
o Collection: collection of an Airship by SNFL;
o Collection Date I: a date to be agreed on by Parties in the period
which ends two years after the date that the first prototype of a rigid
airship will be fully certified by the aviation authorities, in
accordance with all the rules and regulations applicable;
o Collection Date II: a date six months after Collection Date I;
<PAGE>
5
o Deposit: the amount of US$4,000,000 (four million US dollars) to be
paid by Buyer to Rigid as a non refundable deposit for the two
Airships;
o Ground Inspection: a ground inspection in order that Buyer may
reasonably satisfy itself that the Airship is in the condition
specified in SCHEDULE 1;
o Manuals: the manuals, catalogues, drawings and other documents to be
provided by Rigid to Buyer;
o Party(ies): Rigid and/or Buyer;
o Payment Schedule: the payment schedule as described in article 2.2 of
this Agreement;
o Purchase Price: NLG 120,000,000 (one hundred and twenty million
Netherlands guilders), therefor NLG 60,000,000 (sixty million
Netherlands guilders) per Airship, excluding any additional amounts for
improvements and requests from the Buyer to be agreed upon separately
by the Parties;
o Specification: the specification of the Airships set out in SCHEDULE 1;
o Taxes: any and all taxes assessed by any national or local government
in connection with the ownership, sale or use of the airships;
o Technical Records: all records, logs, technical data and other
documents relating to the Airships which are required by the Rigid
appointed aviation authority to be maintained in relation to the
Airships;
o Value Added Tax: value added tax in accordance with Netherlands VAT
regulations and any and all similar taxes;
<PAGE>
6
ARTICLE 2. AGREEMENT TO SELL AND PAYMENT
2.1 Subject to the terms and conditions set out in this Agreement and the
Schedules, Rigid hereby agrees to sell to Buyer and Buyer hereby agrees
to purchase the Airships and take delivery respectively on Collection
Date I and on Collection Date II for the Purchase Price. Buyer shall
provide, at Rigid's first request, evidence satisfactory to and from a
source acceptable to Rigid that Buyer has access to funds necessary to
pay the (remainder of) the Purchase Price to Rigid.
2.2 Payment to Rigid by Buyer of the Purchase Price and all other sums
payable for additional services shall be effected in accordance with
the following Payment Schedule:
o NLG 24,000,000 (twenty-four million Netherlands guilders) on July 31,
1999;
o NLG 24,000,000 (twenty-four million Netherlands guilders) on July 31,
2000;
o NLG 18,000,000 (eighteen million Netherlands guilders) within 2 (two)
days upon Ground Inspection of the first Airship for SNFL;
o NLG 18,000,000 (eighteen million Netherlands guilders) within 2 (two)
days upon Ground Inspection of the second Airship for SNFL;
o half of the remainder of the Purchase Price upon Collection of the
first Airship for SNFL; o half of the remainder of the Purchase Price
upon Collection of the second Airship for SNFL;
o full payment for additional work upon collection of each Airship.
2.3 The Buyer will pay to Rigid on November 16, 1998 the Deposit, which is
non-refundable.
2.4 All sums payable hereunder by Buyer shall be paid in accordance with
the Payment Schedule in full without any deduction, withholding,
counterclaim or set off.
2.5 All sums payable hereunder are exclusive of Value Added Tax.
<PAGE>
7
2.6 Any amounts due from Buyer to Rigid shall, if not paid on the due date
therefore as stipulated in the Payment Schedule, thereafter bear
interest at the statutory interest rate increased with 2% (two percent)
per annum from and including the due date to but excluding the date of
payment calculated on the basis of a three hundred and sixty (360) day
year and thirty (30) day months.
ARTICLE 3. COLLECTION
3.1 Collection of the first Airship to be completed shall be made by Buyer
from Rigid on Collection Date I and Collection of the second Airship to
be completed shall be made by Buyer from Rigid on Collection Date II,
at Lelystad, the Netherlands, or such other location as may be agreed
in writing between the Parties.
3.2 The time for completion by Rigid of the Airships shall not be of the
essence. Therefore, in the event of late completion by Rigid of one or
both of the Airships, Rigid must be granted an additional reasonable
term to satisfy its obligations and formally be declared in default by
SNFL in case Rigid fails to fulfill its obligations within
aforementioned reasonable term.
3.3 At respectively Collection Date I and Collection Date II Buyer shall
deliver to Rigid a signed Acceptance Certificate which shall constitute
conclusive evidence for all purposes that the Airship collected is
satisfactory and has been collected by Buyer from Rigid in accordance
with the requirements of the Agreement.
3.4 Upon Collection by SNFL from Rigid of the respective Airship, the title
to such Airship and all risks of loss and damage shall by and upon
Collection pass from Rigid to Buyer.
<PAGE>
8
ARTICLE 4. CONDITION OF AIRSHIPS
4.1 The Airships shall be accepted by Buyer on Collection in the condition
in which they are offered by Rigid under this Agreement, subject only
to article 4.2 below.
4.2 At Collection Date I and Collection Date II the respective Airships
shall have the Certificate of Airworthiness (C.o.A.) And shall have a
C.o.A. for passenger use issued by competent aviation authorities of
the United States of America or the aviation authorities of the country
of ultimate destination of the respective Airships.
4.3 The Airship shall remain on the Netherlands Register of Aircraft until
the respective Airship is collected. Immediately following Collection
of such Airship hereunder Rigid will take all appropriate action at its
expense to ensure that such Airship is deregistered from the
Netherlands Register of Aircraft.
4.4 The Airships may be collected with tanks empty but if on Collection the
tanks are not empty Buyer will on taking Collection pay to Rigid the
cost to Rigid of the fuel in the tanks.
ARTICLE 5. GROUND INSPECTION
The Airships shall be made available to Buyer for the Ground Inspection at
Lelystad, the Netherlands. The Manuals and Technical Records shall be made
available to Buyer for inspection during such period prior to Collection thereof
as Buyer reasonably requires. Such inspections shall be conducted in
coordination with Rigid's personnel and Buyer shall be allowed reasonable
access, upon prior notice, to the airships to accomplish an inspection to
determine that the Airships are in the condition set forth in article 4 of this
Agreement. Buyer shall immediately state orally and confirm in writing within 4
(four) hours of the relevant inspection to Rigid any and all claims of
discrepancy. If Buyer fails to do so, Buyer shall not be entitled to refuse to
take Collection of the Airships.
<PAGE>
9
ARTICLE 6. DEMONSTRATION FLIGHT
6.1 Prior to Collection Date I and Collection Date II, the respective
Airship will be flown by Rigid for such periods as may be required to
demonstrate to Buyer the function of the Airships and its equipment in
accordance with Rigid's production flight test procedures. The
aggregate duration of such flights will not be less than 1,5 hours or
more than 4 hours. Five persons designated by Buyer may participate in
such flights as observers.
6.2 Rigid may use the Airships for flight and ground tests prior to
Collection to Buyer, without reduction in the Purchase Price, if such
tests are deemed necessary by Rigid to:
6.2.1 obtain or maintain the Certificate of Airworthiness for the
Airships. Rigid will advise Buyer of any flight or ground
tests contemplated by this paragraph 6.2.1; or
6.2.2 evaluate Airships improvement changes that may be offered for
production or retrofit incorporation in any Airships. Rigid
will obtain Buyer's consent and approval, which will not be
unreasonably withheld, of any ground or flight tests
contemplated by this paragraph 6.2.2.
6.3 The expenses for the inspection flights shall be borne by Buyer, except
for the tests as mentioned in article 6.2, which shall be borne by
Rigid.
ARTICLE 7. DISCREPANCIES CORRECTION
7.1 In the event any of the discrepancies referred to in article 5 are not
corrected by Rigid prior to Collection Buyer shall be obliged to accept
and collect the respective Airship and Buyer and Rigid shall develop a
list of agreed discrepancies, necessary corrections or corrective
procedures and a schedule for disposition thereof, or agree on
compensation to be paid in lieu
<PAGE>
10
of corrections; provided that such discrepancies shall be corrected by
or on behalf of Rigid within 5 (five) days of respectively Collection
Date I or Collection Date II, unless agreed compensation has been paid
as aforesaid. Buyer undertakes to cooperate with Rigid in the
correction of such discrepancies. Should Rigid fail in its obligations
under this article 7 Rigid shall indemnify Buyer for the costs incurred
by Buyer in connection with the correction of such discrepancies.
7.2 After Collection Rigid shall not be liable in any way whatsoever for
any physical discrepancies other than those set out in any
discrepancies lists compiled pursuant to articles 5 or 7.
ARTICLE 8. INDEMNIFICATION
8.1 Rigid hereby agrees to indemnify and hold harmless Buyer, its officers,
agents and employees from and against all liabilities, damages, losses,
costs and expenses for:
8.1.1 all injuries to and deaths of persons, and
8.1.2 loss or damage to tangible property of third parties arising
out of or in connection with the operation of the Airships
during tests or flights conducted prior to Collection provided
that this indemnity shall not be effective with regard to loss
or damages to tangible property of third parties, injuries to
or deaths of officers, agents or employees of Buyer if caused
solely by the negligence or willful misconduct of Buyer, its
officers, agents or employees.
8.2 Buyer agrees to indemnify and hold harmless Rigid, its officers,
agents, employees from and against all losses for injury to or death or
loss or damage to property of any of Buyer's officers agents, employees
from and against all losses for injury to or death of or loss or damage
to property of any of Buyer's officers, agents or employees arising out
of or in connection with the inspections, tests or flights conducted
after Collection, unless caused solely by the negligence or willful
misconduct of Rigid, its officers, agents or employees.
<PAGE>
ARTICLE 9. ASSIGNABLE WARRANTIES
On Collection Rigid will, subject to any necessary consents being forthcoming,
assign to Buyer the full benefits of all assignable warranties then subsisting
(if any).
ARTICLE 10. CONDITIONS PRECEDENT
The obligation of Rigid to sell the Airships to Buyer under the Agreement is
subject to the further conditions that the representations and warranties set
out in article 11.2 are true and correct as if each were made with respect to
facts and circumstances existing immediately prior to Collection.
ARTICLE 11. REPRESENTATIONS AND WARRANTIES
11.1 Rigid represents and warrants to Buyer that immediately prior to
Collection it will be the legal and beneficial owner of the Airships
and that on Collection the Airships will be free from all charges and
encumbrances.
11.2 Buyer represents and warrants to Rigid that:
a. Buyer is duly formed and validly existing under the laws of the state
of Nevada, United States of America and has full power to carry on its
business and to enter into and perform its obligations under this
Agreement and has complied with all statutory requirements relative to
its business.
b. Buyer has taken all necessary corporate action to authorize the
execution and delivery of the Agreement.
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11
c. The execution, delivery and performance of the Agreement does not and
will not contravene any contractual restrictions or any existing
applicable law or regulation binding on Buyer.
ARTICLE 12. LIMITS TO LIABILITY OF RIGID
12.1 Buyer agrees and acknowledges that no conditions, warranties,
representations or terms as to the state, condition or airworthiness of
the Airships have been, or will be given by Rigid to Buyer, except as
expressly provided in the Agreement.
12.2 Buyer agrees and acknowledges that Rigid shall only be liable for
damages resulting directly from failures in the construction of the
Airships (such as repair and replacement of defect parts) and not be
liable for any consequential damages resulting from the aforementioned
failures in the construction of the Airships.
ARTICLE 13. TAXES
13.1 Rigid shall bear all taxes ("Taxes") assessed by any national or local
government in connection with Rigid's ownership and the operation and
use of the Airships or any part at any time before Collection.
13.2 Buyer shall be responsible for and shall indemnify and keep Rigid
indemnified fully on demand from and against the payment of all Taxes
whether imposed by the Netherlands government or otherwise arising in
connection with the sale of the Airships hereunder (excluding any tax
which may be assessed or levied on Rigid by the Netherlands government
as a result of the sale of the airships or any part thereof by Rigid),
or the ownership, export, operation or use of the airships or any part
thereof after Collection.
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12
ARTICLE 14. COMPLIANCE WITH EXPORT REGULATIONS
14.1 Buyer undertakes and agrees that it will not at any time or in any way
deal with the Airships or any part thereof and will use its best
endeavors to ensure that no other party deals with the Airships or any
part thereof in any way which is in breach of any relevant import or
export regulations of the United States of America and any of its
states and the Netherlands. Buyer shall indemnify and hold harmless
Rigid against all losses incurred by Rigid as a result of any breach by
Buyer of its obligations under article 15.
14.2 Buyer undertakes that, prior to Collection Date I, it will provide
Rigid with full particulars of the intended use and country of ultimate
destination of both the Airships or any part including details of any
intended resale or reshipment of the Airships and Buyer undertakes that
it will not cause or permit any part of the Airships to be diverted
from its ultimate intended destination without there having being
secured all authorizations of any and all governments of countries
involved.
ARTICLE 15. TERMINATION EVENTS
Without prejudice to any other remedies than available to it Rigid shall have
the right to terminate the Agreement by notice in writing to Buyer taking effect
forthwith on or after occurrence of any of the following events:
a. Any breach by Buyer of any of its obligations under this agreement; or
b. Buyer fails to make payment of the Deposit or fails to meet the
installments of the Purchase Price as stipulated in the Payment
Schedule; or
c. Any representation or warranty made by Buyer contained in the Agreement
or in any
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13
document or certificate furnished to Rigid in connection herewith shall
prove to have been untrue or incorrect in any material respect; or
d. Buyer makes or offers to make any arrangements or composition with or
for the benefit of its creditors; or
e. Buyer ceases or threatens to cease to carry on business or suspends or
threatens to suspend operations or is or becomes unable to pay its
debts or commits any act of insolvency or bankruptcy; or
f. a petition or resolution for the making of an administrative order for
the bankruptcy, winding up or dissolution of Buyer (other than a
winding up for the purposes of reconstruction or amalgamation of a
solvent company) is presented or passed; or
g. Buyer files a voluntary petition in bankruptcy or insolvency; or
h. a supervisor, administrator or other incumbrancer takes possession of
or is appointed over the whole or any part of the assets of Buyer; or
i. Any distress, execution or other process shall be levied or enforced
upon or sued against the whole or any substantial part of the property,
undertaking, or assets of Buyer and is not discharged within 15
(fifteen) days; or
j. Buyer shall make any general arrangement or composition with its
creditors to take or suffer any similar action in consequence of debt;
or
k. Any action is taken or procedure is commenced in any jurisdiction by or
in relation to Buyer which is similar to or analogous with any above
mentioned action or procedure.
ARTICLE 16. NOTICES
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14
16.1 All notices, requests, claims, demands and other communications
hereunder shall be in writing and delivered to the Parties in person or
sent by registered or certified mail, postage prepaid or by facsimile
as follows:
a. Rigid:
Mr. J.C. Taverne
Janskerkhof 12
3512 BL Utrecht
The Netherlands
fax: +31 30 231 64 51
b. Buyer:
Synfuel Technology Inc.
Salt Lake City, Utah
U.S.A.
Fax:
Either Party may change its address for the purpose of the Agreement by
giving written notice thereof to the other Parties.
16.2 Any notice or demand shall be deemed to have been received two clear
business days after the date of dispatch if sent by letter or the date
of delivery if delivered personally or simultaneously with the
transmission if given or made by telex or facsimile provided the
recipient's answer back code has been made by telex or facsimile
provided the recipient's answerback code has been received at the close
of transmission and further provided in each case that the date of
receipt is a Business Day failing which such notice or demand shall be
deemed to have been received on the Business Day falling immediately
thereafter.
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15
ARTICLE 17. ASSIGNMENT
Buyer may not assign any of its right hereunder without the prior written
consent of Rigid.
ARTICLE 18. MISCELLANEOUS
18.1 The terms and conditions of the Agreement supersede those of all
previous agreements, understandings and arrangements, whether written
or oral, between Rigid and Buyer relating to the sale of the Airships
and shall not be varied otherwise than by an instrument in writing of
even date herewith or subsequent hereto executed by the Parties or by
their duly authorized representatives.
18.2 No failure or delay on the part of either Party in exercising any power
or right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any such right or power preclude any
other or further exercise of any such right or power.
18.2 No failure or delay on the part of either Party in exercising any power
or right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any such right or power preclude any
other or further exercise of any such right or power.
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16
18.3 If any term or condition of the Agreement shall to any extent be
invalid or unenforceable the remainder of the Agreement shall not be
affected thereby and each other term and condition shall be valid and
enforceable to the fullest extent permitted by law.
18.4 The Agreement may be executed in two counterparts each of which shall
constitute an original and when taken together shall constitute one
instrument.
18.5 The Agreement shall be governed by and construed in all respects in
accordance with Netherlands law.
IN WITNESS WHEREOF, the Parties have caused this Agreement in
_______________fold to be executed and delivered as of ____________.
- ----------------------------------
Rigid Airships Design N.V.
By:
-----------------------------
Title:
-----------------------------
- ----------------------------------
Synfuel Technology, Inc.
By:
-----------------------------
Title:
-----------------------------
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SCHEDULE 1 TO THE SALE AND PURCHASE AGREEMENT
SPECIFICATION OF THE AIRSHIP:
o length: 180 meter
o max. diameter: 30 meter
o max. hull volume: 83,000 cub. meter
o max. helium volume: 75,000 cub. meter
o powerplants: 6
o propellers: 6 of which 4 vector
o max. airspeed: 145 km/hour
o cruising speed: 120 km/hour
o useful lift: circa 35 tons
