U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D. C., 20549
Form 10-SB
General Form for Registration of Securities of Small Business Issuers
(Under Section 12(b) or (g) of the Securities Exchange Act of 1934)
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC.
(Exact name of registrant as specified in charter)
Nevada 86-0857752
(State of other jurisdiction of (I.R.S. Employer incorporation
or organization) Identification Number)
10240 - 124TH Street, Suite 208
Edmonton, Alberta, Canada T5N 3W6
(Address of Principal Executive Office) (Zip Code)
(780) 488-9193
( Telephone Number)
Securities To Be Registered Under Section 12(b) of the Act:
Title of each Class Name of each Exchange on which
To Be Registered each Class is to be Registered
None None
Securities To Be Registered Under Section 12(g) of the Act:
Common Stock, $0.001 Par Value
(Title of Class)
The number of shares outstanding of each of the registrant's classes of
voting stock, as of February 17, 1999 was: 13,720,000 Common Stock, par
value $0.001
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TABLE OF CONTENTS
Item 1. Description of Business
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Description of Property
Item 4. Security Ownership of Certain Beneficial Owners and
Management
Item 5. Directors, Executive Officers, and Control Persons
Item 6. Executive Compensation
Item 7. Certain Relationships and Related Transactions
Item 8. Legal Proceedings
Item 9. Market for Common Equity and Related Stockholder Matters
Item 10. Recent Sales of Unregistered Securities
Item 11. Description of Securities
Item 12. Indemnification of Directors and Officers
Item 13. Financial Statements
Item 14. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure
Item 15. Financial Statements and Exhibits
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS
Overview
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC., a Nevada corporation (the
"Company") is a development stage company formed in 1998 to encourage
innovative technologies in the environmental industries. The Company's goal
is to acquire technology rights and licenses from patent holders and
others, then secure a market, and raise sufficient capital to build, own,
and operate facilities throughout the world.
The Company is in the process of setting up a subsidiary company
called Umweltservice Europa GmbH to recycle waste lubrication oil. The
Company has obtained the rights in Germany from Enviro-Mining Inc. for
three technologies which when combined can produce a high grade low sulfur
diesel fuel meeting all European specifications under EN 590 legislation.
The EMI Process is a proven alternative to the present disposal methods by
converting automotive waste oil into light heating oil and high quality
diesel fuel. (See "Intellectual Property")
The Company has added separate innovations to the processing package
to provide stability to the products and which meet the lower sulphur
standards required in Europe. The Company has combined these technologies
under the operating name of The EMI Process (EMI). The objective is to
purchase the most appropriate system, which will meet the operating,
technical, and business objectives to be operated by Umweltservice Europa
GmbH.
The Company's Oil Recycling Process
These oil recycling processes have been developed to solve a worldwide
problem of removing used oil from the environment in a safe and non-
polluting way. Most countries have developed collection methods to remove
this hazardous waste from their communities with new emphasis on diversion
from existing landfills. Registered waste oil transporters are tracked to
determine annual volumes, and disposal methods. The majority of the waste
oil enters refineries for upgrading and blending, or is burned in the
cement industry.
The Umweltservice Europa GmbH mandate is to establish 10 facilities
throughout Europe prior to the year 2005.
The Company's operational plan is to establish control of a license
for the oil recycling technology in Germany with limited rights for the
balance of Europe. In addition, the Company will have waste oil suppliers
for its entire capacity of approximately 90 million litres, complete long
term sales arrangements and incur realistic German operational
expenditures. The Company intends to provide, "A Complete Recycling
Solution".
The Company has demonstrated certain needs satisfied by Umweltservice
Europa GmbH, which provide opportunities for collectors:
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* An environmental waste disposal solution
* A method of upgrading/regenerating waste oil
* A stable long term location of disposal for the industry
* A competitive price under long term agreements
The collectors will benefit from a reliable, stable place of disposal
without being price prohibitive. This provides a sound environmental
alternative for the community. In turn Umweltservice Europa GmbH will
produce a high quality diesel fuel of exceptional value assuring:
* The buyer will receive a clean consistent product;
* A preferential market price, allowing value to pass to the preferred
major customers of the diesel distributors; the end result will be a gain
in market share for the diesel distributors;
* An environmental product providing marketing possibilities to promote
environmental awareness; and,
* Product performance will exceed those of bio fuels and other fuel
derivatives.
Process-Operations
The EMI Process surpasses an older patented system developed in the
mid 1970s. The new process is an updated version whereby automotive
engine oil is de-watered and enters a thermal treatment unit whereby
the hydrocarbon chains are cracked (broken). The treated oil enters a
condenser unit to recover light fuels, diesel, and naphtha. The light
fuels are recaptured to heat the initial cracking unit, while the
diesel and heating oil continues on to further processing. The last
stage treats the product to provide the appropriate sulphur, acid,
odor, and chlorine levels, while providing stability to the fuel for
longer shelf life. The end product of the process is a good quality
heating oil, naphtha, bottoms, and diesel fuel for resale.
Product Research and Development
The EMI technology has operated in Indiana, US for several years with
documented diesel production. The EMI Process engineers and
consultants to the technology continue to improve and modify the
system for better performance, increased output and final product
quality. The current model has been operating since 1996 with
excellent results. It is highly automated with advanced safety
features. The design is certified by professional engineering
consultants and manufactured under license.
Our Unique Components
Excellent final product exceeds all required DIN regulations for DIN
EN 590 Diesel fuel. The Systems are designed to meet North American,
Asian, and European Union (EU) environmental permitting requirements.
Full operating support is provided by design and process engineers
enabling Umweltservice Europa GmbH to operate successfully and safely
in Germany. Daily monitoring and quality control via state of the art
video will provide floor information direct to our Canadian office.
All personnel will be provided extensive training for the operations
and safety requirements of the Umweltservice Europa GmbH facility.
The System is self-contained utilizing a relatively small working area
in our redeveloped industrial park site, formerly a Potash mine site
in Merkers. The entire facility, owned and operated by Umweltservice
Europa GmbH, is to be constructed in an open facility similar to any
oil refinery. The plant site will be approximately 30 Meters X 100
Meters. A control building and the fueling facility will be the only
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other buildings on the site at the initial stage. The tank farm will
be underground. The entire site will be secured and fenced.
A diesel fueling station with 4 pumping locations and parking for 10
trailer trucks are to be situated on the 15,000 square meter site. This
highly automated state of the art facility will operate with specialized
Canadian developed equipment. All operators will be locally trained skilled
professionals with excellent working conditions and opportunities for
upward mobility as new facilities become operational.
Products and Services
Detailed Product Description
Our product exceeds all requirements for fuel consumers in the diesel
fuel market. The product from The EMI process is of exceptional
quality. The final product in Canada is meeting the diesel
specifications for North America and is being sold to trucking
Company's as fuel. We will be able to demonstrate that for the same
price points, the client will be obtaining a cleaner and higher
quality diesel fuel.
Product Life Cycle
The product life cycle is similar to comparable diesel fuels, and as a
rule our production being only a fraction of the distributors'
volumes, the product is not held in inventory. The product is
transported by tanker vehicle by Hasenauer Transporte or rail on a
daily basis and enters the market immediately for consumption. The
independent association of gas stations will also be picking up
product daily for their regional needs.
Research and Development Activities
The Company has brought the quality of the product to higher levels as
more process improvements and modifications are added their other
existing international facilities. Propak Industries has state of the
art design technology and excellent experience in process
improvements. Umweltservice Europa GmbH will be receiving the latest
in technology with the newly engineered second generation systems
which have proven their advancements having already been in operation
for the past 12 months.
Operations
Production and Service Delivery Procedure.
The production of diesel fuel is monitored and frequently tested to
ensure excellent quality for the end user. fuel is stored in a clean
tank area for final pick-up. The diesel fuel product is trucked via
30,000 Litre plus transport tanker vehicles owned and operated by
Hasenauer Transporte to its final destination.
Production and Service Capability
The system operates at a safe temperature with full computer
integration providing the operators with current information on
systems and foreseeable problems. In our Primary Plan we are using a
continuous flow process to ensure a constant supply of finished
product in the event of normal shutdown and maintenance of either
unit.
<PAGE>
The specification of the system is for 90,000 tons of waste oil input.
Downtime start-up delays or increases in waste volume can be regulated
through our units with a throughput potential of 100,000 tons.
We have not included any allowance for surplus revenue in our
financial projections. Our intentions are to process 90,000 tons in
the initial stage to prove out the process and as we are able to add
extra volume the capacity will be raised to 100,000 tons. Facility
improvements may provide higher throughput.
Facilities / Site Selection
On March 5, 1997, five sites suggested by the LEG-Economic Development
Thuringia were examined in the central western portion of Thuringia.
Four were eliminated for transportation link purposes. The remaining
site was found acceptable with the following conclusions:
Primary Site: Merkers-Industrieflache Merkers-Kieselbach
Location. The site is at a former Potash mine properly / industrial
park which is currently being redeveloped by the LEG. Other businesses
in the immediate proximity include a construction waste landfill and
comporting facility 100 meters across the road access (owned and
operated by Reinhard Hasenauer, first cousin to Harold Jahn), a metals
recycling facility 20 meters distance separated by the rail line, and
a number of other newer industries within 1 km of the site. (Business
Park tenant List-Appendix)
New Services
The LEG has a division responsible for the servicing and redevelopment
of their properties. This site shall have completely new services
before the end of 1998. We are invited to offer our input into how our
site will be incorporated into the overall design.
Property Advantages:
* Permitting. The industrial park is considered "heavy industrial" which
will expedite our zoning requirements, and acceptable environmental
permitting.
* Access. The transportation links to the site are excellent. New ring
roads are being built around the next city of Bad Salzungen. A rail line
exists directly on the property allowing us to process 60,000 Litre tankers
from other regions. Access to the B62 highway system is only 150 meters
from the site.
* Expansion Opportunity. The additional land belonging to the LEG, 16.0
hectares of developable industry land, can be optioned. Our intention is to
option 3 additional hectares within a 2 year period for expansion
possibilities, given the cost of the land is very reasonable.
* Cost Savings. A further saving will arise out of the potential for
waste oil suppliers and heating oil customers from the industrial parks'
growth in the coming years. This area is becoming a large recycling park
providing excellent synergies for the larger SDI mandate of electrical
production, and other recycling technologies.
<PAGE>
Umweltservice Europa GmbH Site Selection Plan
The objective is to acquire 1.5 hectare of the Merkers property with
the best road and rail access to the east on the site. Two options
would be placed on expanding this site, plus having access to a second
site in Emleben, secondary site. The Emleben site is medium
industrial, 4 hectares in size, and has excellent highway access 2 km
away. The only shortfalls were rail access and expandability of the
site. A purchase contract for the property is signed awaiting final
legal approval and is conditional to an acceptable environment permit.
Competitive Operating Advantage
The systems are highly automated, enabling only 2 operators per shift
to comfortably operate the plant. Each module has its own control
panel with early warning systems and fail safe shut offs in the event
the operator is not present. This offers a reduced need to hire many
new employees. Employment expenses is a large component of operations.
Any cost savings in this area by way of economies of scale are very
beneficial for lower costs. These cost savings provide us with an
opportunity to retain earnings for our further expansion on this site
or new locations throughout Germany.
The system is proven to operate with little maintenance or down time.
This reliability offers us an opportunity to maximize the excess
capacity of the system, while allowing room for extra throughput.
Other systems in the refining industry require larger economies of
scale to operate. They present higher debt servicing, larger
infrastructure, and excessive overhead. Our systems are compact,
operate in an open structure, and require minimal investment relative
to chemical and petrochemical superstructures.
From an environmental stand point, our system is highly monitored and
produces no harmful emissions or waste to the air, land, or water. We
invite and encourage the German Environment Department to inspect our
facility or monitor our systems at their leisure. Our focus is to make
this facility our flagship in Germany with exceptional records of
performance and environmental standards.
Suppliers
Our waste oil will be provided from four reputable sources of supply.
Several Letters of Intent for waste oil supply are currently
available. The consumer auto industry produces excellent quality waste
oil with low impurities.
We will be monitoring and testing all waste oil to our facility for
purity. Fines will be levied as a part of our supply contracts, or
rejected and turned back on the basis of contaminants or excessive
water content. Our application to the environment department
permitting allows for specific waste sources only. We will be very
strict in our acceptance policy. The better the waste oil quality, the
less processing will be required for final product. We will be
<PAGE>
experiencing gains in quality from German waste oil compared to
Spanish, Polish, or typical North American waste oil.
Market Analysis
The Company's target market is Germany, which is a substantial
industrialized economy with exceptionally high volumes of low sulfur, waste
oil supply. Germany has over 82 million inhabitants producing 1.1 billion
liters of waste lubricants, and 650 000 tons of used waste oil.
The size of the Company's target market using figures provided by the
Mineral Oil Association of Germany and the National Association of Waste
Oil Recyclers, represents 240,000,000 Liters of Umweltservice Europa GmbH
product. At a market price of US$0.52 per Liter excluding sales tax for
the high quality diesel fuel, potential sales in the Germany market alone
is US$ 55,000,000 annually.
Industry Description and Outlook
The collection of waste oil has been long established in most
industrialized nations. As a general figure, the amount of waste oil
collected per capita is approximately 10 Litres annually. Estimations of
the total waste oil produced in the nation of Germany have been estimated
at 1,200,000 tons annually. All waste oil is not collected. A percentage is
lost in the combustion process, some is not disposed of in an existing
collection system, and some is simply burned. A net amount of 650,000 tons
of waste oil per year is reported by the Mineral Oil Association of
Germany.
Waste oil is considered hazardous and as such the handling of this
waste, disposal, and collection methods are heavily regulated in Germany. A
specific list of waste collectors is approved to transport this waste,
along with manifests as to how many liters are produced, which locations
produces/collects this oil, and any variation as to seasonal effects.
The types of oil collected are important for our process and our
environmental permitting. Approximately 320,000 tons of this used engine
oil is of extremely high quality in Germany. Automobile laws stringently
require regular oil changes be done and overall car maintenance must be
performed regularly in order to be road worthy. These check ups are made on
a regular basis and must be completed to retain ones license. Secondly,
considering the value individuals place in owning and maintaining their
vehicles in Germany, oil changes are more frequent than is the standard in
North America.
The type of oils to be processed include, engine, hydraulic, and
transmission oils primarily from automobiles, military vehicles, and heavy
equipment. The quality of the oil and its collection will be strictly
adhered to in order to fall under the 4.4 BimscH procedure. This is the
standard set out by the Environment Departments for the collection disposal
and transport of waste oil.
Other oils are available; however, they are classified under a
different section of the environment law section 8.0 BimscH. This is
considered a special waste, and increases the regulatory burden on storage,
processing, emissions, and disposal of residual waste.
<PAGE>
Input - Waste Oil
The primary source of the type of waste oil we require are lube oil
change shops, the machining industry, and military vehicles which produce
engine and hydraulic waste oils. Germany has been a developed industrial
country for over 50 years. They are highly recognized as being world
leaders in manufacturing, chemicals, and heavy industry. The present and
future growth of industry will shift to more service, and knowledge based
efforts. However, automobile usage will remain high for the foreseeable
future resulting in a relatively stable waste oil market in the 650,000 ton
range per year.
Output - Diesel Fuel
The price of diesel fuel fluctuates seasonally and over time, yet
remains much higher than North American prices due to the importation of
fuels into Germany. The price of diesel fuel FOB German Refinery before
national sales and mineral oil taxes has been as high as $0.21 US per liter
and is currently in the $0.15-$0.17 US range. Our calculations are based on
the conservative assumption of a $0.15 US purchase price. We remain
profitable above $0.15 US per liter price.
The diesel fuel industry is very price sensitive. There are multiple
refinery sources. Buyers will shift to an alternative source based on price
points, fuel quality, and price stability. Environmental considerations are
usually not considered. Environmental concerns are only addressed when
legislation is involved requiring purchases be based on a percentage coming
from a recycled source or government incentives providing a lower overall
cost to the buyer. These considerations are not current law in Germany. We
are not expecting these to arise in the near future.
German regulations only state waste oil disposal by "burning" must be
reduced and "recycling" must increase. Recycling to diesel fuel is not
mandated. Umweltservice Europa GmbH will become a preferred recycling
option by virtue of its inherent advantages. In summary, price, stable
supply, and quality of the diesel fuel are the factors to be considered by
our potential customers.
The Company's consumer base for our diesel fuel includes transport
Company's, gas stations, and two sizable diesel fuel distributors. The
ultimate end users are the transportation industry, small independent
trucks, diesel autos, trailer trucks, and city/tour buses.
Target Market
A critical need exists to secure larger centralized sales. This will
lessen the burden of dealing with many smaller clients, reducing costly
infrastructure expenditures. Our waste oil capacity is currency being
secured by way of Letters of Intent. Cement industry and refinery
competitors are not in a position to accept long term contracts or
contracts with preferred prices for waste oil supply. Our location provides
us access to 10 million inhabitants within a 250 km radius consuming in
excess of 2 billion liters of diesel fuel annually. Germany's annual diesel
consumption excluding all other fuels is currently 25 billion liters.
All arrangements are long term with expansion, pace, sad volume clause
allowances. Seasonal trends include two periods in Spring and Fall whereby
both waste oil supply and diesel fuel demand increase concurrently. This
has no bearing on the logistics of operations due to an advanced flow
system allowing adjustments into the system. Our storage tank capacity will
be able to modulate the volumes through the facility. Industry histories
provide all trends in the oil collection and diesel sales seasonal cycles.
<PAGE>
Market Share Penetration
There are a limited number of prospective diesel fuel distributors,
however, each controls a sizable market share. This allows us an effective
and low cost marketing strategy to reach the small circle of key decision
makers. Their focus is to sell to transportation Company's, gas stations,
and trucking firms. The Company's entire capacity fills less than 0.002 %
of the German diesel fuel market.
Market Penetration Waste Oil Supply
Market Share Anticipated 1999 14 %
2000-2004 14 %
<TABLE>
Existing High Quality
Waste Oil Suppliers Volume Commitment to Merkers
<S> <C> <C>
Schmidt Furth 90,000 T 40,000 T
Buster Mannheim 25,000 T 10,000 T
Tersteeg Coesfeld 30,000 T 10,000 T
Other Collectors Germany 175,000 T 30,000 T
--------- ---------
Total 320,000 T 90,000 T
</TABLE>
Diesel Sales in Germany - Monetary Breakdown and Distribution Activity
The price of Diesel at the pumps for the average German consumer is
relatively expensive compared with North American prices due primarily to
higher tax structures. Many passenger vehicles run on diesel, for it is the
most inexpensive fuel available. Regular unleaded and Super gasoline is
currently much higher.
Per Liter Consumer Pump Price Per Gallon
(3.78 Liters)
Diesel $0.61 US (1.11 DM) - $0.72 US (1.29 DM) $2.30 US
Regular Unleaded $0.85 US (1.54 DM) - $0.90 US (1.62 DM) $3.21 US
Super $1.00 US (1.81 DM) - Sl.05 US (1.89 DM) $3.78 US
The majority of the sale price is tax. A 16 % Federal sales tax
similar to the Canadian GST is paid by the consumer. Industry must also pay
this tax, yet all sales prices are quoted as Netto, or net prior to adding
the sales tax.
The Netto price is used for all our activities. A mineral oil tax of
0.63 DM per liter on Diesel currency exists, however, in the coming months
an additional 0.10 DM to 0.25 DM addition to the 0.62 DM mineral oil tax
may become a reality.
These taxes do not effect us, the industry and the consumer is willing
to pay these high taxes with the balance of the price being the true value
of Diesel.
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Diesel Fuel Pricing
The breakdown below demonstrates what the true value of Diesel is for
our financial assumptions;
<TABLE>
<S> <C> <C>
Diesel price at fueling station example 1.16 DM $0.64,44 US
Less: National Sales Tax 16% 0.16 DM $0.08.88 US
--------- ------------
Fueling Station Sale 1.00 DM $0.55,55 US
Less: Fueling station overhead/profit 0.03 DM $0.01.66 US
--------- ------------
Fueling Station Cost from Distributor 0.97 DM $0.53,88 US
Less: Distributor overhead/profit 0.07 DM $0.03,88 US
--------- ------------
Netto Price to Industry/FOB Refinery 0.90 DM $0.50,00 US
Less: Mineral Oil Tax 0.63 DM $0.35.00 US
--------- ------------
True Value or Cost of Diesel 0.27 DM $0.15,00 US
========= ============
</TABLE>
The diesel cost figures include fueling station overhead,
transportation from the refinery to the fueling station, distributor costs,
refining, and importation of crude into Germany.
The current true price leaving a refinery (wholesale price to
distributors) is $0.15 US (0.27 DM), by adding profit and overheads
throughout the chain, the consumer pays a pretax price of $0.20,55 US (0.37
DM). A $0.05,55 US (0.10 DM) margin at this Worst Case Scenario Price.
Umweltservice Europa GmbH will play the role of refiner, distributor,
and fueling station obtaining various levels of this margin range under the
following sales strategy.
Umweltservice Europa GmbH Sale net 16 % Tax True Price after Mineral
Tax
Merkers fueling station $0.55,55 US 1.00 DM $0.20,55 US 0.38 DM
Trucking fleets /
Transit authorities $0.53,88 US 0.97 DM $0.19,44 US 0.35 DM
Fueling stations
Diesel Distributors $0.50,00 US 0.90 DM $0.15,00U $0.27 DM
Geographical Area
A 250 km radius around the Merkers, Thuringia facility is connected to
the Autobahn and rail system. All supply and sales are currently by truck
only. Rail links will be used as the Deutsche Bahn (National Rail System)
reorganizes for better just-in-time services.
Identification of Target Market
1) Government documentation is available on regional waste oil supply and
heating oil sales statistics by liter, and historical sales prices.
Data is available through the German Department of Environment.
2) Umweltservice Europa GmbH will join appropriate associations related
to the waste oil and heating oil industries. We will be registered
with recycling organizations, trade publications, and directories to
remain informed on all developments for our industry in Germany and
the European Community (EU).
<PAGE>
Purchase cycle of Customers
Price is a major concern to retain a customer, yet the market is
stable and will not result in large changes in market demand over many
years.
Key trends/changes with our Target Market
Alternative Fuels. Diesel may be displaced by alternative fuels in the
future. More efficient engines may not require as frequent oil changes
decreasing the supply of waste oil. As technologies develop, more
efficient engines will arrive, thus shrinking the diesel fuel market
over time. In any event, our market share is a very small portion of
the markets large size. We will be informed on these matters by
monitoring the markets and being involved with the "Altol Verband"
national used oil association, responding to trends that indicate any
changes in our market.
Price. Price is a factor when dealing with oil prices. Thus we are
conducting our financial forecasts on conservative figures, while
entering into long term contracts to mitigate the risk of potential
market share declines. The Company's largest source of operating
income is initially anticipated to be from the sale of produced oil,
natural gas and possible natural gas liquids. Therefore, the level of
the Company's revenues and earnings are affected by price at which
these commodities are sold. In the past, average annual sales prices
for oil, natural gas and natural gas liquids, has been erratic, with a
recent history of rising oil price per barrel but lower gas prices.
It is likely that these prices will continue to fluctuate in the
future. Various factors beyond the Company's control affect prices of
oil, including;
* worldwide and domestic supplies of oil;
* the ability of the members of the Organization of Petroleum Exporting
Countries ("OPEC") to agree to and maintain oil price and production
controls;
* political instability or armed conflict in oil-producing regions;
* the price of foreign imports;
* the level of consumer demand;
* the price and availability of alternative fuels;
* the availability of pipeline capacity; and,
* changes in existing regulation and price controls.
Market Test Results
In meeting with our German diesel retailers a variety of concerns were
addressed:
* Technology-Is it proven and viable?
The manufacturing rights and the engineering design of The EMI
Process have been verified by qualified engineers at Propak
Industries in Airdrie, Canada.
* Quality of diesel fuel.
Diesel was provided to PetroLabs of Germany, the official Fuel
Laboratory for the German Government to conduct an independent
testing of the final product. Material supplied by Enviro-Mining
Inc. and tested by PetroLabs confirmed that the low sulphur
standards are achievable. This third party verification is a
required step in the approval process of meeting EU
specifications.
<PAGE>
To gain nationwide and European wide acceptability, the Company
engaged TUV, equivalent to The Canadian Standards Association - CSA,
to conduct a test to verify that the Company meets and exceeds the
requirements for EN 590 European Diesel fuel. The TUV verification and
acceptability is a crucial seal of approval.
* Price and Volumes.
Price was the major concern for all parties, they would like some
advantage in order to gain their long term support and a benefit.
This will motivate them to switch from an existing supplier. The
site visit confirmed and satisfied all concerns over output
capacity. Some pricing will be l/2 cent lower than market price,
providing a greater penetration of the market with acceptable
profit levels, while in other areas a premium will be paid for
our fuel.
* Lead Time
Initial orders, reorders, and volume purchases in short run
situations will not be a concern. We are negotiating 5 year
contracts to ensure long term stability with fixed volumes.
Commodity Pricing is based on Spot markets only, not fixed long
term price contracts. The Company's review of the past 5 year
Spot price levels enhances the Company's ability to become
profitable.
Competition
Although there are Company's with substantially greater financial
resources, there is minimal waste oil recycling being conducted in Germany
at the present. The Mineral Oil Association of Germany classifies an oil
recycler as a refinery which will accept waste oil as a blend to its
feedstock or a cement kiln using waste oil as a fuel for its energy
requirements. (Refineries - Appendix) They consist of refineries only.
These refineries are referred to as waste oil recyclers. They represent our
competition for the feed stock.
Potential Competition
The current technology will allow us to recycle effectively today. Our
supply of waste oil is key. Technologies will continue to improve and
operating costs will decrease providing an ideal closed loop system for
Umweltservice Europa GmbH. In addition, our current competition may start a
bidding war to control the waste oil supply. We have some flexibility on
the purchase price of our input waste oil, yet we will focus our attention
in the media to win support under our environmental and job creation
mandate. We believe the market is large enough that the current competitors
will not perceive us as a threat. Early action will work to our advantage
as we move quickly to secure waste markets.
<PAGE>
Furthermore, some larger oil producers may encourage our development
plans to demonstrate a concern for their environment profile for their
Public Relations departments. Similar programs sponsored by Oil Company's
made contributions to alternative energy campaigns or endangered animal
funds over the past 20 years.
The importance of our target market to the competition
This concern is minimal for both waste oil acquisition and diesel fuel
sales. Umweltservice Europa GmbH will not be perceived as a disruption as
we represent only a small fraction of a large market.
Barriers to enter our Market by new Competitors
* Money - Capital Cost of a new comparable Operation exceeds $ l 5
million US.
* Time - Permitting, environmental approval, and construction phase 2
years.
* Technology - May be unproven or first full scale version.
* Training- Professional Organization with track record required.
* Brand Loyalty - They must compete with the recognized "Umweltservice
Europa" name
* Intellectual Property - Patents, and Designs must be registered in
Germany or EU
* Market Share - Umweltservice Europa GmbH will have a large regional
market share secured
Competition is limited to the cement industry and refineries in very
defined regions of Germany which are not reliant on the waste oil as a
feedstock. Natural gas and other inputs are more efficient. Only one
competing technology originating out of Berlin exists for recycling used
waste oil. The system is in its experimental phase with low capacity and
throughput. Extensive research into other known processes confirms the lack
of fully commercialized conversion processes.
The Company's waste oil supply base is established, registered waste
oil collectors. Existing collectors will switch from their current disposal
locations based on:
* Freight. Costs of trucking in Germany are three times greater than
North America.
* Price. We will be competitive on waste oil purchasing with the
existing cement industry.
* Ecology. Ideology and concern for health issues will play a major
factor as awareness increases and the "baby boomers" of industrialized
nations become more health conscious.
* Stability. Contracts will provide a sense of comfort for an industry
facing many regulatory laws, shifts in community values, and market price
fluctuations.
<PAGE>
* Law. A bill is awaiting approval in the European Community eliminated
burning as a method of waste oil disposal. The existing collectors would
have little choice but to divert this waste to the Company's facilities as
the other recycling refineries are near capacity.
The Company believes that an opportunity exists to capture a large market
share:
* First, companies are being forced to comply with German legislation
under the Oil Act to reduce burning activities, which have adverse health
effects on the population, to more sustainable solutions.
* Second, locations where burning and refining industries are
unavailable will benefit by having a lower transportation fee. The costs of
transportation over greater distances in Germany are very high and
uneconomical.
* Third, collectors face price fluctuations in the oil market, yet when
transferring to the Umweltservice Europa GmbH facility, they will be
guaranteed a supply contract with preferential price and volume
commitments. They will have price stability over the long term.
Marketing and Sales Activity
Overall Market Strategy
Market penetration will occur by way of long term purchase contracts
outlining volumes, and terms. Our growth strategy is to secure our waste
oil input, proceeding with secure sales contracts for our diesel fuel on a
minimum 90,000 ton waste oil processing increment. In order to justify the
capital investment, and security, all expansions will only occur with
bonafide secured contracts. We will not build or expand with a portion of
the facility underutilized or relying on the day to day markets to fill the
shortfall.
Distribution channels will be solely through diesel fuel distribution
companies. Umweltservice Europa GmbH will only sell directly to the end
consumer in areas of strategic competitive advantage. This will alleviate
costly administration and sales budgets, concentrating sales into the
established network of gas stations, fleets, and through our own facility
in Merkers on our Processing site.
Communications will occur through the business manager and
administrator on a business level and through social contact throughout the
community. The Company will take advantage of our environmental focus, and
donations to the community at large to increase awareness of our mandate.
An information package will be developed for local business and residents.
The key group of fuel distributors will be provided a quarterly newsletter
to bring all new activities, helpful hints, and our expansion plans to
their attention.
Sales Strategies
We will not have a sales force to obtain contracts for the sale of the
final product. The business manager will oversee the sales by interacting
with the small group of diesel fuel distributors, fleets, and filling
stations in the immediate 100 km region. The Umweltservice Europa GmbH
office in Merkers will be responsible for promoting and expanding the
interest for our quality product.
<PAGE>
Our strategy to sell $0.0028 US below the Frankfurt Commodity price to
the distribution firms will provide two advantages. They will retain or
expand their market share by passing on savings to preferred clientele,
while obtaining a better margin. This will position the Company to expand,
while ultimately benefiting Umweltservice Europa GmbH with an expanding
sales market via their success.
Government Regulatory Restrictions
Government restrictions on the quality of final product, plant and
site operations, and environmental concerns must all be met. Emissions,
waste disposal, air, noise, groundwater, 24 hour operations and safety
permits must be attained.
The normal timeline for environment permitting is 18 months. EMI
secured an agreement to reduce this to 7 months. Efforts are being made
through political contacts in the region to reduce this timeframe further
based on a number of systems operating in countries such as Canada, United
States, South Korea, and Singapore which possess similar stringent
environmental permitting. The facts are very clear to the systems
acceptability, economics, and environmental benefits. A copy of an American
Environmental Permit is be submitted to the Environment Department as a
reference to the German Government.
Our team is ready to prepare the complete document package in a timely
fashion to speed up this process. Approval by the German Environment
Department is scheduled for the fourth quarter of 1998.
Anticipated Changes in Regulatory Requirements
Present laws for disposal of waste oil by burning are becoming more
restricted. Our research indicates that burning could be abolished
completely in the next two years. Legislation from the EC is in progress to
strengthen the environmental laws pertaining to the release of heavy metals
to the atmosphere through burning methods. Such burning has been linked to
the cause of cancer in many countries.
Once this bill becomes law, the majority of the 34 current members of
the National Used Oil Recycling Association will face the challenge of
locating suitable approved disposal sites. Only a few refineries in Germany
have excess capacity to fill for used oil as a blend to their feedstock at
this time. Umweltservice Europa GmbH has had a welcome reception from the
Association as they view our process as a potentially long term approved
disposal site centrally located in Germany.
Environmental Matters
Hazardous Materials.
The Company's research and development, manufacturing and collection
processes involve the controlled storage, use and disposal of hazardous
materials. The Company is subject to federal, foreign, state, and local
laws and regulations governing the use, manufacture, storage, handling and
disposal of such materials and certain waste products. Although the Company
believes that its safety procedures for handling and disposing of such
materials comply with the standards prescribed by such laws and
<PAGE>
regulations, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of such an
accident, the Company may be held liable for any damages that result, and
any such liability could exceed the resources of the Company. There can be
no assurance that the Company will not be required to incur significant
costs to comply with environmental laws and regulations in the future, nor
that the operations, business or assets of the Company will not be
materially adversely affected by current or future environmental laws or
regulations.
Intellectual Property
The Company's success and ability to compete is dependent in part
upon its proprietary technology. The Company relies on a combination of a
"Limited Technology License Agreement," trade secret laws and non-
disclosure agreements to protect its proprietary technology. The Company
has obtained a license from the Enviro-Mining Incorporated, a company
controlled by officers and directors of the Company. The license is for a
period of thirty (30) years commencing on June 11, 1998, with renewable 10
year terms. The Limited Technology License Agreement requires the payment
of certain minimal annualized payments, and in the event of a default in
the payments, the Company could lose its rights to continue utilizing the
technology. Further, the Limited Technology License Agreement provides
that the Company "must commence construction in the first twelve (12)
months of this agreement, a plant of minimum capacity of 90,000 tons of
waste oil input in the Territory." The agreement, dated June 11, 1998,
further states that it shall be just cause for termination of the Licensee
of all license and marketing rights, if the Company has not commenced
construction of the first plant within the first year of the license
agreement, and an additional commercial scale plant every year thereafter
for the next 5 years.
The licensing of the proprietary process for the stabilization and
purification of gasoil products has its place of origin from CANMET, the
principal research and development arm of the Ministry of Natural Resources
Canada. CANMET owns the intellectual property known as the CANPED process.
The CANPED process of waste oil processing was licensed to Par Excellence
Developments Inc. (PED), of Ontario Canada. On March 6, 1998 Enviro-Mining
Inc., a major shareholder of the Sustainable Development International,
Inc., entered into a "Sub-License Agreement" with PED, wherein the Enviro-
Mining Inc. obtained limited intellectual rights to utilize the CANPED
process of waste oil processing. PED subsequently approved the execution by
the Company and Enviro-Mining Inc. of the "Limited Technology License
Agreement," thus providing the Company with the use of the CANPED process.
The PED - Enviro-Mining Inc. "Sub-License Agreement" is currently limited
to Enviro Recycling GmbH to be built by the Company in or near the town of
Merkers Germany and terminates on December 31, 2017. This termination date
coincides with the term of the Agreement between CANMET and PED. The rights
of the Company, in utilizing the proprietary process of waste oil
processing, is subject to the terms and conditions of the Agreement between
CANMET and PED. In the event of a termination of the rights of PED by
CANMET, then the Company's rights could concurrently be terminated.
The company also seeks to protect its intellectual property rights by
limiting access to the distribution of its documentation and other
proprietary information. In addition, the Company enters into
confidentiality agreements with its employees and certain customers,
vendors and strategic partners. There can be no assurance that the steps
taken by the Company in this regard will be adequate to prevent
misappropriation of its technology or that the Company's competitors will
not independently develop technologies that are substantially equivalent or
superior to the Company's technologies.
<PAGE>
Employees
As of December 31, 1998, the Company had 3 employees. All employees
are located at the Company's headquarters in Alberta, Canada. None of the
Company's employees are subject to any collective bargaining agreement.
The Company's proposed personnel structure can be divided into three
broad categories: management and professional, administrative, and project
personnel. As in most small Company's, the divisions between these three
categories are somewhat indistinct, as employees are engaged in various
functions as projects and work load demands.
The Company is dependent upon Harold Jahn, President, Chief Executive
Officer, and Secretary Treasurer of the Company, Lew Mansell, Senior Vice
President, and Garry R. Knull, Chief Financial Officer, both
internationally and nationally. The Company has entered into employment
agreements with Mr. Jahn, and when funded intends to apply for key man life
insurance on the lives of Mr. Jahn, and Mr. Mansell in the amount of
$1,000,000 each. The Company's future success also depends on its ability
to attract and retain other qualified personnel, for which competition is
intense. The loss of Mr. Jahn, Mr. Mansell, and the other individuals
involved in key management positions, or the Company's inability to attract
and retain other qualified employees could have material adverse effect on
the Company.
Business Outlook
This Form 10-SB includes "forward-looking statements" within the
meaning of the "safe-harbor" provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are based on management's
current expectations and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from
those described in the forward looking statements. All statements, other
than statements of historical facts included in this Form, including
without limitation, statements under "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business," regarding
the Company's financial position, business strategy, and plans and
objectives of management of the Company for future operations, are forward-
looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from
the Company's expectations ("Cautionary Statements") are disclosed
elsewhere in this Form, including without limitation in conjunction with
the forward-looking statements included in this Form. All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by
the Cautionary Statements.
<PAGE>
Risks Associated with Year 2000 Problem
In less than one year, computer systems and/or software used by many
Company's may need to be upgraded to accept four digit entries to
distinguish 21st century dates from 20th century dates. As is the case with
most other Company's using computers in their operations, the Company
recognizes the need to ensure that its operations will not be adversely
impacted by software and/or system failures related to such "Year 2000"
noncompliance. Within the past twelve months, the Company has been
upgrading components of its own internal computer and related information
and operational systems and continues to assess the need for further system
redesign and believes it is taking the appropriate steps to ensure Year
2000 compliance. Based on information currently available, the Company
believes that the costs associated with Year 2000 compliance, and the
consequences of incomplete or untimely resolution of the Year 2000 problem,
will not have a material adverse effect on the Company's business,
financial condition and results of operations in any given year. However,
even if the internal systems of the Company are not materially affected by
the Year 2000problem, the Company's business, financial condition and
results of operations could be materially adversely affected through
disruption in the operation of the enterprises with which the Company
interacts. There can be no assurance that third party computer products
used by the Company are Year 2000 compliant. Further, even though the
Company believes that its current products are Year2000 compliant, there
can be no assurance that under actual conditions such products will perform
as expected or that future products will be Year 2000compliant.
Any failure of the Company's products to be Year 2000 compliant could
result in the loss of or delay in market acceptance of the Company's
products and services, increased service and warranty costs to the Company
or payment by the Company of compensatory or other damages which could have
a material adverse effect on the Company's business, financial condition
and results of operations.
Additional Information
The Company intends to provide an annual report to its security
holders, and to make quarterly reports available for inspection by its
security holders. The annual report will include audited financial
statements.
Concurrent with this filing and upon its effectiveness, the Company
will be subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith,
will file reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected at public reference facilities of the Commission at Judiciary
Plaza, 450 Fifth Street N.W., Washington D.C. 20549; Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; 7
World Trade Center, New York, New York, 10048; and 5670 Wilshire Boulevard,
Los Angeles, California90036. Copies of such material can be obtained from
the Public Reference Section of the Commission at Judiciary Plaza, 450
Fifth Street N.W., Washington, D.C.20549 at prescribed rates.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Following discussion should be read in conjunction
with, and is qualified in its entirety by the Financial Statements section
included below.
With the exception of historical matters, the matters discussed herein
are forward looking statements that involve risks and uncertainties.
Forward looking statements include, but are not limited to, statements
concerning anticipated trends in revenues and net income, the date of
introduction or completion of the Company's products, projections
concerning operations and available cash flow. The Company's actual results
could differ materially from the results discussed in such forward-looking
statements. The following discussion of the Company's financial condition
and results of operations should be read in conjunction with the Company's
financial statements and the related notes thereto appearing elsewhere
herein.
Overview
The Company, which was organized in May 1998, is a Development Stage
Company, engaged in the business of commercializing innovative
technologies in the environmental, energy from waste, and alternative
power system industries. The Company has a limited operating history and
has not generated revenues from the sale of any products. The Company's
activities have been limited to start up procedures. Consequently, the
Company has incurred the expenses of start-up and licensing. Future
operating results will depend on many factors, including the ability of
the Company to raise adequate working capital, demand for the Company's
services and products, the level of competition and the Company's ability
to satisfy governmental regulations and deliver company services and
products while maintaining quality and controlling costs.
Results of Operations
Period from May 27, 1998 (Inception) to October 31, 1998
The first year of operation for the Company achieved two main goals.
The formation of the Company's organization to pursue its business strategy
and obtaining the licensing of technology required to assist in funding the
Company's objectives.
Revenues. The Company is a development stage enterprise as defined in
SFAS #7, and has yet to generate any revenues. The Company is devoting
substantially all of its present efforts to: (1) developing its management
team and administrative network, (2) developing its market, and (3)
obtaining sufficient capital to commence full operations.
General and Administrative. General and administrative, legal and
consulting expenses for the period from May, 1998 to October 31, 1998 were
$52,111, of which $18,000 was paid to a director for his services.
Liquidity and Capital Resources
Cash and cash equivalents will be increasing primarily due to
commencement of operations. The receipt of funds from Private Placement
Offerings and loans obtained through private sources by the Company are
anticipated to offset the near term cash equivalents of the Company. Since
inception, the Company has financed its cash flow requirements through
issuance of common stock, and minimal cash balances. As the Company
<PAGE>
commences operational activities, it may continue to experience net
negative cash flows from operations, pending receipt of sales revenues.
Further, the Company may be required to obtain additional financing to
fund operations through Common Stock offerings and bank borrowings, to the
extent available, or to obtain additional financing to the extent
necessary to augment its working capital.
Over the next twelve months, the Company intends to commence revenue
generation by establishing operational facilities under development in its
target markets. However, the Company will continue the research and
development of its products, increase the number of its employees, and
expand its facilities where necessary to meet development and completion
deadlines. The Company believes, that existing capital and anticipated
funds from operations will not be sufficient to sustain operations and
planned expansion in the next twelve months. Consequently, the Company will
seek additional financing in order to such additional funds will be
available or that, if available, such additional funds will be on terms
acceptable to the Company.
No assurance can be made that such financing would be available, and if
available it may take either the form of debt or equity. In either case,
the financing could have negative impact on the financial conditions of the
Company and its Shareholders.
The Company anticipates that it will incur operating losses in the next
twelve months. The Company's lack of operating history makes predictions
of future operating results difficult to ascertain. The Company's
prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by Company's in their early stage of
development, particularly Company's in new and rapidly evolving markets
such as environmental technology. Such risks for the Company include, but
are not limited to, an evolving and unpredictable business model and the
management of growth. To address these risks, the Company must, among
other things, obtain a customer base, implement and successfully execute
its business and marketing strategy, continue to develop and upgrade its
technology and products, provide superior customer services and order
fulfillment, respond to competitive developments, and attract, retain and
motivate qualified personnel. There can be no assurance that the Company
will be successful in addressing such risks, and the failure to do so can
have a material adverse effect on the Company's business prospects,
financial condition and results of operations.
Initial financing is only to provide funds to prove the business
concept and to finish the development of the environmental technology.
Additional funds will be necessary to take the product to market. The
Company hopes to enter into additional funding arrangements through
strategic partnerships, merger, equity offering or debt offering. Nothing
has been secured as of this time.
ITEM 3. DESCRIPTION OF PROPERTY
Office. The Company's main offices are located at 10240 - 124th
Street, Suite 208, Edmonton, Alberta, Canada , and its telephone
number is (780) 488-9193, Fax No. (780) 488-9100. The facility is a
leased approximately 600 square foot facility utilized in the
following manner: a) administrative offices, b) professional offices,
c) miscellaneous. The headquarters is ideal to commencement the
pursuit of marketing activity throughout North America.
<PAGE>
Technical Library - The Company maintains a technical library, which
is comprised of periodicals, trade journals, books, and other
documents related primarily to the basic sciences, government
regulations and industry materials.
Processing Plant - The manufacturing plant for the Company's products
is to be located in Merkers, Thuringia, Germany, where sufficient
processing equipment will be in place for production purposes.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners.
The following table sets forth certain information as of February 16,
1999 with respect to the beneficial ownership of Common Stock by (i) each
person who to the knowledge of the Company, beneficially owned or had the
right to acquire more than 5% of the Outstanding Common Stock, (ii) each
director of the Company and (iii) all executive officers and directors of
the Company as a group.
<TABLE>
Name of Beneficial Owner (1) Number Percent
of Shares Of Class (2)
<S> <C> <C>
Sustainable Development Group(3) 9,500,000 69%
Enviro-Mining Inc. (4) 3,260,000 24%
Jeff Lea Investments (5) 20,000 1%
------------ -----------
All Directors & Officers as a Group 12,780,000 94%
------------ -----------
</TABLE>
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security, or the sole or
shared investment power with respect to a security (i.e., the power to
dispose of, or to direct the disposition of, a security). In
addition, for purposes of this table, a person is deemed, as of any
date, to have "beneficial ownership" of any security that such person
has the right to acquire within 60 days after such date.
(2) Figures are rounded to the nearest percentage.
(3) Sustainable Development Group is controlled by Harold Jahn.
(4) Enviro-Mining Inc. is owned 50% by Harold Jahn and 50% by Lew Mansell.
(5) Jeff Lea Investments is controlled by Garry Knull.
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
Name Age Title
Harold Jahn 29 President, CEO, Secretary/Treasurer, Director
Lew Mansell 52 Senior Vice President
Garry R. Knull 52 Chief Financial Officer
Duties, Responsibilities and Experience
Harold Jahn - President and Chief Executive Officer
Mr. Jahn graduated from the University of Alberta with a BA degree in
International Relations and Economics in 1991. His education contributed
to his knowledge of business and government issues, creativity in problem
solving, strengthened concerns for sustainable development, and managing
projects in a timely manner. Following graduation Harold began a four year
career in real estate to build business contacts, and gain a solid
understanding of the private sector.
Over the past number of years, his focus has been on international
marketing and environmental technologies. In mid 1995, Enviro-Mining Inc.
was cofounded by Mr. Jahn as a solution for recycling needs in the tire
industry. Its mission has expanded, developing a broader recycling mandate
internationally with the inclusion of innovative technologies in power
generation and mining equipment worldwide.
Mr. Jahn continues to be involved in numerous business activities in
Canada, the United States, and Europe related to recycling, the
environment, and the alternative energy industry.
Lew Mansell - Senior Vice President
Mr. Mansell graduated with a B.Sc. in chemistry in 1968, and brings over 25
years of management skills to this position. His experience includes
polymer research, industrial sales and services in the manufacturing,
petrochemical, and corrosion industry. Since 1978, he has successfully
turned around several Company's implementing new quality control systems,
and production procedures. The marketing and commercialization of
innovative technologies became his focus from 1990.
The opportunity to build, own, and operate sustainable business projects
was created with the co-founding of Enviro-Mining Inc. His involvement
with SDI allows his talents to excel as SDI seeks leading edge
opportunities to recycle oils, plastics, and tires. Developing new ideas
for sustainable development extends into alternative energy, mineral
processing, and construction materials.
<PAGE>
Garry R. Knull - Chief Financial Officer
Garry R. Knull, CA is the senior partner in a professional accounting
practice and has been in practice for over 25 years. He has been involved
in corporate and commercial accounting, auditing and providing financial
and taxation advice to a variety of clients. He is also Chief Financial
Officer of a midsize oilfield manufacturing and supply company.
Compensation Committee Interlocks and Insider Participation
The Company does not currently have a compensation committee of the
Board of Directors. However, the Board of Directors intends to establish a
compensation committee which is expected to consist of three inside
directors and the two independent members of the Board of Directors.
Stock Option Plan and Non-Employee Directors' Plan
The following descriptions apply to stock option plans, which the
Company has adopted; however, no options have been granted as of this date.
The Company intends to reserve for issuance an aggregate of 1,000,000
shares of Common Stock under a Stock Option Plan (the "Stock Option Plan")
and Non-Employee Directors' Plan described below (the "Directors' Plan")
which is planned to be adopted by the Company. These plans are intended to
encourage directors, officers, employees and consultants of the Company to
acquire ownership of Common Stock. The opportunity is intended to foster
in participants a strong incentive to put forth maximum effort for the
continued success and growth of the Company, to aid in retaining
individuals who put forth such efforts, and to assist in attracting the
best available individuals to the Company in the future.
Stock Option Plan
Officers (including officers who are members of the Board of
Directors), directors (other than members of the Stock Option Committee
(the "Committee") to be established to administer the Stock Option Plan and
the Directors' Plan) and other employees and consultants of the Company and
its subsidiaries (if established) will be eligible to receive options under
a the planned Stock Option Plan. The Committee will administer the Stock
Option Plan and will determine those persons to whom options will be
granted, the number of options to be granted, the provisions applicable to
each grant and the time periods during which the options may be exercised.
No options may be granted more than ten years after the date of the
adoption of the Stock Option Plan.
Unless the Committee, in its discretion, determines otherwise, non-
qualified stock options will be granted with an option price equal to the
fair market value of the shares of Common Stock to which the non-qualified
stock option relates on the date of grant. In no event may the option
price with respect to an incentive stock option granted under the Stock
Option Plan be less than the fair market value of such Common Stock to
which the incentive stock option relates on the date the incentive stock
option is granted.
Each option granted under the Stock Option Plan will be exercisable
for a term of not more than ten years after the date of grant. Certain
other restrictions will apply in connection with this Plan when some awards
may be exercised. In the event of a change of control (as defined in the
Stock Option Plan), the date on which all options outstanding under the
Stock Option Plan may first be exercised will be accelerated. Generally,
all options terminate 90 days after a change of control.
<PAGE>
Directors Plan
The Directors' Plan is intended to:
* Enable the Company to secure persons of requisite business experience
to serve on the Board of Directors,
* To motivate directors to enhance the future growth of the Company by
furthering their identification with the interests of the Company and its
stockholders, and
* To assist in retaining directors.
The Directors' Plan will provide for the grant of stock options to
persons who are members of the Board of Directors and who at the time they
joined the Board of Directors were not employees of the Company or any of
its affiliates ("Non-Employee Directors"). The Committee will administer
the Directors' Plan. Each of the Non-Employee Directors will receive an
option to purchase shares of Common Stock. Such options will vest in three
equal annual installments commencing on the first anniversary of such Non-
Employee Director's election. Options granted under the Directors' Plan may
not be exercised more than five years after the date of grant. No option
may be granted more than ten years after the date of the adoption of the
Directors' Plan. In the event of a change of control (as defined in the
Directors' Plan), the date on which all options outstanding under the
Directors' Plan may first be exercised is accelerated. Generally, all
options will terminate 90 days after a change of control.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth the cash compensation of the Company's
executive officers and directors during each of the fiscal years since
inception of the Company. The remuneration described in the table does not
include the cost to the Company of benefits furnished to the named
executive officers, including premiums for health insurance and other
benefits provided to such individual that are extended in connection with
the conduct of the Company's business. The value of such benefits cannot be
precisely determined, but the executive officers named below did not
receive other compensation in excess of the lesser of $50,000 or 10% of
such officer's cash compensation.
Summary Compensation Table
<TABLE>
Long Term
Annual Compensation Compensation
Name and Other Annual Restricted
Principal Year Salary Bonus Compensation stock Options Others
Position
<S> <C> <C> <C> <C> <C> <C> <C>
Harold 1998 $24,000
Jann
Lew
Mansell
Garry R.
Knull
</TABLE>
Compensation of Directors
All directors will be reimbursed for expenses incurred in attending
Board or committee meetings.
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
License Agreement. On June 11, 1998, the Company entered into a
license agreement ("Limited Technology License Agreement") with Enviro-
Mining Inc. regarding the licensing of the Company by Enviro-Mining, Inc.
to use certain patented technology in connection with the recycling of
waste oil into low sulphur diesel.
The license is for a period of thirty (30) years commencing on June
11, 1998, with renewable 10 year terms. The Limited Technology License
Agreement requires the payment of certain minimal annualized payments, and
in the event of default in the payments, the Company could lose its rights
to continue utilizing the technology. Further, the Limited Technology
License Agreement provides that the Company "must commence construction in
the first twelve (12) months of this agreement, a plant of minimum
capacity of 90,000 tons of waste oil input in the Territory." The
agreement, dated June 11, 1998, further states that it shall be just cause
for termination of the Licensee of all license and marketing rights if the
Company has not commenced construction of the first plant within the first
year of the license agreement, and an additional commercial scale plant
every yea thereafter for the next 5 years.
Enviro-Mining, Inc. Harold Jahn, President and CEO of the Company, and Lew
Mansell, Senior Vice President of the Company, are joint owners of Enviro-
Mining, Inc.
Sustainable Development Group Harold Jahn, President and CEO of the
Company, and Lew Mansell, Senior Vice President of the Company, are joint
owners of Sustainable Development Group.
ITEM 8. LEGAL PROCEEDINGS
The Company is not presently a party to any litigation, nor to the
knowledge of management is any litigation threatened against the Company,
which would materially affect the Company.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Prior to this filing there has not been a public market for the
Company's Common Stock, and there can be no assurance that a public market
for the Common Stock will develop or be sustained after this filing. The
trading price of the Company's Common Stock could be subject to wide
fluctuations in response to quarterly variations in operating results,
announcement of technological innovations or new products by the Company
or its competitors, and other events or factors. In addition, in recent
years the stock market has experienced extreme price and volume
fluctuations that have had a substantial effect on the market prices for
many emerging growth Company's, which may be unrelated to the operating
performance of the specific Company's.
The Company's shares of Common Stock are not registered with the U.S.
Securities and Exchange Commission under the Securities Act of 1933, as
amended (hereinafter referred to as the "Act"), and with the exception of
certain shares issued pursuant to Regulation D-504, are "restricted
securities." Rule 144 of the Act provides, in essence, that holders of
restricted securities for a period of one year (unless an affiliate of the
Company) may, every three months, sell to a market maker or in ordinary
brokerage transactions an amount equal to one percent of the Company's then
<PAGE>
outstanding securities. Affiliates may be required to hold for two years.
Non-affiliates of the Company who hold restricted securities for a period
of two years may sell their securities without regard to volume limitations
or other restriction. A total of 956,200 shares are unrestricted and the
balance of 12,760,800 shares of Common Stock will be available for resale
under Rule 144 commencing in 1999. Sales of shares of Common Stock under
Rule 144 may have a depressive effect on the market price of the Company's
Common Stock, should a public market develop for such stock. Such sales
might also impede future financing by the Company.
Since its inception in May 1998, the Company has not paid cash
dividends on its Common Stock. It is the present policy of the Company not
to pay cash dividends and to retain future earnings to support the
Company's growth. Any payments of cash dividends in the future will be
dependent upon, among other things, the amount of funds available
therefore, the Company's earnings, financial condition, capital
requirements, and other factors which the Board of Directors deem relevant.
As of December 31, 1998 there were approximately 53 Common
Shareholders of record.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Private Placements. In June 1998, the Company completed an exempt
placement of securities of $500,000 of common stock, pursuant to Regulation
D 504 of the Securities Act of 1933. In October 1998, the Company
completed an exempt placement of securities of $200,000 of common stock,
pursuant to Regulation D 504 of the Securities Act of 1933.
ITEM 11. DESCRIPTION OF SECURITIES
Common Stock
The Company's Articles of Incorporation authorizes the issuance of
50,000,000 shares of common stock, $0.001 par value per share, of which
13,720,000 shares were outstanding as of the date of this filing. Holders
of shares of common stock are entitled to one vote for each share on all
matters to be voted on by the stockholders and have no cumulative voting
rights. Holders of shares of common stock are entitled to share ratably in
dividends, if any, as may be declared, from time to time by the Board of
Directors in its discretion, from funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, the
holders of shares of common stock are entitled to share pro rata all
assets remaining after payment in full of all liabilities. Holders of
common stock have no preemptive rights to purchase the Company's common
stock. There are no conversion rights or redemption or sinking fund
provisions with respect to the common stock. All of the outstanding shares
of common stock are validly issued, fully paid and non-assessable.
Preferred Stock
The Company's Articles of Incorporation authorizes the issuance of
10,000,000 shares of preferred stock, $0.001 par value per share, of which
no shares were outstanding as of the date of this filing. The Preferred
Stock may be issued from time to time by the Board of Directors as shares
of one or more classes or series. Subject to the provisions of the
Company's Certificate of Incorporation and limitations imposed by law, the
Board of Directors is expressly authorized to adopt resolutions to issue
the shares, to fix the number of shares and to change the number of shares
constituting any series, and to provide for or change the voting powers,
designations, preferences and relative, participating, optional or other
special rights, qualifications, limitations or restrictions thereof,
including dividend rights (including whether dividends are cumulative),
dividend rates, terms of redemption (including sinking fund provisions),
redemption prices, conversion rights and liquidation preferences of the
shares constituting any class or series of the Preferred Stock, in each
case without any further action or vote by the stockholders.
<PAGE>
One of the effects of undesignated Preferred Stock may be to enable
the Board of Directors to render more difficult or to discourage an attempt
to obtain control of the Company by means of a tender offer, proxy contest,
merger or otherwise, and thereby to protect the continuity of the Company's
management. The issuance of shares of Preferred Stock pursuant to the Board
of Director's authority described above may adversely affect the rights of
holders of Common Stock. For example, Preferred stock issued by the Company
may rank prior to the Common Stock as to dividend rights, liquidation
preference or both, may have full or limited voting rights and may be
convertible into shares of Common Stock. Accordingly, the issuance of
shares of Preferred Stock may discourage bids for the Common Stock at a
premium or may otherwise adversely affect the market price of the Common
Stock.
Dividend Policy
The Company has never declared or paid cash dividends on its Common
Stock. The Company currently anticipates that it will retain all future
earnings for use in the operation and expansion of its business and does
not anticipate paying any cash dividends in the foreseeable future.
Transfer Agent
The transfer agent for the common stock is Pacific Stock Transfer,
5844 South Pecos Road, Suite D, Las Vegas, Nevada 89120.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation for the Company do not contain provisions for
indemnification of the officers and directors; however, Section 78.751 of
the Nevada General Corporation Laws provides as follows:
78.751 Indemnification of officers, directors, employees and agents;
advance of expenses.
1. A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorney's fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the action, suit
or proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
<PAGE>
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding,
he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually
and reasonably incurred by him in connection with the defense or settlement
of the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or
matter as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or suit
was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such expenses as the
court deems proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections 1 and 2, or in
defense of any claim, issue or matter therein, he must be indemnified by
the corporation against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by
a court or advanced pursuant to subsection 5, must be made by the
corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper
in the circumstances. The determination must be made:
(a) By the stockholders:
(b) By the board of directors by majority vote of a quorum consisting o
directors who were not parties to act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the act, suit or proceeding so orders, by independent legal
counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the act,
suit or proceeding cannot to obtained, by independent legal counsel in a
written opinion; or
5. The articles of incorporation, the bylaws or an agreement made by
the corporation may provide that the expenses of officers and directors
incurred in defending a civil or criminal, suit or proceeding must be paid
by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he
is not entitled to be indemnified by corporation. The provisions of this
subsection do not affect any rights to advancement of expenses to which
corporate personnel other than the directors or officers may be entitled
under any contract or otherwise by law.
<PAGE>
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
articles of incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his office, except
that indemnification, unless ordered by a court pursuant to subsection 2 or
for the advancement of expenses made pursuant to subsection 5, may not be
made to or on behalf of any director or officer if a final adjudication
establishes that his act or omissions involved intentional misconduct,
fraud or a knowing violation of the law and was material to the cause of
action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
ITEM 13. FINANCIAL STATEMENTS
The 1998 Audited Financial Statement of the Company, prepared by the
Accounting Firm of Grant Thornton, required by Regulation S-X commence on
page F-1 hereof in response to Item 13 of this Registration Statement on
Form 10SB and are incorporated herein by this reference.
Audited Financial Statements of Sustainable Development International, Inc.
Independent Auditors' Report F-1
Statement of Loss and Deficit for the
period ended October 31, 1998 F-2
Balance Sheet as of October 31, 1998 F-3
Statements of Changes in Financial Position
Period Ended October 31, 1998 F-4
Notes to Financial Statements F-5-F-7
<PAGE>
Chartered Accountants
Canadian Member Firm of
Grant Thornton International
Auditors' Report
To the Shareholders of
Sustainable Development International Inc.
We have audited the balance sheet of Sustainable Development
International Inc. as at October 31, 1998 and the statement of
loss and deficit and changes in financial position for the period
then ended. These financial statements are the responsibility of
the company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are
free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the company as at
October 31, 1998 and the results of its operations and changes in
its financial position for the period then ended in accordance
with generally accepted accounting principles.
Edmonton, Canada
November 6, 1998 Chartered Accountants
<PAGE>
<TABLE>
Sustainable Development International Inc.
Statement of Loss and Deficit
(Expressed in United States Dollars)
Period Ended October 31, 1998 (157 days)
<S> <C>
Expenses
Advertising $ 150
Amortization 4,167
Consulting fees 23,401
Management fees (Note 5) 18,000
Professional fees 4,988
Service Charges 455
Travel 950
-----------
(52,111)
-----------
Net loss and deficit, end of period $ (52,111)
===========
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
<TABLE>
Sustainable Development International Inc.
Balance Sheet
(Expressed in United States Dollars)
October 31, 1998
<S> <C>
Assets
Current
Cash $ 330,053
Licensing agreement (Note 2) 295,833
-----------
$ 625,886
===========
</TABLE>
<TABLE>
<S> <C>
Liabilities
Current
Payables and accruals $ 13,989
-----------
Shareholder's Equity
Capital stock (Note 4) 664,008
Deficit (52,111)
-----------
611,897
-----------
$ 625,886
============
</TABLE>
Commitment (Note 3)
On behalf of the Board
_____________________ Director
See accompanying notes to the financial statements.
<PAGE>
<TABLE>
Sustainable Development International Inc.
Statement of Changes in Financial Position
(Expressed in United States Dollars)
Period Ended October 31, 1998 (157 days)
<S> <C>
Cash derived from (applied to):
Operating
Net loss $ (52,111)
Amortization 4,167
Change in non-cash operating
working capital:
Payables and accruals 13,989
------------
(33,955)
Financing
Issuance of capital stock 664,008
Investing
Purchase of licensing agreement (300,000)
------------
Net increase in cash and balance, end of period $ 330,053
============
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
Sustainable Development International Inc.
Notes to the Financial Statements
(Expressed in United States Dollars)
October 31, 1998
1. Commencement of operations
Sustainable Development International, Inc., a Nevada corporation, is a
development stage company formed on May 27, 1998 to encourage sustainable
development by commercializing innovative technologies in environmental
industries.
The company's goal is to acquire technology rights and licenses from patent
holders for proven technologies, then secure a market, and finally raise
the necessary capital to build, own, and operate facilities throughout the
world.
2. Significant accounting policies
Basis of presentation
The company's accounting and reporting policies conform to generally
accepted accounting principles and industry practice in the United States.
The amounts are reported in these financial statements are in United States
dollars.
Use of estimates
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the amounts of revenues and expenses for the
reported period. Actual results could differ from those estimates.
Licensing agreement
Licensing agreements are recorded at cost. Licensing agreements are
assessed for future recoverability or impairment on an annual basis by
estimating future net undiscounted cash flows and residual values or by
estimating replacement or appraised values. If the net carrying amount of
the licensing agreement exceeds the estimated net recoverable amount, the
agreement is written down with a charge against income.
Amortization of licensing agreements is being recorded in the financial
statements on a straight-line basis over the life of the agreement, which
is 30 years.
3. Licensing agreement 1998
Licensing agreement $ 300,000
On June 11, 1998 Sustainable Development International Inc. entered into a
Limited Technology License Agreement with Enviro-Mining Inc., an Alberta,
Canada Corporation. The Agreement commits Sustainable Development
International Inc. to pay an amount equal to or less than $300,000 to
Enviro-Mining Inc. as a production royalty.
The Agreement could be terminated if Sustainable Development International
Inc. does not commence construction within the first twelve months of the
agreement, at a minimum plant capacity of 90,000 Tonnes of waste oil input.
<PAGE>
<TABLE>
Sustainable Development International Inc.
Notes to the Financial Statements
(Expressed in United States Dollars)
October 31, 1998
4. Capital stock
<S> <C>
Authorized:
50,000,000 Common voting shares, $.001 par value
10,000,000 Preferred shares
Issued:
13,700,000 Common voting shares $ 13,700
Additional paid in capital 650,308
------------
$ 664,008
============
</TABLE>
<TABLE>
During the period, the company had the following
share transactions:
Shares $
<S> <C> <C>
Shares issued to founding shareholders, May
1998. 11,500,000 $ 8
Common shares issued for transfer of Licensing
Agreement at $0.25 per share, June 1998. 1,200,000 300,000
Common shares issued for cash consideration of
$0.25 per share by private placement,
September 1998. 706,596 176,649
Common shares issued for services at $0.25
per share, June 1998 to October 1998. 93,404 23,351
Common share issued for cash consideration of
$1.00 per share by private placement,
October 1998. 200,000 200,000
------------ ----------
13,700,000 700,008
Expenses on issuance of share capital. - (36,000)
------------ ----------
13,700,000 $ 664,008
============ ===========
</TABLE>
<PAGE>
Sustainable Development International Inc.
Notes to the Financial Statements
(Expressed in United States Dollars)
October 31, 1998
5. Related party transactions
a) During the year, Enviro Mining Inc., a shareholder of the company, sold
to the company a Licensing Agreement for $300,000.
b) During the year, management fees were paid to the director of the
company totaling $18,000.
6. Uncertainty due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect an entity's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the company,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
<PAGE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has not had any changes in or disagreements with Accountants
since inception.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
Exhibit Description
Number
<S> <C>
(3)(i)* Articles of Incorporation
(a) Articles of Incorporation, as amended for Sustainable
Development International, Inc., a Nevada corporation
(3)(ii)* Bylaws
(a) Bylaws, as amended for Sustainable Development
International, Inc., a Nevada corporation
(4)* Instruments defining the rights of security holders:
(4)(i)* (a) Articles of Incorporation for Sustainable Development
International, Inc., a Nevada Corporation
(b) Bylaws of Sustainable Development International, Inc.,
a Nevada Corporation
(c) Stock Certificate specimen
(10)(i)* Material Contracts
(a) Limited Technology License Agreement
(b) Power Purchase Agreement -German State Electrical
Utility
(24)* Consents of expert
(a) Grant Thornton - Auditors
(27)* Financial Data Schedule
*Filed herewith.
</TABLE>
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
February 17, 1999 SUSTAINABLE DEVELOPMENT
INTERNATIONAL, INC.
(Registrant)
By: /S/ Harold Jahn
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Harold Jahn Chairman, CEO, President February 17, 1999
Harold Jahn
/s/ Lew Mansell Senior Vice President, February 17, 1999
Lew Mansell Director
/s/ Garry R. Knull Treasurer, CFO February 17, 1999
Garry R. Knull
ARTICLES OF INCORPORATION
OF
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC.
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, being at least eighteen (18) years of age and
acting as the incorporator of the Corporation hereby being formed under and
pursuant to the laws of the State of Nevada, does hereby certify that:
Article I - NAME
The exact name of this corporation is:
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC.
Article II - REGISTERED OFFICE AND RESIDENT AGENT
The registered office and place of business in the State of
Nevada of this corporation shall be located at 1850 E. Flamingo Rd., Suite
111, Las Vegas, Nevada. The resident agent of the corporation is DONALD J.
STOECKLEIN, whose address is 1850 E. Flamingo Rd., Suite 111, Las Vegas,
Nevada 89119.
Article III - DURATION
The Corporation shall have perpetual existence.
Article IV - PURPOSES
The purpose, object and nature of the business for which this
corporation is organized are:
(a) To engage in any lawful activity, (b) To carry on such
business as may be necessary, convenient, or desirable to accomplish
the above purposes, and to do all other things incidental thereto
which are not forbidden by law or by these Articles of Incorporation.
<PAGE>
Article V - POWERS
This Corporation is formed pursuant to Chapter 78 of the Nevada
Revised Statutes. The powers of the Corporation shall be those powers
granted by 78.060 and 78.070 of the Nevada Revised Statutes under which
this corporation is formed. In addition, the corporation shall have the
following specific powers:
(a) To elect or appoint officers and agents of the corporation
and to fix their compensation; (b) To act as an agent for any
individual, association, partnership, corporation or other legal
entity; (c) To receive, acquire, hold, exercise rights arising out of
the ownership or possession thereof, sell, or otherwise dispose of,
shares or other interests in, or obligations of, individuals,
association, partnerships, corporations, or governments; (d) To
receive, acquire, hold, pledge, transfer, or otherwise dispose of
shares of the corporation, but such shares may only be purchased,
directly or indirectly, out of earned surplus; (e) To make gifts or
contributions for the public welfare or for charitable, scientific or
educational purposes.
Article VI - CAPITAL STOCK
Section 1. Authorized Shares. The total number of shares which
this corporation is authorized to issue is 50,000,00 shares of Common
Stock of $.001 par value and 10,000,000 shares of Preferred Stock of
$.001 par value.
Section 2. Voting Rights of Stockholders. Each holder of the
Common Stock shall be entitled to one vote for each share of stock
standing in his name on the books of the corporation.
<PAGE>
Section 3. Consideration for Shares. The Common Stock shall be
issued for such consideration, as shall be fixed from time to time by
the Board of Directors. In the absence of fraud, the judgment of the
Directors as to the value of any property or services received in full
or partial payment for shares shall be conclusive. When shares are
issued upon payment of the consideration fixed by the Board of
Directors, such shares shall be taken to be fully paid stock and shall
be non-assessable. The Articles shall not be amended in this
particular.
Section 4. Stock Rights and Options. The corporation shall have
the power to create and issue rights, warrants, or options entitling
the holders thereof to purchase from the corporation any shares of its
capital stock of any class or classes, upon such terms and conditions
and at such times and prices as the Board of Directors may provide,
which terms and conditions shall be incorporated in an instrument or
instruments evidencing such rights. In the absence of fraud, the
judgment of the Directors as to the adequacy of consideration for the
issuance of such rights or options and the sufficiency thereof shall
be conclusive.
Article VII - MANAGEMENT
For the management of the business, and for the conduct of the affairs
of the corporation, and for the future definition, limitation, and
regulation of the powers of the corporation and its directors and
stockholders, it is further provided:
Section 1. Size of Board. The initial number of the Board of
Directors shall be one (1). Thereafter, the number of directors shall
be as specified in the Bylaws of the corporation, and such number may
<PAGE>
from time to time be increased or decreased in such manner as
prescribed by the Bylaws. Directors need not be stockholders.
Section 2. Powers of Board. In furtherance and not in
limitation of the powers conferred by the laws of the State of Nevada,
the Board of Directors is expressly authorized and empowered:
(a) To make, alter, amend, and repeal the Bylaws subject to the
power of the stockholders to alter or repeal the Bylaws made by the
Board of Directors;
(b) Subject to the applicable provisions of the Bylaws then in
effect, to determine, from time to time, whether and to what extent,
and at what times and places, and under what conditions and
regulations, the accounts and books of the corporation, or any of
them, shall be open to stockholder inspection. No stockholder shall
have any right to inspect any of the accounts, books or documents of
the corporation, except as permitted by law, unless and until
authorized to do so by resolution of the Board of Directors or of the
stockholders of the Corporation;
(c) To authorize and issue, without stockholder consent,
obligations of the Corporation, secured and unsecured, under such
terms and conditions as the Board, in its sole discretion, may
determine, and to pledge or mortgage, as security therefore, any real
or personal property of the corporation, including after-acquired
property;
(d) To determine whether any and, if so, what part of the earned
surplus of the corporation shall be paid in dividends to the
stockholders, and to direct and determine other use and disposition of
any such earned surplus;
(e) To fix, from time to time, the amount of the profits of the
corporation to be reserved as working capital or for any other lawful
purpose;
<PAGE>
(f) To establish bonus, profit-sharing, stock option, or other
types of incentive compensation plans for the employees, including
officers and directors, of the corporation, and to fix the amount of
profits to be shared or distributed, and to determine the persons to
participate in any such plans and the amount of their respective
participations.
(g) To designate, by resolution or resolutions passed by a
majority of the whole Board, one or more committees, each consisting
of two or more directors, which, to the extent permitted by law and
authorized by the resolution or the Bylaws, shall have and may
exercise the powers of the Board;
(h) To provide for the reasonable compensation of its own
members by Bylaw, and to fix the terms and conditions upon which such
compensation will be paid;
(i) In addition to the powers and authority hereinbefore, or by
statute, expressly conferred upon it, the Board of Directors may
exercise all such powers and do all such acts and things as may be
exercised or done by the corporation, subject, nevertheless, to the
provisions of the laws of the State of Nevada, of these Articles of
Incorporation, and of the Bylaws of the corporation.
Section 3. Interested Directors. No contract or transaction
between this corporation and any of its directors, or between this
corporation and any other corporation, firm, association, or other
legal entity shall be invalidated by reason of the fact that the
director of the corporation has a direct or indirect interest,
pecuniary or otherwise, in such corporation, firm, association, or
legal entity, or because the interested director was present at the
meeting of the Board of Directors which acted upon or in reference to
such contract or transaction, or because he participated in such
action, provided that: (1) the interest of each such director shall
<PAGE>
have been disclosed to or known by the Board and a disinterested
majority of the Board shall have, nonetheless, ratified and approved
such contract or transaction (such interested director or directors
may be counted in determining whether a quorum is present for the
meeting at which such ratification or approval is given); or (2) the
conditions of N.R.S. 78.140 are met.
Section 4. Name and Address. The name and post office address
of the first Board of Directors which shall consist of one (1) person
who shall hold office until his successors are duly elected and
qualified, are as follows:
NAME ADDRESS
HAROLD JAHN 1850 E. Flamingo Road,
Suite 111
Las Vegas, Nevada 89119
Article VIII - PLACE OF MEETING; CORPORATE BOOKS
Subject to the laws of the State of Nevada, the stockholders and the
directors shall have power to hold their meetings, and the directors shall
have power to have an office or offices and to maintain the books of the
Corporation outside the State of Nevada, at such place or places as may
from time to time be designated in the Bylaws or by appropriate resolution.
Article IX - AMENDMENT OF ARTICLES
The provisions of these Articles of Incorporation may be amended,
altered or repealed from time to time to the extent and in the manner
prescribed by the laws of the State of Nevada, and additional provisions
authorized by such laws as are then in force may be added. All rights
herein conferred on the directors, officers and stockholders are granted
subject to this reservation.
<PAGE>
Article X - INCORPORATOR
The name and address of the incorporator signing these Articles of
Incorporation are as follows:
NAME POST OFFICE ADDRESS
HAROLD JAHN 1850 E. Flamingo Road,
Suite 111
Las Vegas, Nevada 89119
Article XI - LIMITED LIABILITY OF OFFICERS AND DIRECTORS
Except as hereinafter provided, the officers and directors of the
corporation shall not be personally liable to the corporation or its
stockholders for damages for breach of fiduciary duty as a director or
officer. This limitation on personal liability shall not apply to acts or
omissions which involve intentional misconduct, fraud, knowing violation of
law, or unlawful distributions prohibited by Nevada Revised Statutes
Section 78.300.
IN WITNESS WHEREOF, the undersigned incorporator has executed
these Articles of Incorporation this 27th day of May, 1998.
/s/ Harold Jahn
--------------------------
HAROLD JAHN
STATE OF NEVADA )
) ss:
COUNTY OF CLARK )
On May 27, 1998, personally appeared before me, a Notary Public,
HAROLD JAHN, who acknowledged to me that he executed the foregoing Articles
of Incorporation.
/s/ Debra K. Amigone
---------------------------
NOTARY PUBLIC
BYLAWS
OF
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC.,
a Nevada corporation
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICES. The principal office shall be
in the City of Las Vegas, County of Clark, State of Nevada.
Section 2. OTHER OFFICES. The board of directors may at any
time establish branch or subordinate offices at any place or places where
the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of stockholders shall
be held at any place within or without the State of Nevada designated by
the board of directors. In the absence of any such designation,
stockholders' meetings shall be held at the principal executive office of
the corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of
stockholders shall be held at a date and time designated by the board of
directors. (At such meetings, directors shall be elected and any other
proper business may be transacted by a plurality vote of stockholders.)
Section 3. SPECIAL MEETINGS. A special meeting of the
stockholders, for any purpose or purposes whatsoever, unless prescribed by
statute or by the articles of incorporation, may be called at any time by
the president and shall be called by the president or secretary at the
request in writing of a majority of the board of directors, or at the
request in writing of stockholders holding shares in the aggregate entitled
to cast not less than a majority of the votes at any such meeting.
The request shall be in writing, specifying the time of such
meeting, the place where it is to be held and the general nature of the
business proposed to be transacted, and shall be delivered personally or
sent by registered mail or by telegraphic or other facsimile transmission
to the chairman of the board, the president, any vice president or the
secretary of the corporation. The officer receiving such request forthwith
shall cause notice to be given to the stockholders entitled to vote, in
accordance with the provisions of Sections 4 and 5 of this Article II, that
a meeting will be held at the time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty
(60) days after the receipt of the request. If the notice is not given
within twenty (20) days after receipt of the request, the person or persons
requesting the meeting may give the notice. Nothing contained in this
paragraph of this Section 3 shall be construed as limiting, fixing or
affecting the time when a meeting of stockholders called by action of the
board of directors may be held.
Section 4. NOTICE OF STOCKHOLDERS' MEETINGS. All notices of
meetings of stockholders shall be sent or otherwise given in accordance
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with Section 5 of this Article II not less than ten (10) nor more than
sixty (60) days before the date of the meeting being noticed. The notice
shall specify the place, date and hour of the meeting and (i) in the case
of a special meeting the general nature of the business to be transacted,
or (ii) in the case of the annual meeting those matters which the board of
directors, at the time of giving the notice, intends to present for action
by the stockholders. The notice of any meeting at which directors are to
be elected shall include the name of any nominee or nominees which, at the
time of the notice, management intends to present for election.
If action is proposed to be taken at any meeting for approval of
(i) contracts or transactions in which a director has a direct or indirect
financial interest, (ii) an amendment to the articles of incorporation,
(iii) a reorganization of the corporation, (iv) dissolution of the
corporation, or (v) a distribution to preferred stockholders, the notice
shall also state the general nature of such proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
Notice of any meeting of stockholders shall be given either personally or
by first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the stockholder at the address of such stockholder
appearing on the books of the corporation or given by the stockholder to
the corporation for the purpose of notice. If no such address appears on
the corporation's books or is given, notice shall be deemed to have been
given if sent by mail or telegram to the corporation's principal executive
office, or if published at least once in a newspaper of general circulation
in the county where this office is located. Personal delivery of any such
notice to any officer of a corporation or association or to any member of a
partnership shall constitute delivery of such notice to such corporation,
association or partnership. Notice shall be deemed to have been given at
the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication. In the event of the
transfer of stock after delivery or mailing of the notice of and prior to
the holding of the meeting, it shall not be necessary to deliver or mail
notice of the meeting to the transferee.
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If any notice addressed to a stockholder at the address of such
stockholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the
stockholder at such address, all future notices or reports shall be deemed
to have been duly given without further mailing if the same shall be
available to the stockholder upon written demand of the stockholder at the
principal executive office of the corporation for a period of one year from
the date of the giving of such notice.
An affidavit of the mailing or other means of giving any notice
of any stockholders' meeting shall be executed by the secretary, assistant
secretary or any transfer agent of the corporation giving such notice, and
shall be filed and maintained in the minute book of the corporation.
Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 6. QUORUM. The presence in person or by proxy of the
holders of a majority of the shares entitled to vote at any meeting of
stockholders shall constitute a quorum for the transaction of business,
except as otherwise provided by statute or the articles of incorporation.
The stockholders present at a duly called or held meeting at which a quorum
is present may continue to do business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum, if any
action taken (other than adjournment) is approved by at least a majority of
the shares required to constitute a quorum.
Section 7. ADJOURNED MEETING AND NOTICE THEREOF. Any
stockholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of
the shares represented at such meeting, either in person or by proxy, but
in the absence of a quorum, no other business may be transacted at such
meeting.
When any meeting of stockholders, either annual or special, is
adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at a meeting
at which the adjournment is taken. At any adjourned meeting the
corporation may transact any business which might have been transacted at
the original meeting.
Section 8. VOTING. Unless a record date set for voting
purposes be fixed as provided in Section 1 of Article VII of these bylaws,
only persons in whose names shares entitled to vote stand on the stock
records of the corporation at the close of business on the business day
next preceding the day on which notice is given (or, if notice is waived,
at the close of business on the business day next preceding the day on
which the meeting is held) shall be entitled to vote at such meeting. Any
stockholder entitled to vote on any matter other than elections of
directors or officers, may vote part of the shares in favor of the proposal
<PAGE>
and refrain from voting the remaining shares or vote them against the
proposal, but, if the stockholder fails to specify the number of shares
such stockholder is voting affirmatively, it will be conclusively presumed
that the stockholder's approving vote is with respect to all shares such
stockholder is entitled to vote. Such vote may be by voice vote or by
ballot; provided, however, that all elections for directors must be by
ballot upon demand by a stockholder at any election and before the voting
begins.
When a quorum is present or represented at any meeting, the vote
of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before
such meeting, unless the question is one upon which by express provision of
the statutes or of the articles of incorporation a different vote is
required in which case such express provision shall govern and control the
decision of such question. Every stockholder of record of the corporation
shall be entitled at each meeting of stockholders to one vote for each
share of stock standing in his name on the books of the corporation.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT
STOCKHOLDERS. The transactions at any meeting of stockholders, either
annual or special, however called and noticed, and wherever held, shall be
as valid as though had at a meeting duly held after regular call and
notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting, each person entitled to vote, not present in
person or by proxy, signs a written waiver of notice or a consent to a
holding of the meeting, or an approval of the minutes thereof. The waiver
of notice or consent need not specify either the business to be transacted
or the purpose of any regular or special meeting of stockholders, except
that if action is taken or proposed to be taken for approval of any of
those matters specified in the second paragraph of Section 4 of this
Article II, the waiver of notice or consent shall state the general nature
of such proposal. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Attendance of a person at a meeting shall also constitute a
waiver of notice of such meeting, except when the person objects, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened, and except that attendance at a
meeting is not a waiver of any right to object to the consideration of
matters not included in the notice if such objection is expressly made at
the meeting.
Section 10. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
MEETING. Any action which may be taken at any annual or special meeting of
stockholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the
holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted. All
<PAGE>
such consents shall be filed with the secretary of the corporation and
shall be maintained in the corporate records. Any stockholder giving a
written consent, or the stockholder's proxy holders, or a transferee of the
shares of a personal representative of the stockholder of their respective
proxy holders, may revoke the consent by a writing received by the
secretary of the corporation prior to the time that written consents of the
number of shares required to authorize the proposed action have been filed
with the secretary.
Section 11. PROXIES. Every person entitled to vote for
directors or on any other matter shall have the right to do so either in
person or by one or more agents authorized by a written proxy signed by the
person and filed with the secretary of the corporation. A proxy shall be
deemed signed if the stockholder's name is placed on the proxy (whether by
manual signature, typewriting, telegraphic transmission or otherwise) by
the stockholder or the stockholder's attorney in fact. A validly executed
proxy which does not state that it is irrevocable shall continue in full
force and effect unless revoked by the person executing it, prior to the
vote pursuant thereto, by a writing delivered to the corporation stating
that the proxy is revoked or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by the person executing the
proxy; provided, however, that no such proxy shall be valid after the
expiration of six (6) months from the date of such proxy, unless coupled
with an interest, or unless the person executing it specifies therein the
length of time for which it is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution. Subject to the
above and the provisions of Section 78.355 of the Nevada General
Corporation Law, any proxy duly executed is not revoked and continues in
full force and effect until an instrument revoking it or a duly executed
proxy bearing a later date is filed with the secretary of the corporation.
Section 12. INSPECTORS OF ELECTION. Before any meeting of
stockholders, the board of directors may appoint any persons other than
nominees for office to act as inspectors of election at the meeting or its
adjournment. If no inspectors of election are appointed, the chairman of
the meeting may, and on the request of any stockholder or his proxy shall,
appoint inspectors of election at the meeting. The number of inspectors
shall be either one (1) or three (3). If inspectors are appointed at a
meeting on the request of one or more stockholders or proxies, the holders
of a majority of shares or their proxies present at the meeting shall
determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to
act, the vacancy may be filled by appointment by the board of directors
before the meeting, or by the chairman at the meeting.
The duties of these inspectors shall be as follows:
(a) Determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence
of a quorum, and the authenticity, validity, and effect of proxies;
<PAGE>
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in any
way arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine the election result; and
(f) Do any other acts that may be proper to conduct the
election or vote with fairness to all stockholders.
ARTICLE III
DIRECTORS
Section 1. POWERS. Subject to the provisions of the Nevada
General Corporation Law and any limitations in the articles of
incorporation and these bylaws relating to action required to be approved
by the stockholders or by the outstanding shares, the business and affairs
of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the board of directors.
Without prejudice to such general powers, but subject to the same
limitations, it is hereby expressly declared that the directors shall have
the power and authority to:
(a) Select and remove all officers, agents, and employees
of the corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the articles of incorporation or these bylaws,
fix their compensation, and require from them security for faithful
service.
(b) Change the principal executive office or the principal
business office from one location to another; cause the corporation to be
qualified to do business in any other state, territory, dependency, or
foreign country and conduct business within or without the State; designate
any place within or without the State for the holding of any stockholders'
meeting, or meetings, including annual meetings; adopt, make and use a
corporate seal, and prescribe the forms of certificates of stock, and alter
the form of such seal and of such certificates from time to time as in
their judgment they may deem best, provided that such forms shall at all
times comply with the provisions of law.
(c) Authorize the issuance of shares of stock of the
corporation from time to time, upon such terms as may be lawful, in
consideration of money paid, labor done or services actually rendered,
debts or securities cancelled, tangible or intangible property actually
received.
<PAGE>
(d) Borrow money and incur indebtedness for the purpose of
the corporation, and cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations, or other evidences of debt and
securities therefor.
Section 2. NUMBER OF DIRECTORS. The authorized number of
directors shall be no fewer than one (1) nor more than seven (7). The
exact number of authorized directors shall be set by resolution of the
board of directors, within the limits specified above. The maximum or
minimum number of directors cannot be changed, nor can a fixed number be
substituted for the maximum and minimum numbers, except by a duly adopted
amendment to this bylaw duly approved by a majority of the outstanding
shares entitled to vote.
Section 3. QUALIFICATION, ELECTION AND TERM OF OFFICE OF
DIRECTORS. Directors shall be elected at each annual meeting of the
stockholders to hold office until the next annual meeting, but if any such
annual meeting is not held or the directors are not elected at any annual
meeting, the directors may be elected at any special meeting of
stockholders held for that purpose, or at the next annual meeting of
stockholders held thereafter. Each director, including a director elected
to fill a vacancy, shall hold office until the expiration of the term for
which elected and until a successor has been elected and qualified or until
his earlier resignation or removal or his office has been declared vacant
in the manner provided in these bylaws. Directors need not be
stockholders.
Section 4. RESIGNATION AND REMOVAL OF DIRECTORS. Any
director may resign effective upon giving written notice to the chairman of
the board, the president, the secretary or the board of directors of the
corporation, unless the notice specifies a later time for the effectiveness
of such resignation, in which case such resignation shall be effective at
the time specified. Unless such resignation specifies otherwise, its
acceptance by the corporation shall not be necessary to make it effective.
The board of directors may declare vacant the office of a director who has
been declared of unsound mind by an order of a court or convicted of a
felony. Any or all of the directors may be removed without cause of such
removal is approved by the affirmative vote of a majority of the
outstanding shares entitled to vote. No reduction of the authorized number
of directors shall have the effect of removing any director before his term
of office expires.
Section 5. VACANCIES. Vacancies in the board of directors,
may be filled by a majority of the remaining directors, though less than a
quorum, or by a sole remaining director. Each director so elected shall
hold office until the next annual meeting of the stockholders and until a
successor has been elected and qualified.
<PAGE>
A vacancy in the board of directors exists as to any authorized
position of directors which is not then filled by a duly elected director,
whether caused by death, resignation, removal, increase in the authorized
number of directors or otherwise.
The stockholders may elect a director or directors at any time to
fill any vacancy or vacancies not filled by the directors, but any such
election by written consent shall require the consent of a majority of the
outstanding shares entitled to vote. If the resignation of a director is
effective at a future time, the board of directors may elect a successor to
take office when the resignation becomes effective.
If after the filling of any vacancy by the directors, the
directors then in office who have been elected by the stockholders shall
constitute less than a majority of the directors then in office, any holder
or holders of an aggregate of five percent or more of the total number of
shares at the time outstanding having the right to vote for such directors
may call a special meeting of the stockholders to elect the entire board.
The term of office of any director not elected by the stockholders shall
terminate upon the election of a successor.
Section 6. PLACE OF MEETINGS. Regular meetings of the board
of directors shall be held at any place within or without the State of
Nevada that has been designated from time to time by resolution of the
board. In the absence of such designation, regular meetings shall be held
at the principal executive office of the corporation. Special meetings of
the board shall be held at any place within or without the State of Nevada
that has been designated in the notice of the meeting or, if not stated in
the notice or there is not notice, at the principal executive office of the
corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in such meeting can hear one another, and all such directors
shall be deemed to be present in person at such meeting.
Section 7. ANNUAL MEETINGS. Immediately following each
annual meeting of stockholders, the board of directors shall hold a regular
meeting for the purpose of transaction of other business. Notice of this
meeting shall not be required.
Section 8. OTHER REGULAR MEETINGS. Other regular meetings of
the board of directors shall be held without call at such time as shall
from time to time be fixed by the board of directors. Such regular
meetings may be held without notice, provided the notice of any change in
the time of any such meetings shall be given to all of the directors.
Notice of a change in the determination of the time shall be given to each
director in the same manner as notice for special meetings of the board of
directors.
Section 9. SPECIAL MEETINGS. Special meetings of the board
of directors for any purpose or purposes may be called at any time by the
chairman of the board or the president or any vice president or the
secretary or any two directors.
<PAGE>
Notice of the time and place of special meetings shall be
delivered personally or by telephone to each director or sent by
first-class mail or telegram, charges prepaid, addressed to each director
at his or her address as it is shown upon the records of the corporation.
In case such notice is mailed, it shall be deposited in the United States
mail at least four (4) days prior to the time of the holding of the
meeting. In case such notice is delivered personally, or by telephone or
telegram, it shall be delivered personally or by telephone or to the
telegraph company at least forty-eight (48) hours prior to the time of the
holding of the meeting. Any oral notice given personally or by telephone
may be communicated to either the director or to a person at the office of
the director who the person giving the notice has reason to believe will
promptly communicate it to the director. The notice need not specify the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive office of the corporation.
Section 10. QUORUM. A majority of the authorized number of
directors shall constitute a quorum for the transaction of business, except
to adjourn as hereinafter provided. Every act or decision done or made by
a majority of the directors present at a meeting duly held at which a
quorum is present shall be regarded as the act of the board of directors,
subject to the provisions of Section 78.140 of the Nevada General
Corporation Law (approval of contracts or transactions in which a director
has a direct or indirect material financial interest), Section 78.125
(appointment of committees), and Section 78.751 (indemnification of
directors). A meeting at which a quorum is initially present may continue
to transact business notwithstanding the withdrawal of directors, if any
action taken is approved by at least a majority of the required quorum for
such meeting.
Section 11. WAIVER OF NOTICE. The transactions of any meeting
of the board of directors, however called and noticed or wherever held,
shall be as valid as though had at a meeting duly held after regular call
and notice if a quorum be present and if, either before or after the
meeting, each of the directors not present signs a written waiver of
notice, a consent to holding the meeting or an approval of the minutes
thereof. The waiver of notice of consent need not specify the purpose of
the meeting. All such waivers, consents and approvals shall be filed with
the corporate records or made a part of the minutes of the meeting. Notice
of a meeting shall also be deemed given to any director who attends the
meeting without protesting, prior thereto or at its commencement, the lack
of notice to such director.
Section 12. ADJOURNMENT. A majority of the directors present,
whether or not constituting a quorum, may adjourn any meeting to another
time and place.
Section 13. NOTICE OF ADJOURNMENT. Notice of the time and
place of holding an adjourned meeting need not be given, unless the meeting
is adjourned for more than twenty-four (24) hours, in which case notice of
such time and place shall be given prior to the time of the adjourned
meeting, in the manner specified in Section 8 of this Article III, to the
directors who were not present at the time of the adjournment.
<PAGE>
Section 14. ACTION WITHOUT MEETING. Any action required or
permitted to be taken by the board of directors may be taken without a
meeting, if all members of the board shall individually or collectively
consent in writing to such action. Such action by written consent shall
have the same force and effect as a unanimous vote of the board of
directors. Such written consent or consents shall be filed with the
minutes of the proceedings of the board.
Section 15. FEES AND COMPENSATION OF DIRECTORS. Directors and
members of committees may receive such compensation, if any, for their
services, and such reimbursement of expenses, as may be fixed or determined
by resolution of the board of directors. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any
other capacity as an officer, agent, employee, or otherwise, and receiving
compensation for such services. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF DIRECTORS. The board of directors
may, by resolution adopted by a majority of the authorized number of
directors, designate one or more committees, each consisting of one or more
directors, to serve at the pleasure of the board. The board may designate
one or more directors as alternate members of any committees, who may
replace any absent member at any meeting of the committee. Any such
committee, to the extent provided in the resolution of the board, shall
have all the authority of the board, except with regard to:
(a) the approval of any action which, under the Nevada
General Corporation Law, also requires stockholders' approval or approval
of the outstanding shares;
(b) the filing of vacancies on the board of directors or in
any committees;
(c) the fixing of compensation of the directors for serving
on the board or on any committee;
(d) the amendment or repeal of bylaws or the adoption of
new bylaws;
(e) the amendment or repeal of any resolution of the board
of directors which by its express terms is not so amendable or repealable;
<PAGE>
(f) a distribution to the stockholders of the corporation,
except at a rate or in a periodic amount or within a price range determined
by the board of directors; or
(g) the appointment of any other committees of the board of
directors or the members thereof.
Section 2. MEETINGS AND ACTION BY COMMITTEES. Meetings and
action of committees shall be governed by, and held and taken in accordance
with, the provisions of Article III, Sections 6 (place of meetings), 8
(regular meetings), 9 (special meetings and notice), 10 (quorum), 11
(waiver of notice), 12 (adjournment), 13 (notice of adjournment) and 14
(action without meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the board
of directors and its members, except that the time or regular meetings of
committees may be determined by resolutions of the board of directors and
notice of special meetings of committees shall also be given to all
alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of
any committee not inconsistent with the provisions of these bylaws. The
committees shall keep regular minutes of their proceedings and report the
same to the board when required.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the corporation shall
be a president, a secretary and a treasurer. The corporation may also
have, at the discretion of the board of directors, a chairman of the board,
one or more vice presidents, one or more assistant secretaries, one or more
assistant treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article V. Any two or
more offices may be held by the same person.
Section 2. ELECTION OF OFFICERS. The officers of the
corporation, except such officers as may be appointed in accordance with
the provisions of Section 3 or Section 5 of this Article V, shall be chosen
by the board of directors, and each shall serve at the pleasure of the
board, subject to the rights, if any, of an officer under any contract of
employment. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, a vice president, a
secretary and a treasurer, none of whom need be a member of the board. The
salaries of all officers and agents of the corporation shall be fixed by
the board of directors.
<PAGE>
Section 3. SUBORDINATE OFFICERS, ETC. The board of directors
may appoint, and may empower the president to appoint, such other officers
as the business of the corporation may require, each of whom shall hold
office for such period, have such authority and perform such duties as are
provided in the bylaws or as the board of directors may from time to time
determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. The officers
of the corporation shall hold office until their successors are chosen and
qualify. Subject to the rights, if any, of an officer under any contract
of employment, any officer may be removed, either with or without cause, by
the board of directors, at any regular or special meeting thereof, or,
except in case of an officer chosen by the board of directors, by any
officer upon whom such power or removal may be conferred by the board of
directors.
Any officer may resign at any time by giving written notice to
the corporation. Any such resignation shall take effect at the date of the
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective. Any such resignation is without
prejudice to the rights, if any, of the corporation under any contract to
which the officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office
because of death, resignation, removal, disqualification or any other cause
shall be filled in the manner prescribed in these bylaws for regular
appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board,
if such an officer be elected, shall, if present, preside at all meetings
of the board of directors and exercise and perform such other powers and
duties as may be from time to time assigned to him by the board of
directors or prescribed by the bylaws. If there is no president, the
chairman of the board shall in addition be the chief executive officer of
the corporation and shall have the powers and duties prescribed in
Section 7 of this Article V.
Section 7. PRESIDENT. Subject to such supervisory powers, if
any, as may be given by the board of directors to the chairman of the
board, if there be such an officer, the president shall be the chief
executive officer of the corporation and shall, subject to the control of
the board of directors, have general supervision, direction and control of
the business and the officers of the corporation. He shall preside at all
meetings of the stockholders and, in the absence of the chairman of the
board, of if there be none, at all meetings of the board of directors. He
shall have the general powers and duties of management usually vested in
the office of president of a corporation, and shall have such other powers
and duties as may be prescribed by the board of directors or the bylaws.
He shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to
some other officer or agent of the corporation.
<PAGE>
Section 8. VICE PRESIDENTS. In the absence or disability of
the president, the vice presidents, if any, in order of their rank as fixed
by the board of directors or, if not ranked, a vice president designated by
the board of directors, shall perform all the duties of the president, and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the president. The vice presidents shall have such
other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors or the bylaws,
the president or the chairman of the board.
Section 9. SECRETARY. The secretary shall attend all
meetings of the board of directors and all meetings of the stockholders and
shall record, keep or cause to be kept, at the principal executive office
or such other place as the board of directors may order, a book of minutes
of all meetings of directors, committees of directors and stockholders,
with the time and place of holding, whether regular or special, and, if
special, how authorized, the notice thereof given, the names of those
present at directors' and committee meetings, the number of shares present
or represented at stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent or
registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all
stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates issued for the same, and the
number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given, notice of all
meetings of stockholders and of the board of directors required by the
bylaws or by law to be given, and he shall keep the seal of the corporation
in safe custody, as may be prescribed by the board of directors or by the
bylaws.
Section 10. TREASURER. The treasurer shall keep and maintain,
or cause to be kept and maintained, adequate and correct books and records
of accounts of the properties and business transactions of the corporation,
including accounts of its assets, liabilities, receipts, disbursements,
gains, losses, capital, retained earnings and shares. The books of account
shall at all reasonable times be open to inspection by any director.
The treasurer shall deposit all moneys and other valuables in the
name and to the credit of the corporation with such depositories as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to
the president and directors, whenever they request it, an account of all of
his transactions as treasurer and of the financial condition of the
corporation, and shall have other powers and perform such other duties as
may be prescribed by the board of directors or the bylaws.
<PAGE>
If required by the board of directors, the treasurer shall give
the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful
performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
Section 1. ACTIONS OTHER THAN BY THE CORPORATION. The
corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with the action, suit or
proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, has no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding,
he had reasonable cause to believe that his conduct was unlawful.
Section 2. ACTIONS BY THE CORPORATION. The corporation may
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses, including
amounts paid in settlement and attorneys' fees, actually and reasonably
incurred by him in connection with the defense or settlement of the action
or suit if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to which
<PAGE>
such a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to the
extent that the court in which the action or suit was brought or other
court of competent jurisdiction determines upon application that in view of
all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
Section 3. SUCCESSFUL DEFENSE. To the extent that a
director, officer, employee or agent of the corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding
referred to in Sections 1 and 2, or in defense of any claim, issue or
matter therein, he must be indemnified by the corporation against expenses,
including attorneys' fees, actually and reasonably incurred by him in
connection with the defense.
Section 4. REQUIRED APPROVAL. Any indemnification under
Sections 1 and 2, unless ordered by a court or advanced pursuant to Section
5, must be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances. The determination must
be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or
proceeding;
(c) If a majority vote of a quorum consisting of directors
who were not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not
parties to the act, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion.
Section 5. ADVANCE OF EXPENSES. The articles of
incorporation, the bylaws or an agreement made by the corporation may
provide that the expenses of officers and directors incurred in defending a
civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of
the action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to
be indemnified by the corporation. The provisions of this section do not
affect any rights to advancement of expenses to which corporate personnel
other than directors or officers may be entitled under any contract or
otherwise by law.
<PAGE>
Section 6. OTHER RIGHTS. The indemnification and advancement
of expenses authorized in or ordered by a court pursuant to this
Article VI:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under
the articles of incorporation or any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, for either an action in his
official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
Section 2 or for the advancement of expenses made pursuant to Section 5,
may not be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
Section 7. INSURANCE. The corporation may purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
for any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of this Article VI.
Section 8. RELIANCE ON PROVISIONS. Each person who shall act
as an authorized representative of the corporation shall be deemed to be
doing so in reliance upon the rights of indemnification provided by this
Article.
Section 9. SEVERABILITY. If any of the provisions of this
Article are held to be invalid or unenforceable, this Article shall be
construed as if it did not contain such invalid or unenforceable provision
and the remaining provisions of this Article shall remain in full force and
effect.
Section 10. RETROACTIVE EFFECT. To the extent permitted by
applicable law, the rights and powers granted pursuant to this Article VI
shall apply to acts and actions occurring or in progress prior to its
adoption by the board of directors.
<PAGE>
ARTICLE VII
RECORDS AND BOOKS
Section 1. MAINTENANCE OF SHARE REGISTER. The corporation
shall keep at its principal executive office, or at the office of its
transfer agent or registrar, if either be appointed and as determined by
resolution of the board of directors, a record of its stockholders, giving
the names and addresses of all stockholders and the number and class of
shares held by each stockholder.
Section 2. MAINTENANCE OF BYLAWS. The corporation shall keep
at its principal executive office, or if its principal executive office is
not in this State at its principal business office in this State, the
original or a copy of the bylaws as amended to date, which shall be open to
inspection by the stockholders at all reasonable times during office hours.
If the principal executive office of the corporation is outside this state
and the corporation has no principal business office in this state, the
secretary shall, upon the written request of any stockholder, furnish to
such stockholder a copy of the bylaws as amended to date.
Section 3. MAINTENANCE OF OTHER CORPORATE RECORDS. The
accounting books and records and minutes of proceedings of the stockholders
and the board of directors and any committee or committees of the board of
directors shall be kept at such place or places designated by the board of
directors, or, in the absence of such designation, at the principal
executive office of the corporation. The minutes shall be kept in written
form and the accounting books and records shall be kept either in written
form or in any other form capable of being converted into written form.
Every director shall have the absolute right at any reasonable
time to inspect and copy all books, records and documents of every kind and
to inspect the physical properties of this corporation and any subsidiary
of this corporation. Such inspection by a director may be made in person
or by agent or attorney and the right of inspection includes the right to
copy and make extracts. The foregoing rights of inspection shall extend to
the records of each subsidiary of the corporation.
Section 4. ANNUAL REPORT TO STOCKHOLDERS. Nothing herein
shall be interpreted as prohibiting the board of directors from issuing
annual or other periodic reports to the stockholders of the corporation as
they deem appropriate.
Section 5. FINANCIAL STATEMENTS. A copy of any annual
financial statement and any income statement of the corporation for each
quarterly period of each fiscal year, and any accompanying balance sheet of
the corporation as of the end of each such period, that has been prepared
by the corporation shall be kept on file in the principal executive office
of the corporation for twelve (12) months.
<PAGE>
Section 6. ANNUAL LIST OF DIRECTORS, OFFICERS AND RESIDENT
AGENT. The corporation shall, on or before June 25th of each year, file
with the Secretary of State of the State of Nevada, on the prescribed form,
a list of its officers and directors and a designation of its resident
agent in Nevada.
ARTICLE VIII
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE. For purposes of determining the
stockholders entitled to notice of any meeting or to vote or entitled to
receive payment of any dividend or other distribution or allotment of any
rights or entitled to exercise any rights in respect of any other lawful
action, the board of directors may fix, in advance, a record date, which
shall not be more than sixty (60) days nor less than ten (10) days prior to
the date of any such meeting nor more than sixty (60) days prior to any
other action, and in such case only stockholders of record on the date so
fixed are entitled to notice and to vote or to receive the dividend,
distribution or allotment of rights or to exercise the rights, as the case
may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date fixed as aforesaid, except as otherwise
provided in the Nevada General Corporation Law.
If the board of directors does not so fix a record date:
(a) The record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next
preceding the day on which the meeting is held.
(b) The record date for determining stockholders entitled
to give consent to corporate action in writing without a meeting, when no
prior action by the board has been taken, shall be the day on which the
first written consent is given.
(c) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the
board adopts the resolution relating thereto, or the sixtieth (60th) day
prior to the date of such other action, whichever is later.
Section 2. CLOSING OF TRANSFER BOOKS. The directors may
prescribe a period not exceeding sixty (60) days prior to any meeting of
the stockholders during which no transfer of stock on the books of the
corporation may be made, or may fix a date not more than sixty (60) days
prior to the holding of any such meeting as the day as of which
stockholders entitled to notice of and to vote at such meeting shall be
determined; and only stockholders of record on such day shall be entitled
to notice or to vote at such meeting.
<PAGE>
Section 3. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a person registered on
its books as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Nevada.
Section 4. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS. All
checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the
corporation, shall be signed or endorsed by such person or persons and in
such manner as, from time to time, shall be determined by resolution of the
board of directors.
Section 5. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
The board of directors, except as in the bylaws otherwise provided, may
authorize any officer or officers, agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances; and, unless so authorized or ratified by the board of directors
or within the agency power or authority to bind the corporation by any
contract or engagement or to pledge its credit or to render it liable for
any purpose or to any amount.
Section 6. STOCK CERTIFICATES. A certificate or certificates
for shares of the capital stock of the corporation shall be issued to each
stockholder when any such shares are fully paid, and the board of directors
may authorize the issuance of certificates or shares as partly paid
provided that such certificates shall state the amount of the consideration
to be paid therefor and the amount paid thereon. All certificates shall be
signed in the name of the corporation by the president or vice president
and by the treasurer or an assistant treasurer or the secretary or any
assistant secretary, certifying the number of shares and the class or
series of shares owned by the stockholder. When the corporation is
authorized to issue shares of more than one class or more than one series
of any class, there shall be set forth upon the face or back of the
certificate, or the certificate shall have a statement that the corporation
will furnish to any stockholders upon request and without charge, a full or
summary statement of the designations, preferences and relatives,
participating, optional or other special rights of the various classes of
stock or series thereof and the qualifications, limitations or restrictions
of such rights, and, if the corporation shall be authorized to issue only
special stock, such certificate must set forth in full or summarize the
rights of the holders of such stock. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon
<PAGE>
a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were an officer,
transfer agent or registrar at the date of issue.
No new certificate for shares shall be issued in place of any
certificate theretofore issued unless the latter is surrendered and
canceled at the same time; provided, however, that a new certificate may be
issued without the surrender and cancellation of the old certificate if the
certificate thereto fore issued is alleged to have been lost, stolen or
destroyed. In case of any such allegedly lost, stolen or destroyed
certificate, the corporation may require the owner thereof or the legal
representative of such owner to give the corporation a bond (or other
adequate security) sufficient to indemnify it against any claim that may be
made against it (including any expense or liability) on account of the
alleged loss, theft or destruction of any such certificate or the issuance
of such new certificate.
Section 7. DIVIDENDS. Dividends upon the capital stock of
the corporation, subject to the provisions of the articles of
incorporation, if any, may be declared by the board of directors at any
regular or special meeting pursuant to law. Dividends may be paid in cash,
in property, or in shares of the capital stock, subject to the provisions
of the articles of incorporation.
Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as
a reserve or reserves to meet contingencies, or for equalizing dividends,
or for repairing or maintaining any property of the corporation, or for
such other purpose as the directors shall think conducive to the interest
of the corporation, and the directors may modify or abolish any such
reserves in the manner in which it was created.
Section 8. FISCAL YEAR. The fiscal year of the corporation
shall be fixed by resolution of the board of directors.
Section 9. SEAL. The corporate seal shall have inscribed
thereon the name of the corporation, the year of its incorporation and the
words "Corporate Seal, Nevada."
Section 10. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
The chairman of the board, the president, or any vice president, or any
other person authorized by resolution of the board of directors by any of
the foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations,
foreign or domestic, standing in the name of the corporation. The
authority herein granted to said officers to vote or represent on behalf of
<PAGE>
the corporation any and all shares held by the corporation in any other
corporation or corporations may be exercised by any such officer in person
or by any person authorized to do so by proxy duly executed by said
officer.
Section 11. CONSTRUCTION AND DEFINITIONS. Unless the context
requires otherwise, the general provisions, rules of construction, and
definitions in the Nevada General Corporation Law shall govern the
construction of the bylaws. Without limiting the generality of the
foregoing, the singular number includes the plural, the plural number
includes the singular, and the term "person" includes both a corporation
and a natural person.
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY STOCKHOLDERS. New bylaws may be
adopted or these bylaws may be amended or repealed by the affirmative vote
of a majority of the outstanding shares entitled to vote, or by the written
assent of stockholders entitled to vote such shares, except as otherwise
provided by law or by the articles of incorporation.
Section 2. AMENDMENT BY DIRECTORS. Subject to the rights of
the stockholders as provided in Section 1 of this Article, bylaws may be
adopted, amended or repealed by the board of directors.
<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting secretary of
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC., a Nevada corporation; and
2. That the foregoing Amended and Restated Bylaws, comprising
twenty (20) pages, constitute the Bylaws of said corporation as duly
adopted and approved by the board of directors of said corporation by a
Unanimous Written Consent dated as of June 25, 1998 and duly adopted and
approved by the stockholders of said corporation at a special meeting held
on June 25, 1998.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of said corporation this 25th day of June, 1998.
/s/ Harold Jahn
------------------------------
Harold Jahn, Secretary
Sustainable Development
International, Inc.
INCORPORATED UNDER THE LAWS OF THIS STATE OF NEVADA
50,000,000 SHARES COMMON STOCK AUTHORIZED, $.001 PAR VALUE
THIS
CERTIFIES CUSIP 889323 10 5
THAT SEE REVERSE FOR
CERTAIN DEFINITIONS
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF
SUSTAINABLE DEVELOPMENT INTERNATIONAL, INC.
transferable on the books of the corporation in person or by duly
authorized attorney upon surrender of this certificate properly endorsed.
This certificate and the shares represented hereby are subject to the laws
of this State of Nevada, and to the Certificate of Incorporation and Bylaws
of the Corporation, as now hereafter amended. This certificate is not
valid unless countersigned by the Transfer Agent. WITNESS the facsimile
seal of the Corporation and the signature of its duly authorized officers.
DATE
Sustainable Development International, Inc.
Corporate Seal
Nevada
PRESIDENT/
SECRETARY
LIMITED TECHNOLOGY LICENSE AGREEMENT
THIS AGREEMENT is made and entered into this 11th day of June 1998, by and
between Sustainable Development International Inc., a Nevada, USA
Corporation, hereinafter referred to as "Licensee", and ENVIRO-MINING INC.,
an Alberta, Canada Corporation, hereinafter referred to as "Licensor".
WHEREAS, the Licensor expended time, effort, and money to develop and
obtain knowledge in the field of science related to an oil rerefining
technology for the production of a high grade low sulphur #2 diesel and
associated products from waste lubrication oil referred to as "The EMI
Process" technology and has established successfully a reputation, demand,
and goodwill for such technology; and
WHEREAS the Licensee desires to obtain the benefits of the technology
established by the licensor and the right to do business under the trade
name "The EMI Process" as hereinafter provided.
IT IS THEREFORE AGREED between the parties as follows conditional upon
due diligence and acceptance of the viability of the technology by SDII. on
or before June 11, 1998:
1. License. The Licensee shall have the exclusive right to engage under
the terms hereof in the business of producing, merchandising,
marketing, distribution, promotion and selling products manufactured
by the EMI Process throughout the Territory as defined in Section 5.
2. Term of License. The term of this license shall commence on June 11,
1998, and o for thirty (30) years with an option to renew for ten (10)
year periods at the end f the first thirty (30) year period. Should the
Licensee refuse to renew at the end of the 30 year period then the
Licensee must not use the technology and return it to the Licensor.
Should the Licensor refuse to renew at the end of the first 30 year
period the Licensor must engage in good faith negotiations to amend this
license agreement, or to sell SDII for fair market value to the Licensee.
3. Funds to be paid.
A. Funds must be paid to Enviro-Mining Inc. under the following
terms. US $300,000 for the EMI Process.
B. The Licensee must commence construction in the first twelve (12)
months of this agreement, a plant of minimum capacity of 90,000
Tonnes of waste oil input in the Territory.
<PAGE>
C. It shall be just cause for termination of the Licensee of all
license and marketing rights, etc., if SDII has not commenced
construction of the first plant within the first year of this
license agreement, and an additional commercial scale plant every
year thereafter for the next 5 years.
4. Recurring funds to be paid by the Licensee to the Licensor.
A. There is an annual recurring fee to be paid as a production
royalty. the amount of this fee is negotiable to any amount
equal to or less than US $300,000.
B. Each additional plant will be subject to a license fee on a
negotiated basis at the time an application for a new license is
received.
5. Territory. The Territory within which the license and marketing
rights, etc., applies is for the Federal Republic of Germany.
6. Confidentiality. Both parties acknowledge the confidential nature of
information and procedures which shall be made available to the
Licensee by Licensor and either shall disclose to anyone other than an
authorized employee any information or procedures of the other party,
Any confidential literature or documents given to the other party will
be returned at the expiration or termination of this license. This
Agreement shall be deemed to be a confidential communication of the
parties.
7. Technology Disclosure. Full disclosure of all engineering and
process designs will be made available to the Licensee throughout the
term of the agreement.
8. Reporting Requirements.
a. The Licensee shall submit to the Licensor, on forms approved or
provided by the Licensor, such financial or operating information
as required by the Licensor to establish the gross revenue and
operating efficiencies for the plant. The Licensee, by these
presents, consents to the use of such information by the Licensor
as the licensor shall, in its sole discretion, determine. The
Licensee consents to the use of their information by the licensor
for design, publications, and research. All use of the
information for marketing and promotional use will be controlled
by the Licensee.
b. Bi - annual reports to inform the Licensor of the activities and
marketing programs of the Licensee must be submitted for review
and consultation. This will serve to apprise both parties of
improvements to the technology and of contacts interested in the
technology. Failure to provide this written communication will
be cause for termination.
<PAGE>
9. Personnel. The Licensee will hire only those people who have related
experience and qualifications to operate a facility of this design and
complexity. The Licensor will have the right to review any potential
applicant and should these individuals are not acceptable to the
Licensor a position will not be offered.
10. Purchase Option. EMI has the option, with ninety (90) days written
notice from the Licensee to purchase any and all shares, warrants,
options and equity in the operating entity which owns the plant, for
fair market value during the term of the agreement.
11. Licensee Undertakings.
a. The licensee shall not, during the term of this agreement communicate
or divulge to, or use for the benefit of, any other person, partnership,
association, or corporation, any information or knowledge concerning the
methods of manufacture, promotion, sale, or distribution used or employed
by the Licensor in and about its business which may be communicated to the
Licensee or which the Licensee may acquire by virtue of this operation
under the terms of this agreement; nor will the Licensee do any willful
prejudicial or injurious act to the business or goodwill of the Licensor.
b. During the term of this agreement, or upon its termination for any
cause, the Licensee will not , directly or indirectly, enter the employment
of, or render services to, any other person, partnership, association, or
corporation engaged in the same or substantially similar business covered
by this agreement in any area which can be reasonably termed competitive to
the Licensor or any of its licensees; and during such term the licensee
will not, within such territory, engage in such business on his own
account, or hold out any interest therein, directly or indirectly, as an
individual, partner, shareholder, director, consultant, independent
contractor, officer, clerk, principal, agent, employee, trustee, or in any
relation or capacity whatsoever.
c. Upon the termination of this agreement for any cause, the Licensee
will immediately discontinue the use of all trade names, trademarks, signs,
structures, and forms of advertising indicative of the Licensor or the
business or products thereof, and will make or cause to be made such
changes in signs, buildings, and structures as the Licensor shall
reasonably direct so as to distinguish effectively the same from its former
appearance and from any other of Licensor's places of business. If the
Licensee shall upon request fail or omit to make such changes or cause them
to be made, then the licensor shall have the right to enter upon the
premises upon which such business is being conducted without being deemed
guilty of trespass or any other tort, and shall have the right to make such
charges or cause them to be made at the expense of the Licensee, which
<PAGE>
expense the Licensee shall pay on demand. The Licensee shall also on
request of the Licensor, and upon the payment of the reasonable market
value thereof, turn over and deliver to the Licensor, its representatives,
agents or assignees, all matters and things bearing the trademark or trade
name of the Licensor and any technology developed while this license was
exercised.
12. Independence of restrictive covenants. The covenants contained above
shall be construed as independent of any other provision of this
agreement and independent of each other unless otherwise stated, and
the existence of any claim or cause of action of the Licensee against
the Licensor, whether predicated on this agreement or otherwise, shall
not constitute a defense to the enforcement by the Licensor of such
covenants.
13. Reciprocity of restrictive covenants. All restrictions applicable to
the Licensee hereinabove, shall also bind and be applicable to the
Licensor.
14. Termination.
a. If the Licensee shall neglect or fail to perform or observe any of the
Licensee's covenants for a period of two (2) months, or if any assignment
shall be made of the business for the benefit of creditors, or if a
receiver, guardian, conservator, trustee in bankruptcy, or similar officer
shall be appointed to take charge of all or part of the Licensee's
property, or if the Licensee is adjudicated a bankrupt, then unless such
condition or conditions are remedied to the satisfaction of the Licensor
within fourteen (14) days after written notice thereof has been given to
the Licensee, the license hereunder shall cease.
b. In the event of any failure by the Licensee to pay any amounts owed to
the Licensor, the Licensor's expenses in collecting same, together with a
delinquency charge of one (0.01) cent per month of each dollar or fraction
thereof in arrears more than sixty (60) consecutive days from the date
first due, and reasonable attorney's fees, shall be paid by the Licensee.
c. All agreements, fees, and projects currently in progress or completed
previously shall continue as agreed for the duration of the original
agreement in the event the Licensee no longer holds a license.
15. Licensor Undertaking. The Licensor shall provide all necessary
engineering, feasibilities, and other undertakings requested by the
Licensee within a reasonably acceptable timeframe and quality at the
expense of the Licensee.
16. Complete agreement; waivers. This agreement contains the entire
agreement of the parties, and no representations, inducements, promises, or
agreements, oral or otherwise, between the parties not embodied herein
shall be of any force or effect. No failure of the parties to exercise any
right given to them hereunder, or to insist upon strict compliance by the
<PAGE>
other party with any obligations hereunder, and no customs or practice of
the parties at variance with the terms hereof shall constitute a waiver of
the other party's rights to demand exact compliance with the terms hereof.
Waiver by the parties of any particular default by the other party shall
not affect or impair the other's rights in respect to any subsequent
default of the same or of a different nature, nor shall any delay or
omission of the other to exercise any rights arising from such default
affect or impair the other's rights as to such default or any subsequent
default.
17. Separability of provisions. If any covenant or other provision of
this agreement is invalid, illegal, or incapable of being enforced, by
reason of any rule of law, administrative order, judicial decision or
public policy, all other conditions and provisions of this agreement shall,
nevertheless, remain in full force and effect, and no covenant or provision
shall be deemed dependent upon any other covenant or provision unless so
expressed herein.
18. Assignability. This agreement shall inure to the benefit of the
heirs, successors and assigns of the Licensor and Licensee. The Licensor
and Licensee shall have the right to assign their rights under this
agreement to any person, firm, association, or corporation; except that any
assignment by the Licensee must be approved in writing by the Licensor.
Such approval will not be unreasonably withheld. Such assignment shall not
be binding upon the parties unless the transferee has agreed in writing to
assume all of the parties obligations to the terms of this agreement.
19. Governing Law. This agreement, and the transactions contemplated
hereby, shall be governed by, construed and enforced in accordance with the
laws of the Province of Alberta, Canada. The parties herein waive trial by
jury and agree to submit to the personal jurisdiction and venue of a court
of subject matter jurisdiction located in the City of Edmonton, Province of
Alberta, Canada. In the event that litigation results from or arises out
of this Agreement or the performance thereof, the parties agree to
reimburse the prevailing party's reasonable attorney's fees, court costs,
and all other expenses, whether or not taxable by the court as costs, in
addition to any other relief to which the prevailing party may be entitled.
In such event, no action shall be entertained by said court or any court of
competent jurisdiction if filed more than one year subsequent to the date
the cause(s) of action actually accrued regardless of whether damages were
otherwise as of said time calculable.
20. Contractual Procedures. Unless specifically disallowed by law,
should litigation arise hereunder, service of process thereof may be
obtained through certified mail, return receipt requested; the parties
hereto waiving any and all rights they may have to object to the method by
which service was perfected.
<PAGE>
21. Arbitration. Any controversy or claim arising out of or relating to
this document/contract or the breach thereof, and which is not settled
between the signatories themselves, shall be settled by arbitration in
accordance with the rules of the arbitration committee of the
international chamber of commerce in Paris (France) with hearings to
take place in Paris (France) or other mutually agreed location and
judgment upon award rendered by the arbitration(s) may be entered in
any court having jurisdiction thereof including the award to the
aggrieved signatory or signatories, such awarding related to the total
remuneration received as a result of business conducted with the
parties covered by this agreement plus any and all court costs,
attorney fees, and any other costs or charges reasonably necessary to
adjudicate the controversy in addition to any and all damages deemed
fair by the arbitrator(s).
22. Extraordinary remedies. To the extent recognizable at law, the
parties hereto, in the event of breach and in addition to any and all other
remedies available thereto, may obtain injunctive relief, regardless of
whether the injured party can demonstrate that no adequate remedy exists at
law. Moreover, breach or threatened breach by the Licensor of Licensee's
rights to Licensee's exclusive Territory may be enjoined without further
notice to Licensor, so long as Licensee is given the opportunity to appear
and contest within thirty (30) days thereof. Any and all parties related
to or affiliated with such breach or threatened breach shall be similarly
enjoined.
<PAGE>
IN WITNESS WHEREOF the parties have executed this Agreement.
Signed, sealed and delivered
in the presence of :
"LICENSOR"
____________________________ /S/Lew Mansell
-------------------------------
Witness LEW MANSELL
VICE PRESIDENT
ENVIRO-MINING INC.
CITY OF EDMONTON,
ALBERTA, CANADA DATE June 11, 1998
"LICENSEE"
____________________________ /s/Harold Jahn
----------------------------------
Witness HAROLD JAHN
PRESIDENT
SUSTAINABLE DEVELOPMENT
INTERNATIONAL INCORPORATED
CITY OF LAS VEGAS,
NEVADA, USA DATE June 11, 1998
C O N T R A C T
of
Input of Electricity
into the Net of
TEAG Thueringer Energie AG
between
Umweltservice Europa GmbH
Sustainable Development International Inc.
124 Street Number 10240 Suite 208
Edmonton T5N 3W6
Alberta Canada
- -following "Operating Company of Electricity Plant"-
and
TEAG Thueringer Energie AG
Schwerborner Strasse 30
Postfach 450
99009 Erfurt
Deutschland
- -following named as "TEAG"-
<PAGE>
1. Content of Contract
This contract defines the Sale and Revenue of electricity.
1.1 Delivery of Electricity from the Operating Company of the
Electricity Plant to TEAG
The Operating Company of the Electricity Plant offers the surplus of
Electricity that is produced and not used in the Electricity Plant in
36460 Merkers to TEAG at the conditions of this contract. Their own use
includes all energy needed in the industrial plants of the Operating
Company of the Electricity Plant.
The connecting plant of the TEAG terminates at transmission connection
point of the switchgear to be confirmed after viewing and finalizing of
the technical concept.
The ending point of the connecting plant is the point of Transfer.
The Set up/Expansion/Change and Operation of the electrical Plants
behind the Transfer point (side of the Operating Company), with the
exception of the Meter Equipment site, lies with the Operating Company of
the Electricity Plant.
Each Contract Partner is financially responsible for the upkeep of
their own plants.
Additional to the costs of building the connecting plant and the
necessary methods in the already completed Net of the TEAG, does the
owner of the Operating Company of the Electricity Plant pay a
connecting fee usually based on the conditions in the connecting agreement.
The Operating Company of the Electricity Plant delivers Alternating
current of 110 000 Volt and 50 Hertz up to a maximum of 106 000 kW
(Delivery ability) at a cost of 0,97 inductive in the 110 kV-Net at the
Transfer point to the TEAG.
Changes of Delivery ability or of the Energy carrier, require
Agreements, particularly about the adaptation of the connecting plant
as well as the responsibility of costs.
1.1.2 The TEAG includes the available electricity from the
Operating Company of the Electricity Plant in its Net, that is
mentioned in the framework of this Contract.
1.1.3 The Operating Company of the Electricity Plant consists at
the time of the conclusion of this Contract of:
Number of Aggregates - with each ...kW (Discussed Capacity) still has
to be defined
Changes of the above Electricity Plant can only happen in agreement
with the TEAG. The Operating Company of the Electricity Plant commits to
coordinate these changes in a reasonable timeframe - typically one year
before the realization of the changes- with the TEAG and to come to an
agreement.
<PAGE>
1.1.4 Delivery of Electricity to a third party by the Electricity
Plant is by this contract not allowed. The Delivery to a third party
has to be separately coordinated before the Delivery starts with the
TEAG, so that the technical consequences of meter and net can be checked
and necessary parts can be installed. The industrial plants of the
Electricity Plant is not subject to this part of the contract.
1.2 Purchase of Electricity of the Electricity Plant from the TEAG
The Purchase of Electricity of the Electricity Plant from the TEAG is
to be agreed on separately of this contract.
2. The set up and operation of the Electricity Plant
2.1 Set up, Maintenance and Operation of the Plants of Production,
Metering and Distribution of Electricity as well as the connection to the
Net of the TEAG follows the Guidelines and Regulations of the Verband
Deutscher Elektrotechniker (VDE) (the Association of German Electrical
technicians) and the particular VDEW-Regulations to the Parallel
operation "Technical Regulations Parallel operation of Plants that produce
Electricity for their own use with the Middle voltage of the Electricity-
Supply-Organization (EVU)". Additional to this have the regulations of
the TEAG to be followed upon the conclusion of this contract.
2.2 The Contract Partners commit to keep up and maintain their Plants
to prevent disruptions from happening.
2.3 The Operating Company of the Electricity Plant controls the
Operation up until the point of Transfer according to point 1.1.1 of this
contract as well as the functional efficiency of the Meter equipment and
communicates any technical faults immediately according to the
Regulation to the next TEAG-Office (see extra Page to Input contract -
Appendix 4).
3. Disturbances and Regulate Downtime, Financial Responsibility
3.1 The Contract partners commit to fix or repair any Disruptions,
Maintenance Procedures or similar activities on the Plants, which would
require an interuption or limitation of the Electricity Delivery in the
fastest time possible. TEAG has to be notified four months before the
beginning of the Calendar year about all downtime of the Electricity Plant
as a consequence of Revisions as well as start and duration.
3.2 The Operating Company of the Electricity Plant has the obligation
- - upon request of the TEAG, to disconnect the Electricity Plant from
the Net in case of technical reasons. The TEAG has the right to
disconnect the Electricity Plant immediately from the Net in case of
Danger or Disturbance.
3.3 The Net of Electricity Supply of the TEAG has a build in Short-
Disruption- Protection. The Operating Company of the Electricity Plant
is responsible to protect his own Plants from any damages that may
happen because of this device.
<PAGE>
3.4 For Damages that the Contract Partners cause each other, created
through the Interruption or irregular Supply of Electricity, will the
financial responsibility after closer Clarification of the Point 4
"Conditions of the Supply of Electricity for Special-Contract- Customers
from the TEAG Net" (Appendix 2) the reason as well as the amount be
defined.
In all other cases is the financial responsibility of the Contract
partners within the legal Regulations in the accordance, that the
financial responsibility is limited to the replacement of the direct
Damage. The financial responsibility for indirect Damages and their
Consequences, especially for loss of profit, loss of Production,
Earnings and Use, is out of the question.
4. Meter Equipment
4.1 The Electricity delivered from the Electricity Plant to the TEAG
is on the side of the 110 000 Volt measured through:
1 Meter Cabinet for one Measurement-Distance with 1 registering
Measurement (will be defined at a later time)
1 High voltage-Voltage changer
1 High voltage-Electricity changer
4.2 For the Meter equipment that TEAG provides has the Operating
Company of the Electricity Plant to pay a monthly amount according to
the Meter-Price-Sheet an amount of 1,5 Percent of the particular Re-
Buy-Price. As well, the Operating Company of the Electricity Plant a Use-
Amount for the Online-Data-Distance-Transmission, see Meter-Price-Sheet.
The Meter-Price will be calculated using TEAG's existing billing
system. The TEAG has the right to adjust the Meter-Prices.
5. Payment
The TEAG pays for the Electricity, based on the agreed Input-Capacity
(Point 1 in this contract) and according to point 4.1 of this contract.
The payment for the Input of Electricity is a summary of the whole
year of the Price (see in Price-Sheet) for the delivered
Electricity.
The input of Electricity is subject according to the various High-
Charge and Low-Charge prices as indicated on the Price-Sheet.
High-Charge (HT) applies between Monday and Friday from 6.00 A.M. and
22.00 h (P.M.) and on Saturdays from 6.00 A.M. and 13.00 h (P.M.). For
all other times, including statutory holidays in Thueringen (Germany)
apply the Low-Charge (NT) Prices.
The TEAG has the right to change the Time-Charges. The TEAG will
communicate this to the Operating Company of the Electricity Plant in an
appropriate timeframe.
In the High-Charge times as mentioned above, the Electricity Plant
commits to supply between 96 and 106 MW to the TEAG. If this input-
capacity in the High-Charge times is not fulfilled, if the supply is lower
than 96 MW, when possible and available, will the payment be according to
the Low-Charge Price-Schedule. If the supply capacity is 20% under the 96
MW mark, will the payment be according to the Minimum-Schedule on the
Price-Sheet.
<PAGE>
In case of no input from the Electricity Plant in High-Charge Times
and the TEAG must purchase the required Electricity from other sources
to unfavorable conditions, the Electricity Plant pays the difference to
the Price according to the High-Charge Times to the TEAG.
6. Adjustment to changes of the electricity-economical conditions of the
TEAG
If there are any changes electricity-economically for the TEAG within
the timeframe of this contract or Price-Sheet changes happen, the TEAG
has the right to do an adjustment to the contract as well as to the
Price-Schedule. The changes will be announced in writing 3 months in
advance. As well the conditions in point 5 of this contract are to be
followed.
According to Input-Capacity, Input-Conditions and Competition-
Situation as well as changes in Economical Situations, the TEAG has the
right to adjust the prices on a yearly basis on the 30th of Payment
7. Billing and Payment
7.1 The billing year of the TEAG begins on the 1st of October and
ends on the 30th of September. The TEAG has the right to change the
billing year.
7.2 For the reading of the Meter equipment and billing of the
Electricity-Input are following guidelines:
The reading of the Meter equipment will be done at the end of each
month by the TEAG. According to the Meters, the TEAG will be issued a
credit. The credit will be accepted up to 25 days after the last
month's calculation period.
The TEAG is willing to agree on a different timeframe of reading the
Meter equipment and Billing period, if so desired by the Operating
Company of the Electricity Plant.
7.3 Should the Operating Company of the Electricity Plant decide to
discontinue their supply to the TEAG, the company commits to communicate
this immediately to the TEAG.
8. Start and Duration of Contract, Clause of exiting the Contract
Agreement
8.1 The Contract starts with the legal Signatures of both Contract
Partners, however not before the start of operation of the Connection-
Plant or the start of operation of the Electricity Plant. The duration is
at first eight years till the end of the business year 31st of December
2007. After that time, each extension of the Contract is 12 months, if the
Contract is not canceled in writing three months prior to yearend.
The agreements of Supply, Purchase and Payment of Electricity according to
point 1.1 and 6 will take place at the point of starting the operation of
the Connection Plant as well as the Meter Equipment.
8.2 Should the TEAG receive an offer of a third party that would, after
proving its viability, supply Electricity to a lower price and fulfill all
other conditions, with a price difference of 3% during the time of
Contract, the TEAG will, based on this offer, ask for new price
negotiations with the Operating Company of the Electricity Plant. If the
Operating Company of the Electricity Plant doesn't fulfill the new
conditions, after adjusting the Contract, has the TEAG the right to
discontinue this contract with a three months notice.
<PAGE>
8.3 Should the price adjustment according to the Competition situation as
well as the changes at the time of the introduction of the Electricity
price-Index according to point 5 as well as changes according to
Appendix 1, point 3 not be recognized and not confirmed from the
Electricity Plant and an adjustment of the contract does not take place,
has the TEAG the right to discontinue this contract with a three months
notice.
8.4 Should the Operating Company of the Electricity Plant close the Plant
permanently, the contract will be ceased at the end of the month. The
permanent closing of the Plant will be communicated - usually one year and
three months before actual close down - to the TEAG.
8.5 If defects in the Electricity Plant are not taken care of by the
Operating Company, even though the TEAG has asked for the correction, has
the TEAG the right to resign from this Contract immediately.
8.6 In the case of cancellation of this contract, there will be no
possibility of working with the Parallel operation of the
Electricity Plant and the TEAG Net.
9. Place of legal Jurisdiction
9.1 The Place of Jurisdiction and Performance is the headquarters of TEAG,
except in cases whereby an outside Court of Law has jurisdictional
precedent. At the time of the conclusion of this Contract it is Erfurt
(Germany)
9.2 Verbal Agreements have no validity; changes and additions of this
contract must be done in written form.
10. Other Regulations
The observance of the VDEW-Regulations to the Parallel operation "Technical
Regulations Parallel operation of Plants that produce Electricity for their
own use with the Middle voltage of the Electricity-Supply-Organization
(EVU)" and Appendix 1 as well as point 3 mentioned Regulation in times of
disruptions, the scheduled downtimes including financial responsibility
represent an important part of this contract, as long as the Contract
doesn't define anything else for specific cases.
11. General Clause
11.1 If individual Regulations of this Contract are ineffective or become
ineffective, will all other Agreements still be in effect. The Contract
Partners commit to update these agreements to benefit of both parties as
their situations change or improve. For common errors in the Contract are
to be handled the same as above.
11.2 In case of Disagreement that is related to this Contract, the
appropriate Court of Laws will represent the executive power in
situations, where there cannot be an amicable agreement between the two
parties in a regular court of law.
<PAGE>
11.3 To ensure the appropriate Fulfillment of this Contract, the TEAG saves
the ongoing data for electricity supply tariff base.
11.4 This Contract has two Copies, each Contract partner has one copy.
11.5 If arrangements of this Contract for its Effectiveness according to
the laws of Competition-Restriction have to be registered with the
Cartel-Registry, the registration will be done by TEAG. Any resulting
costs shall be borne by both parties equally.
.........................................., the........................
Erfurt, December 2, 1998
Operating Company of the Electricity Plant TEAG Thueringer
Energie AG
Umweltservice Europa GmbH
Sustainable Development International Inc.
Appendix -
Index for the Contract of Input of Electricity
between
TEAG Thueringer Energie AG
and
Umweltservice Europa GmbH (Sustainable Development International Inc.)
Appendix 1 - Payment regulation and Price-Sheet
Appendix 2 - Supply Conditions
Conditions for the Supply of Electricity of Special-
Contract-Clients form the TEAG Net
Appendix 3 - VDEW-Regulations to Parallel operation
"Technical Regulations Parallel operation of Plants that produce
Electricity for their own use with the Middle voltage of the Electricity-
Supply-Organization (EVU)"
Appendix 4 - Extra Page: Announcements of Disruptions/Regulation
Appendix 5 - Price-Sheet
<PAGE>
Price-Sheet
for Input of Electricity from Power stations
on the basis of rational Energy-Usage
Payment Schedule (Updated: October 10, 1998)
High-Charge times (HT) Supply Commitment
<TABLE>
<S> <C> <C>
January - March Monday - Friday 6.00 - 22.00 h
8.0 Pf/kWh
April - June Monday - Friday 6.00 - 7.00 h
5.5 Pf/kWh
7.00 - 19.00 h 8.0 Pf/kWh
19.00 - 22.00 h 5.5 Pf/kWh
July - September Monday - Friday 6.00 - 7.00 h
5.5 Pf/kWh
7.00 - 16.00 h 8.0 Pf/kWh
16.00 - 22.00 h 5.5 Pf/kWh
October - December Monday - Friday 6.00 - 22.00 h
8.0 Pf/kWh
Year round Saturdays 6.00 - 13.00 h
4.2 Pf/kWh
Low-Charge times (NT) 4.2 Pf/kWh
Minimum Payment 3.0 Pf/kWh
3. Sales Tax -
The listed prices are net prices; upon written confirmation of the
calculation for the right of Sales Tax is presented, these prices will bear
the Sales Tax (Goods- and Service Tax) in an amount to be the existing tax
laws of Germany. Upon the issuance of the invoice of the sales tax to the
Operating Company of the Electricity Plant, they shall be realized.
</TABLE>
Chartered Accountants
Management Consultants
Canadian Member Firm of
Grant Thornton International GRANT THORNTON
February 17, 1999
Re: Sustainable Development International Inc.
Consent of Independent Accountants
As independent chartered accountants, we hereby consent to the use of our
report and to all
references to our firm included in, or made a part of, this registration
statement.
/s/Grant Thornton
GRANT THORNTON
2400 Scotia Place 1
10060 Jasper Avenue
Edmonton, Alberta
T5J 3R8
Tel: (403) 422-7114
Fax: (403) 426-3208
e-mail: [email protected]
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