SHARE PURCHASE AGREEMENT
BETWEEN
International Fuel Technology, Inc.
AND
Sellers listed on the signature page hereof
April 30, 2001
TABLE OF CONTENTS
SHARE PURCHASE AGREEMENT...................................................... 1
1. DEFINITIONS............................................................... 1
2. BASIC TRANSACTION......................................................... 5
(a) Purchase and Sale of Shares.......................................... 5
(b) Consideration for Purchase........................................... 5
(c) The Closing.......................................................... 5
(d) Deliveries at the Closing............................................ 5
(e) Buyer Shares......................................................... 6
(f) Registration Rights.................................................. 6
(g) Conditions on Sale of Shares.........................................10
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.............................10
(a) Organization of the Company..........................................10
(b) Authority; No Conflict...............................................11
(c) Consents.............................................................12
(d) Shares...............................................................12
(e) Capitalization.......................................................12
(f) Brokers' Fees........................................................13
(g) Title to Assets......................................................13
(h) Subsidiaries.........................................................13
(i) Books and Records....................................................13
(j) Depositaries; Powers of Attorney, Etc................................13
(k) Events Subsequent to March 31, 2001..................................13
(l) No Liabilities.......................................................15
(m) Legal Compliance.....................................................15
(n) Tax Matters..........................................................15
(o) Real Property........................................................16
(p) Intellectual Property................................................16
(q) Tangible Assets......................................................18
(r) Inventory............................................................19
(s) Contracts............................................................19
i
(t) Notes and Accounts Receivable........................................20
(u) Insurance............................................................20
(v) Litigation...........................................................20
(w) Product Warranty.....................................................20
(x) Product Liability....................................................20
(y) Employees............................................................20
(z) Employee Benefits....................................................20
(aa) Guaranties..........................................................21
(bb) Environmental, Health, and Safety Matters...........................21
(cc) Certain Business Relationships With the Company.....................22
(dd) Disclosure..........................................................22
(ee) Investment..........................................................22
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER...............................22
(a) Organization of the Buyer............................................22
(b) Authority; No Conflict...............................................23
(c) Consents.............................................................24
(d) Brokers' Fees........................................................24
(e) SEC Documents........................................................24
(f) No Material Adverse Effect...........................................24
(g) DPI Transaction......................................................24
(h) Disclosure...........................................................24
5. PRE-CLOSING COVENANTS.....................................................24
(a) General..............................................................24
(b) Notices and Consents.................................................25
(c) Operation of Business................................................25
(d) Preservation of Business.............................................25
(e) Full Access..........................................................25
(f) Notice of Developments...............................................25
(g) Exclusivity..........................................................25
6. CONDITIONS TO OBLIGATION TO CLOSE.........................................25
(a) Conditions to Obligation of the Buyer................................25
(b) Conditions to Obligation of the Sellers..............................27
7. TERMINATION...............................................................27
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(a) Termination of Agreement.............................................28
(b) Effect of Termination................................................28
8. POST-CLOSING COVENANTS....................................................28
(a) General..............................................................28
(b) Litigation Support...................................................28
(c) Transition...........................................................29
(d) Confidentiality......................................................29
(e) Covenant Not to Compete..............................................29
(f) Buyer Support of Company.............................................30
9. REMEDIES FOR BREACHES OF THIS AGREEMENT...................................30
(a) Survival of Representations and Warranties...........................30
(b) Indemnification Provisions for Benefit of the Buyer..................31
(c) Indemnification Provisions for Benefit of the Sellers................31
(d) Limitation of Indemnification Claims.................................31
(e) Matters Involving Third Parties......................................31
(f) Determination of Adverse Consequences................................32
(g) Escrow; Right of Set-Off.............................................32
10. TAX MATTERS...............................................................32
(a) Tax Periods Ending on or Before the Closing Date.....................33
(b) Tax Periods Beginning Before and Ending After the Closing Date.......33
(c) Cooperation on Tax Matters...........................................33
(d) Certificates.........................................................33
(e) Certain Taxes........................................................33
11. MISCELLANEOUS.............................................................34
(a) Press Releases and Public Announcements..............................34
(b) No Third-Party Beneficiaries.........................................34
(c) Entire Agreement.....................................................34
(d) Succession and Assignment............................................34
(e) Counterparts.........................................................34
(f) Headings.............................................................34
(g) Notices..............................................................34
(h) Governing Law........................................................35
(i) Amendments and Waivers...............................................35
iii
(j) Severability.........................................................35
(k) Expenses.............................................................36
(l) Construction.........................................................36
(m) Incorporation of Exhibits and Schedules..............................36
(n) Specific Performance.................................................36
(o) Submission to Jurisdiction...........................................36
(p) Seller Representative................................................37
Exhibit A--List of Sellers.......................................1
Exhibit B--Sellers' Interest.....................................2
Exhibit C--Performance Escrow Agreement..........................4
DISCLOSURE SCHEDULE.............................................15
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SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (this "Agreement") made as of April 30, 2001,
by and among International Fuel Technology, Inc., a corporation organized under
the laws of the State of Nevada ("Buyer"), and each of persons listed on Exhibit
A (the "Sellers").
Whereas:
(A) The Company is a private company limited by shares incorporated under the
Companies Xxx 0000.
(B) The Sellers hold all of the outstanding share capital of Interfacial
Technologies (UK) Ltd., a company incorporated in England with registered
number of 3996824 (the "Company").
(C) This Agreement contemplates a transaction in which the Buyer will purchase
all of the share capital of the Company from the Sellers in return for the
Buyer Shares.
Now, Therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. Definitions. Unless context otherwise requires, capitalized terms used
in this Agreement shall have the meanings ascribed to them in this (S)1.
"Accredited Investor" has the meaning set forth in Regulation D promulgated
under the Securities Act.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliates' Intellectual Property" has the meaning set forth in (S)3(p)(i)
below.
"Agreement" has the meaning set forth in the preamble.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Best Efforts" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible, provided, however, that an obligation
to use Best Efforts under this Agreement does
not require the Person subject to that obligation to take actions that would
result in a materially adverse change in the benefits to such Person of this
Agreement and the Contemplated Transactions.
"Business" means the business that the Company conducts as of the Closing
Date, which includes the business of (i) researching, developing, licensing, or
selling technologies intended to reduce harmful pollutant emissions from
petroleum-based fuels or (ii) manufacturing or marketing products derived or
related to such technologies.
"Buyer" has the meaning set forth in the preface above.
"Buyer Shares" means the common stock of the Buyer, $0.01 par value.
"Buyers' Closing Documents" has the meaning set forth in (S)4(b) below.
"Closing" has the meaning set forth in (S)2(c) below.
"Closing Date" has the meaning set forth in (S)2(c) below.
"Confidential Information" means any information concerning the businesses
and affairs of the Company that is not already generally available to the
public.
"Consent" means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" means all of the transactions contemplated by
this Agreement, including (a) the sale of the Shares by Sellers to Buyer, (b)
the execution, delivery, and performance of the documents referenced herein, (c)
the performance by Buyer and Sellers of their respective covenants and
obligations under this Agreement, and (d) Buyer's acquisition and ownership of
the Shares and exercise of control over the Company.
"Company" has the meaning set forth in the recitals above.
"Companies Act means the Companies' Xxx 0000 as amended by the Companies
Xxx 0000.
"Disclosure Schedule" has the meaning set forth in (S)3 below.
"Employee Benefit Plan" has the meaning set forth in (S)3(z) below.
"Environmental, Health, and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic
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chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect.
"Escrow Account" means the Escrow Account as defined in the Performance
Escrow Agreement.
"Governmental Authorization" means any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" means any: nation, state, county, city, town, village,
district, or other jurisdiction of any nature; federal, state, local, municipal,
foreign, or other government; governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal); multi-national organization or body; or
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.
"Indemnified Party" has the meaning set forth in (S)9(e) below.
"Indemnifying Party" has the meaning set forth in (S)9(e) below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Legal Requirement" means any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
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"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any properly appointed
arbitrator by the Sellers and the Buyer.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Organizational Documents" means the Certificate of Incorporation and
Original Memorandum of Articles of Association, each as amended, of the Company.
"OTC" has the meaning set forth in (S)2(g) below.
"Party" means the Sellers and/or the Buyer.
"Performance Escrow Agreement" means the agreement of the same title to be
executed at Closing pursuant to (S)6(a)(ix).
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a Governmental Body.
"Purchase Price" has the meaning set forth in (S)2(b) below.
"Registration" has the meaning set forth in (S)2(f) below.
"Registration Statement" has the meaning set forth in (S)2(f) below.
"Restricted Area" means the world.
"SEC" has the meaning set forth in (S)2(f) below.
"SEC Documents" has the meaning set forth in (S)4(e) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Sellers" means each of the Persons shown on the attached Exhibit A.
"Sellers' Closing Documents" has the meaning set forth in (S)3(b) below.
"Seller Representative"--means, collectively, Simon Orange, Xxx Xxxxxxxxxx
and Xxxxx Xxxxxxxx (and their successor), who as a result of the due
authorization of this Agreement by the Sellers shall be deemed to have been
appointed by the Sellers for the purpose of acting on behalf
4
of the Sellers with respect to the transactions contemplated by this Agreement,
including without limitation acting as transfer agent for the Buyer Shares,
administering certain portions of the Performance Escrow Agreement, and making
decisions with respect to indemnity claims and amendments to this Agreement, the
Performance Escrow Agreement, or any ancillary agreements.
"Shares" means all of the entire raised share capital of the Company.
"State Acts" has the meaning set forth in (S)2(e) below.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in (S)9(e) below.
2. Basic Transaction.
(a) Purchase and Sale of Shares. On and subject to the terms and conditions
of this Agreement, the Buyer agrees to purchase from the Sellers, and the
Sellers agree to sell, transfer, convey, and deliver to the Buyer, all of the
Shares at the Closing for the consideration specified below in this (S)2.
(b) Consideration for Purchase. In consideration of the Contemplated
Transactions, the Buyer will at Closing issue Twenty One Million (21,000,000)
Buyer Shares to be registered upon the books and records of the Buyer in the
name of the Sellers, pro rata with respect to the Sellers' respective interests
in the Company as shown more accurately on Exhibit B hereto; provided, however,
that such Buyer Shares shall be delivered in accordance with (S)2(d)(ii)(B) (the
"Purchase Price").
(c) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxxxx Xxxxxxxx,
LLP in St. Louis, Missouri commencing at 9:00 a.m. local time on Friday, May 4,
2001 or such other date as the Parties may mutually determine (the "Closing
Date").
(d) Deliveries at the Closing. At the Closing, each of the Parties will
make the deliveries described in this (S)2(d).
(i) The Sellers will deliver to the Buyer (with each document duly
executed and acknowledged, as appropriate):
5
(A) the various certificates, instruments, and documents referred
to in (S)6(a) below; and
(B) such other instruments of sale, transfer, conveyance, and
assignment as necessary to effectuate the Contemplated Transactions.
(ii) The Buyer will deliver to the Sellers (with each document duly
executed and acknowledged, as appropriate):
(A) the various certificates, instruments, and documents referred
to in (S)6(b) below; and
(B) in accordance with (S)2(b) above, the Buyer Shares with
twelve million five hundred thousand (12,500,000) of such Buyer Shares
to be delivered to the Sellers in the amounts set forth in Exhibit B
subject only to the terms of (S)2(e), and the balance of such Buyer
Shares to be held in the name of the Sellers in the Escrow Account.
(e) Buyer Shares. The Sellers acknowledge that the Buyer Shares are
securities that have not been registered under the Securities Act or applicable
state securities laws (the "State Acts"), and that the Buyer Shares may not be
assigned, sold, pledged, hypothecated, donated or otherwise transferred without
registration under the Securities Act and the State Acts or pursuant to a
transaction which, in the opinion of counsel acceptable to the Buyer, is exempt
from such registration requirements. The Sellers further agree that no
disposition of Shares may be made unless Buyer shall first have been provided
with a written opinion satisfactory to Buyer in form and substance from counsel
reasonably satisfactory to the Buyer to the effect that the holder may transfer
the Buyer Shares as desired without registration under the Securities Act or the
State Acts. Each certificate for Buyer Shares will be imprinted with a legend
substantially in the following form, which legend shall be modified to remove
all references to this Agreement and any securities laws at such time as the
restrictions upon the disposition of the shares set forth herein or therein, as
the case may be, lapse:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The transfer of the
securities represented by this certificate is subject to certain securities
laws restrictions and restrictions as set forth in a Share Purchase
Agreement dated as of April 30, 2001. The issuer of this certificate will
furnish a copy of these provisions to the holder hereof without charge upon
written request.
(f) Registration Rights. The Buyer hereby covenants that it will file a
registration statement on the appropriate form ("Registration Statement") with
the Securities and Exchange Commission (the "SEC") to register (the
"Registration") Two Million (2,000,000) of the Buyer Shares as soon as is
reasonably practicable following the Closing Date, but no later than the
sixtieth (60th) day after the Closing Date. In connection with the Registration,
the Buyer shall:
(i) respond in writing to any SEC comments in the Registration
Statement (or any amendment thereto) within ten (10) business days of the
receipt of such comments,
6
and shall use its Best Efforts to cause the Registration Statement to be
declared effective by the SEC no more than five days following the receipt
of a "No Review" or similar letter from the SEC or the fifth day following
the day the SEC notifies the Buyer that it has completed its review of the
Registration Statement and that such Registration Statement is eligible to
be declared effective;
(ii) prepare and file with the SEC such amendments and supplements the
Registration Statement as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of the Buyer Shares
covered by the Registration Statement and to keep such registration
statement effective for that period of time specified in subsection (iv)
below; provided, however, that before filing the Registration Statement or
any amendments thereto, the Buyer will furnish to the Sellers' counsel,
copies of all such documents proposed to be filed;
(iii) pay any and all expenses incurred in connection with the
Registration, including without limitation all registration, filing and
qualification fees, printing expenses (other than any underwriter's
discounts on commissions);
(iv) keep the Registration Statement continuously effective for the
lesser of a period of one hundred eighty (180) days or for such period as
the Sellers complete the distribution described in the Registration
Statement;
(v) furnish to each Seller such number of conformed copies of the
Registration Statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in the Registration Statement (including each
preliminary prospectus and any summary prospectus) and any prospectus filed
under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
Seller may reasonably request in order to facilitate the public sale or
other disposition of the Buyer Shares included in the Registration;
(vi) use its Best Efforts to register the Buyer Shares included in the
Registration Statement under such other securities laws or blue sky laws as
any Seller shall reasonably request, to keep such registrations or
qualifications in effect for so long as the Registration Statement remains
in effect, and take any other action which may be reasonably necessary to
enable such Seller to consummate the disposition; provided that for such
purpose Buyer shall not be required to qualify generally to do business as
a foreign corporation in any jurisdiction wherein it would not but for the
requirements of this subdivision be obligated to be so qualified or to
consent to general service of process in any such jurisdiction;
(vii) use its Best Efforts to cause all Buyer Shares covered by such
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
Sellers to consummate the disposition of such securities;
7
(viii) notify the Sellers and their counsel promptly and confirm such
advice in writing promptly after the Buyer has knowledge thereof:
(A) when the Registration Statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to
the Registration Statement has been filed, and, with respect to the
Registration Statement or any post-effective amendment thereto, when
the same has become effective;
(B) of any request by the SEC for amendments or supplements to
the Registration Statement or the prospectus or for additional
information;
(C) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings by any person for that purpose; and
(D) of the receipt by the Buyer of any notification with respect
to the suspension of the registration or qualification of any Buyer
Shares for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for such
purpose;
(ix) notify each Seller at any time when a prospectus is required to
be delivered under the Securities Act, upon discovery that, or upon the
happening of any event as a result of which, the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material facts required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and at the request of any Seller
promptly prepare and furnish to such Seller a reasonable number of copies
of a supplement to or an amendment to such prospectus as may be necessary
to that, as thereafter delivered to the purchasers, such prospectus shall
not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(x) use Best Efforts to obtain the withdrawal of any order suspending
the effectiveness of the Registration Statement as soon as practicable;
(xi) otherwise use its Best Efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of a least twelve months, but not more than eighteen months,
beginning with the first full calendar month after the effective date of
the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(xii) use its Best Efforts to list all Buyer Shares covered by such
Registration Statement on any securities exchange on which any shares of
the Buyer's common stock are then listed.
8
The Buyer may require each Seller to furnish the Buyer such information
regarding such Seller and the distribution of the Buyer Shares covered by such
Registration as the Buyer may from time to time reasonably request in writing.
The Buyer will not file any Registration Statement with respect to the
Buyer Shares issued pursuant to the Contemplated Transactions, or amendment
thereto or any prospectus or any supplement thereto (including such documents
incorporated by reference and proposed to be filed after the initial filing of
the Registration Statement) to which the Sellers shall reasonably object,
provided that the Buyer may file such documents in a form required by law or
upon the advice of its counsel.
The Buyer represents and warrants to each Seller that it has obtained all
necessary waivers, consents and authorizations necessary to execute this
Agreement and consummate the Contemplated Transactions.
Each Seller agrees that, upon receipt of any notice from the Buyer of the
occurrence of any event of the kind described in (S)2(f)(ix), such Seller will
forthwith discontinue such Seller's disposition of Buyer Shares pursuant to the
Registration Statement until such Seller receives the copies of the supplemented
or amended prospectus contemplated by (S)2(f)(ix) and, if so directed by the
Buyer, will deliver to the Buyer (at the Buyer's expense) all copies, other than
permanent file copies, then in such Seller's possession of the prospectus
relating to such Buyer Shares current at the time of receipt of such notice.
In connection with the preparation and filing of the Registration Statement
the Buyer will give the Sellers, and their counsel and accountants, the
opportunity to participate in the preparation of Registration Statement, each
prospectus included therein or filed with the SEC, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Buyer with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the reasonable opinion of Sellers' counsel,
to conduct a reasonable investigation within the meaning of the Securities Act.
The Buyer will, and hereby does agree to indemnify and hold harmless the
Sellers against any losses, claims, damages or liabilities, joint or several, to
which such Sellers may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arising out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Buyer will reimburse Sellers for any
legal or any other expenses reasonably incurred by them in connection with
investigation or defending any such loss, claim, liability, action or
proceeding, provided that Buyer shall not be liable in any such case to the
extent that any such loss, claim, damage, liability, (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or
9
supplement in reliance upon and in conformity with written information furnished
to the Buyer by the Sellers stating that it is for use in the preparation
thereof. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any Seller and shall survive the transfer
of the Buyer Shares by the Sellers.
The Buyer may require, as a condition to including the Buyer Shares in the
Registration Statement, that the Buyer shall have received an undertaking
satisfactory to it from the Sellers of such Buyer Shares, to indemnify and hold
harmless (in the same manner and to the same extent as set forth above the
Buyer, each director of the Buyer, each officer of the Buyer and each other
person, if any, who controls the Buyer within the meaning of the Securities Act,
with respect to any statement or alleged statement in or omission or alleged
omission from the Registration Statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Buyer through an instrument duly executed by such
Seller specifically stating that it is for use in the preparation of the
Registration Statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Any such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Buyer or any such director, officer or controlling person and shall survive the
transfer of the Buyer Shares by such Seller.
(g) Conditions on Sale of Shares. Sellers covenant that, during the one (1)
year period after the Registration Statement is declared effective by the SEC,
(i) no Seller will, without the prior written consent of the Buyer, sell any
Buyer Shares received hereunder on the open market at a price lower than the
last sale price quoted on the NASD Over-The-Counter Bulletin Board (the "OTC"),
(ii) no Seller shall, during any consecutive thirty (30) day period, sell more
than ten percent (10%) of the registered Buyer Shares received by such Seller
hereunder, and (iii) no Seller shall sell in any single transaction or during
any OTC trading day more than ten thousand (10,000) shares. After any and all
sales of Buyer Shares during the first year following the date that the
Registration Statement is declared effective by the SEC, the Sellers shall
promptly give written notice to Buyer and shall provide Buyer with all
information as Buyer shall reasonably request to determine compliance with this
Section.
3. Representations and Warranties of the Seller. The Sellers, jointly and
severally (except as specifically provided otherwise in this (S)3), represent
and warrant to the Buyer that the statements contained in this (S)3 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this (S)3), except as set
forth in the disclosure schedule accompanying this Agreement and initialed by
the Parties (the "Disclosure Schedule"). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this (S)3.
(a) Organization of the Company. The Company is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. The Company is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required. The Company has full corporate power and authority and all licenses,
permits, and authorizations necessary to carry on the businesses in which it is
10
engaged and in which it presently proposes to engage and to own and use the
properties owned and used by it. (S)3(a) of the Disclosure Schedule lists the
directors, managers and officers of the Company. The Sellers have delivered to
the Buyer correct and complete copies of the Organizational Documents of the
Company. The Company is not in default under or in violation of any provision of
its Organizational Documents.
(b) Authority; No Conflict
(i) Except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws of
general application affecting enforcement of creditors' rights generally
and the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and
would be subject to the discretion of the court before which any proceeding
therefor may be brought:
(A) This Agreement constitutes the legal, valid, and binding
obligation of Sellers, enforceable against Sellers in accordance with
its terms; and
(B) Upon the execution and delivery by Sellers of the documents
contemplated herein (collectively, the "Sellers' Closing Documents"),
the Sellers' Closing Documents will constitute the legal, valid, and
binding obligations of Sellers, enforceable against Sellers in
accordance with their respective terms.
(ii) Sellers have the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and the
Sellers' Closing Documents and to perform their obligations under this
Agreement and the Sellers' Closing Documents.
(iii) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly, in any way which may reasonably be expected to
cause a material adverse effect on the Company (with or without notice or
lapse of time):
(A) contravene, conflict with, or result in a violation of (1)
any provision of the Company's Organizational Documents, or (2) any
resolution adopted by the board of directors, the managers, or the
shareholders of the Company;
(B) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any
of the Contemplated Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which the
Company or any Seller, or any of the assets owned or used by the
Company, may be subject;
(C) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Company or that
otherwise relates to the business of, or any of the assets owned or
used by, the Company;
11
(D) cause Buyer or the Company to become subject to, or to
become liable for the payment of, any Tax;
(E) cause any of the assets owned by the Company to be
reassessed or revalued by any taxing authority or other Governmental
Body;
(F) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Company
contract listed in (S)3(s) of the Disclosure Schedule;
(G) result in the imposition or creation of any Security
Interest upon or with respect to any of the assets owned or used by
the Company; or
(H) Cause the Company to breach the terms of any contract.
(c) Consents. Neither any Seller nor the Company is or will be required to
give any notice to or obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.
(d) Shares. Each Seller holds of record and owns beneficially (except for
the Seller designated as nominee on Exhibit A, the "Nominee," which Seller is
not the beneficial owner of the number of shares set forth next to his name),
the number of Shares set forth next to his or its name in Exhibit B, free and
clear of any restrictions on transfer, Taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. No Seller is a party to any option, warrant, purchase right, or other
contract or commitment that could require the Seller to sell, transfer, or
otherwise dispose of any of the share capital of the Company (other than this
Agreement). No Seller is a party to any voting trust, proxy, or other agreement
or understanding with respect to the voting related to the Company.
(e) Capitalization. Sellers are and will be on the Closing Date the
legal and beneficial owners (except for the Seller designated as nominee on
Exhibit A, the "Nominee," which Seller is not the beneficial owner of the number
of shares set forth next to his name) and holders of the Shares, free and clear
of all Security Interests. The Shares are fully-paid and non-assessable. The
Shares constitute all of the issued and outstanding capital interest in the
Company. Upon the Closing, the Buyer will be the legal and beneficial owner of
the Shares. No legend or other reference to any purported Security Interest
appears upon any certificate representing equity securities of the Company. All
of the outstanding equity securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable in the U.K. There are no
contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of the Company. None of the outstanding equity securities or
other securities of the Company were issued in violation of any Legal
Requirement. The Company does not own, or have any contract to acquire, any
equity securities or other securities of any Person or any direct or indirect
equity or ownership interest in any other business or subsidiary.
12
(f) Brokers' Fees. None of the Sellers has any Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
Contemplated Transactions for which the Buyer could become liable or obligated.
The Company has no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement.
(g) Title to Assets. The Company has good and marketable title to, or a
valid leasehold interest in or license to use, the properties and assets used by
it, free and clear of all Security Interests.
(h) Subsidiaries. The Company has no subsidiaries or interests in other
Persons.
(i) Books and Records. The books of account, minute books, shareholders'
registers, and other records of the Company, all of which have been made
available to Buyer, are complete and correct in all material respects and have
been maintained in all material respects in accordance with the requirements of
the Companies Act, including the maintenance of an adequate system of internal
controls. The minute books of the Company contain materially accurate and
complete records of all meetings held of, and corporate action taken by, the
shareholders, the boards of directors, the managers and committees of the boards
of directors of the Company, and no meeting of any such shareholders, board of
directors, managers or committee has been held for which minutes have not been
prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Company.
(j) Depositaries; Powers of Attorney, Etc. (S)3(j) of the Disclosure
Letter sets forth (i) the name of each bank or similar entity in which the
Company has an account, lock box or safe deposit box and the names of all
persons authorized to draw thereon or to have access thereto, and (ii) the name
of each person holding a general or special power of attorney from the Company
and a description of the terms thereof.
(k) Events Subsequent to March 31, 2001. Since March 31, 2001, there has
not been any adverse change in the business, financial condition, operations,
results of operations, or future prospects of the Company. Without limiting the
generality of the foregoing, since that date:
(i) the Company has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a fair consideration in
the Ordinary Course of Business;
(ii) the Company has not entered into any agreement, contract, lease,
or license (or series of related agreements, contracts, leases, and
licenses);
(iii) no party (including the Company) has accelerated, terminated,
modified, or cancelled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) to which the
Company is a party or by which it is bound;
(iv) the Company has not imposed any Security Interest upon any of
its assets, tangible or intangible;
13
(v) the Company has not made any capital expenditure (or series of
related capital expenditures);
(vi) the Company has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions);
(vii) the Company has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation;
(viii) the Company has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of
Business;
(ix) the Company has not cancelled, compromised, waived, or released
any right or claim (or series of related rights and claims);
(x) the Company has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in any of the
Organizational Documents of the Company;
(xii) the Company has not issued, sold, or otherwise disposed of any
of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any
of its share capital;
(xiii) the Company has not declared, set aside, or paid any dividend
or made any distribution with respect to its share capital (whether in cash
or in kind) or redeemed, purchased, or otherwise acquired any of its share
capital;
(xiv) the Company has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property;
(xv) the Company has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xvi) the Company has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
(xvii) the Company has not granted any increase in the base
compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xviii) the Company has not adopted, amended, modified, or terminated
any bonus, profit-sharing, incentive, severance, or other plan, contract,
or commitment for the
14
benefit of any of its directors, officers, and employees (or taken any such
action with respect to any other Employee Benefit Plan);
(xix) the Company has not made any other change in employment terms
for any of its directors, officers, and employees outside the Ordinary
Course of Business;
(xx) the Company has not made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of Business;
(xxi) there has not been any other occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of
Business involving the Company; and
(xxii) the Company has not committed to any of the foregoing.
(l) No Liabilities. Except as set forth on (S)3(l) of the Disclosure
Schedule, the Company has no Liabilities (and there is no Basis for any present
or future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against the Company giving rise to any Liability).
(m) Legal Compliance. The Company has complied with all applicable
material Legal Requirements, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply.
(n) Tax Matters.
(i) The Company has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all respects. All
Taxes owed by the Company (whether or not shown on any Tax Return) have
been paid. The Company currently is not the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where the Company does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of the Company that arose in
connection with any failure (or alleged failure) to pay any Tax.
(ii) Except as set forth on (S)3(l) of the Disclosure Schedule, the
Company has withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, shareholder, or other third party.
(iii) No Seller or director or officer (or employee responsible for
Tax matters) of the Company expects any authority to assess any additional
Taxes for any period for which Tax Returns have been filed. There is no
dispute or claim concerning any Tax Liability of the Company either (A)
claimed or raised by any authority in writing or (B) as to which any of the
Sellers and the directors and officers (and employees responsible for Tax
matters) of the Company has Knowledge. (S)3(n)(iii) of the Disclosure
Schedule lists all federal, state, local, and foreign income Tax Returns
filed with respect to the Company, none of which have been audited or are
currently the subject of audit.
15
(iv) The Company has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(v) Except as set forth on (S)3(l) of the Disclosure Schedule, the
Company has no Liability for unpaid Taxes.
(vi) The Company is not a party to any Tax allocation or sharing
agreement. The Company (A) has not been a member of a group filing a
consolidated Tax Return or (B) has any Liability for the Taxes of any
Person (other than the Company) as a transferee or successor, by contract,
or otherwise.
(o) Real Property.
(i) The Company owns no real property.
(ii) The Company does not lease, sublease or use any real property.
(p) Intellectual Property.
(i) The Company owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary
for the operation of the businesses of the Company as presently conducted
and as presently proposed to be conducted. Without limiting the foregoing,
the Company is the licensee of certain Intellectual Property pursuant to
the license agreement set forth on (S)3(p)(v) of the Disclosure Schedule
(the "Affiliates' Intellectual Property") and will, by Closing, own all
Affiliates' Intellectual Property free and clear of any claims or Security
Interest, which Affiliates' Intellectual Property will be available to the
Company immediately subsequent to the Closing hereunder and the completion
of the Contemplated Transactions on the same basis. The Company has taken
all necessary and desirable action to maintain and protect each item of
Intellectual Property that it owns, uses or proposes to use. The Sellers
and their Affiliates have taken all necessary and desirable action to
maintain and protect each item of the Affiliates' Intellectual Property.
(ii) None of the Sellers owns any Intellectual Property related to
the Affiliates' Intellectual Property, except as shown on (S)3(p)(ii) of
the Disclosure Schedule. To the Knowledge of the Sellers, none of the
Affiliates of the Sellers or the Company owns any Intellectual Property
related to the Affiliates' Intellectual Property, except as shown on
(S)3(p)(ii) of the Disclosure Schedule.
(iii) To the knowledge of the Sellers, none of the Company or the
Sellers (or their Affiliates in connection with the Affiliates'
Intellectual Property) has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and none of the Sellers (or their
Affiliates in connection with the Affiliates' Intellectual Property) the
directors and officers (and employees with responsibility for Intellectual
Property matters) of the Company has ever received any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the Company, the
Sellers or their Affiliates must license or refrain from using any
Intellectual Property
16
rights of any third party). To the Knowledge of any of the Sellers and the
directors and officers (and employees with responsibility for Intellectual
Property matters) of the Company, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of the Company or the Affiliates' Intellectual
Property.
(iv) 3(p)(iv) of the Disclosure Schedule identifies, as of the
Closing Date, each patent or registration which has been issued to the
Sellers, the Company or their Affiliates in connection with the Affiliates'
Intellectual Property or to the Company with respect to any of its
Intellectual Property, identifies each pending patent application or
application for registration with respect to the Affiliates' Intellectual
Property or which the Company has made with respect to any of its
Intellectual Property, and identifies each license, agreement, or other
permission which (a) the Sellers, their Affiliates, or the Company has
granted with respect to the Affiliates' Intellectual Property; or (b) the
Company has granted to any third party with respect to any of its
Intellectual Property (together with any exceptions). The Company has
delivered to the Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as
amended to date) and has made available to the Buyer correct and complete
copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. (S)3(p)(iv) of the
Disclosure Schedule also identifies each trade name or unregistered
trademark used by the Company in connection with any of its businesses.
With respect to each item of Intellectual Property required to be
identified in (S)3(p)(iv) of the Disclosure Schedule, as of the Closing:
(A) the Company will possess all right, title, and interest in
and to the item, free and clear of any Security Interest, license, or
other restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened which
challenges the legality, validity, enforceability, use, or ownership
of the item; and
(D) the Company has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(v) (S)3(p)(v) of the Disclosure Schedule identifies each item of
Intellectual Property that any third party owns and that Company uses
pursuant to license, sublicense, agreement, or permission. The Company has
delivered to the Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect
to each item of Intellectual Property required to be identified in
(S)3(p)(v) of the Disclosure Schedule;
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and
effect;
17
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of the
Contemplated Transactions;
(C) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(D) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(E) with respect to each sublicense, the representations and
warranties set forth in subsections (A) through (D) above are true and
correct with respect to the underlying license;
(F) the underlying item of Intellectual Property is not subject
to any outstanding injunction, judgment, order, decree, ruling, or
charge;
(G) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened which
challenges the legality, validity, or enforceability of the underlying
item of Intellectual Property; and
(H) the Company has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
(vi) There are no agreements, contracts or licenses (except for this
Agreement) related to the Affiliates' Intellectual Property, except as
shown on (S)3(p)(vi) of the Disclosure Schedule.
(vii) To the Knowledge of any of the Sellers and the directors and
officers (and employees with responsibility for Intellectual Property
matters) of the Company, the Company will not interfere with, infringe
upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the continued
operation of its businesses as presently conducted and as presently
proposed to be conducted.
(viii) None of the Sellers and the directors and officers (and
employees with responsibility for Intellectual Property matters) of the
Company has any actual knowledge, without investigation, of any new
products, inventions, procedures, or methods of manufacturing or processing
that any competitors or other third parties have developed which reasonably
could be expected to supersede or make obsolete any product or process of
the Company.
(q) Tangible Assets. The Company does not own, lease, sublease or use any
buildings, machinery, equipment, or other tangible assets.
18
(r) Inventory. The Company neither owns, leases, subleases or uses any
inventory, supplies, work in process, raw materials, parts or finished goods.
(s) Contracts. (S)3(s) of the Disclosure Schedule lists the following
contracts and other agreements to which the Company is a party:
(i) any agreement (or group of related agreements) for the rental,
hire or lease of personal property to or from any Person;
(ii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement involving any of the Sellers or their Affiliates
(other than the Company);
(vii) any profit sharing, share option, share purchase, share
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a full-
time, part-time, consulting, or other basis providing severance benefits;
(x) any agreement under which it has advanced or loaned any amount to
any of its directors, officers, and employees outside the Ordinary Course
of Business;
(xi) any agreement under which the consequences of a default or
termination could have an adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the
Company; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of (Pounds)1,000.
The Company has delivered to the Buyer a correct and complete copy of each
written agreement listed in (S)3(s) of the Disclosure Schedule (as amended to
date) and a written summary setting forth the terms and conditions of each oral
agreement referred to in (S)3(s) of the Disclosure Schedule. With respect to
each such agreement: (A) the agreement is legal, valid, binding,
19
enforceable, and in full force and effect; (B) the agreement will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms immediately following the consummation of the Contemplated Transactions;
(C) no party is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement; and (D) no
party has repudiated any provision of the agreement.
(t) Notes and Accounts Receivable. The Company is not the beneficiary of
any notes or accounts receivable.
(u) Insurance. The Company has never been a party, a named insured, or
otherwise the beneficiary of coverage at any time under any insurance policy.
(v) Litigation. The Company is not (i) subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) a party or
threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. None of the Sellers and the directors and officers (and employees
with responsibility for litigation matters) of the Company has any reason to
believe that any such action, suit, proceeding, hearing, or investigation may be
brought or threatened against the Company.
(w) Product Warranty. The Company has not manufactured, sold, leased, or
delivered any product to any third party. The Company has no standard terms and
conditions of sale or lease. The Company has not provided any services to any
third party.
(x) Product Liability. The Company has no Liability (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by the Company.
(y) Employees. To the Knowledge of any of the Sellers and the directors
and officers (and employees with responsibility for employment matters) of the
Company, no executive, key employee, or group of employees has any plans to
terminate employment with the Company. The Company is not a party to or bound by
any collective bargaining agreement, nor it experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining disputes. The
Company has not committed any unfair labor practice. None of the Sellers and the
directors and officers (and employees with responsibility for employment
matters) of the Company has any Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of the Company.
(z) Employee Benefits. With the exception of the expense reimbursement
arrangements set forth on Schedule (S)3(z) of the Disclosure Schedule, which
will be terminated prior to Closing, the Company has no employee benefit,
health, welfare, supplemental unemployment benefit, bonus, severance, pension,
profit sharing, deferred compensation, stock, stock appreciation, retirement,
hospitalization insurance, medical, dental, legal, disability and similar plans
or arrangements or practices relating to the employees or former employees of
Company ("Employee Benefit Plan").
20
(aa) Guaranties. The Company is not a guarantor or otherwise liable for
any Liability or obligation (including indebtedness) of any other Person.
(bb) Environmental, Health, and Safety Matters
(i) Each of the Company and its respective predecessors and
Affiliates has complied and is in compliance with all Environmental,
Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, each of the
Company and its Affiliates has obtained and complied with, and is in
compliance with, all permits, licenses and other authorizations that are
required pursuant to Environmental, Health, and Safety Requirements for the
occupation of its facilities and the operation of its business; a list of
all such permits, licenses and other authorizations is set forth on
(S)3(bb) of the Disclosure Schedule.
(iii) Neither the Company, nor its respective predecessors or
Affiliates has received any written or oral notice, report or other
information regarding any actual or alleged violation of Environmental,
Health, and Safety Requirements, or any Liabilities or potential
Liabilities, including any investigatory, remedial or corrective
obligations, relating to any of them or its facilities arising under
Environmental, Health, and Safety Requirements.
(iv) None of the following exists at any property or facility owned
or operated by the Company: (1) underground storage tanks, (2) asbestos-
containing material in any form or condition, (3) materials or equipment
containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(v) None of the Company, or its predecessors or Affiliates has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to Liabilities.
(vi) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for
site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called "transaction-
triggered" or "responsible property transfer" Environmental, Health, and
Safety Requirements.
(vii) Neither the Company, nor any of its predecessors or Affiliates
has, either expressly or by operation of law, assumed or undertaken any
Liability, including without limitation any obligation for corrective or
remedial action, of any other Person relating to Environmental, Health, and
Safety Requirements.
(viii) No facts, events or conditions relating to the past or present
facilities, properties or operations of the Company, or any of its
predecessors or Affiliates will prevent, hinder or limit continued
compliance with Environmental, Health, and Safety Requirements, give rise
to any investigatory, remedial or corrective obligations pursuant
21
to Environmental, Health, and Safety Requirements, or give rise to any
other Liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental, Health, and Safety Requirements,
including without limitation any relating to onsite or offsite releases or
threatened releases of hazardous materials, substances or wastes, personal
injury, property damage or natural resources damage.
(cc) Certain Business Relationships With the Company. Except as set forth
in Parts 3(p) and 3(s) of the Disclosure Schedule, none of the Sellers or their
Affiliates (other than the Company) has been involved in any business
arrangement or relationship with the Company within the past 12 months, and none
of the Sellers or their Affiliates (other than the Company) owns any asset,
tangible or intangible, which is used in the business of the Company.
(dd) Disclosure. The representations and warranties contained in this
(S)3, together with the documents that are both attached hereto and referenced
in the Disclosure Schedule, do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements and information contained in this (S)3 not misleading.
(ee) Investment. Each of the Sellers, severally and for such Seller, and
not jointly, represents and warrants that it (i) understands that the Buyer
Shares have not been, and will not only be, registered under the Securities Act,
or under any state securities laws, and are being offered and sold in reliance
upon federal and state exemptions for transactions not involving any public
offering, (ii) except for the Nominee, is acquiring the Buyer Shares solely for
his or its own account for investment purposes, and not with a view to the
distribution thereof, (iii) is a sophisticated investor with knowledge and
experience in business and financial matters, (iv) has received certain
information concerning the Buyer and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and the risks
inherent in holding the Buyer Shares, (v) is able to bear the economic risk and
lack of liquidity inherent in holding the Buyer Shares, and (vi) is an
Accredited Investor for the reasons set forth in (S)3(ee) of the Disclosure
Schedule.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to the Sellers that the statements contained in this (S)4 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this (S)4), except as set
forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this (S)4.
(a) Organization of the Buyer. The Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. The Buyer is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required. The Buyer has full corporate power and authority and all licenses,
permits, and authorizations necessary to carry on the businesses in which it is
engaged and in which it presently proposes to engage and to own and use the
properties owned and used by it or, if the Buyer is not so qualified in any such
jurisdiction, it can become so qualified in such jurisdiction without a material
adverse effect on the business of the Buyer, taken as a whole.
22
The Buyer is not in default under or in violation of any provision of its
articles of incorporation or bylaws, as amended.
(b) Authority; No Conflict.
(i) Except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws of
general application affecting enforcement of creditors' rights generally
and the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and
would be subject to the discretion of the court before which any proceeding
therefor may be brought:
(A) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms; and
(B) Upon the execution and delivery by Buyer of the documents
contemplated herein (collectively, the "Buyer's Closing Documents"),
the Buyer's Closing Documents will constitute the legal, valid, and
binding obligations of Buyer, enforceable against Buyer in accordance
with their respective terms.
(ii) Buyer has the absolute and unrestricted right, power, authority,
and capacity to execute and deliver this Agreement and the Buyer's Closing
Documents and to perform its obligations under this Agreement and the
Buyer's Closing Documents.
(iii) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly, in any way which may reasonably be expected to
cause a material adverse effect on the Buyer (with or without notice or
lapse of time):
(A) contravene, conflict with, or result in a violation of (1)
any provision of the Buyer's articles of incorporation or bylaws, as
amended, or (2) any resolution adopted by the board of directors or
the shareholders of the Buyer;
(B) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any
of the Contemplated Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which the
Buyer or any of the assets owned or used by the Buyer, may be subject;
(C) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any material
contract to which Buyer is a party; or
(D) result in the imposition or creation of any Security
Interest upon or with respect to any of the assets owned or used by
the Buyer.
23
(c) Consents. Buyer is not and will not be required to give any notice to
or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
(d) Brokers' Fees. The Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Sellers could become
liable or obligated.
(e) SEC Documents. Buyer has heretofore delivered or made available to
the Sellers all reports required to be filed by Buyer under Sections 13(a),
14(a), 14(c) and 15(d) of the Securities Exchange Act with the SEC on or after
June 30, 2000 (the "SEC Documents"). As of their respective dates, each of the
SEC Documents complied in all material aspects with all applicable requirements
of the Securities Act, as amended, and the Securities Exchange Act and the rules
and regulations of the SEC applicable to such reports and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited financial
statements and unaudited financial statements of Buyer included in the SEC
Documents or incorporated therein by reference fairly present the financial
position of Buyer as of the dates of such financial statements and the results
of Buyer's operations and cash flows for the periods then ended, in accordance
with United States generally accepted accounting principles, except for the
variances from such principles as are set forth in the notes thereto.
(f) No Material Adverse Effect. Since the date of the most recent filing
by Buyer under the Securities Exchange Act prior to the date hereof, there has
been no event or occurrence that has caused or is reasonably expected to cause a
material adverse effect on Buyer other than economic conditions affecting the
economy generally or the industry in which the Buyer conducts its business
generally.
(g) DPI Transaction The sole consideration of any type paid, or payable,
from the Buyer or any Affiliate of the Buyer to, or for the benefit of, Diesel
Products, Inc. in consideration of all or substantially all of the capital stock
or assets of Diesel Products, Inc. does not exceed the issuance of 9,000,000
Buyer Shares, of which not more than 750,000 are required to be registered.
(h) Disclosure The representations and warranties contained in this (S)4,
together with the documents referenced herein, including the SEC Documents, do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this (S)4 not misleading.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its Best Efforts to take all
action and to do all things necessary in order to consummate and make effective
the transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in (S)6 below).
24
(b) Notices and Consents. The Sellers will give any notices to third
parties, and each of the Sellers will use its Best Efforts to obtain any third
party consents, that the Buyer may request and are required as set forth in
(S)3(c) above. Each of the Parties will give any notices to, make any filings
with, and use its Best Efforts to obtain any authorizations, consents, and
approvals of Governmental Bodies in connection with the matters referred to in
(S)3(c) above.
(c) Operation of Business. The Sellers will cause the Company to not
engage in any practice, take any action, or enter into any transaction outside
the Ordinary Course of Business. Without limiting the generality of the
foregoing, the Sellers will ensure that the Company does not (i) declare, set
aside, or pay any dividend or make any distribution with respect to its share
capital or redeem, purchase, or otherwise acquire any of its share capital, (ii)
pay any amount to any third party with respect to any costs and expenses the
Company has incurred or may incur in connection with this Agreement and the
Contemplated Transactions, or (iii) otherwise engage in any practice, take any
action, or enter into any transaction of the sort described in (S)3(k) above.
(d) Preservation of Business. The Sellers will cause the Company to keep
its business and properties substantially intact.
(e) Full Access. The Sellers will, and will cause the Company to, permit
representatives of the Buyer to have full access to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to the Company.
(f) Notice of Developments. Each Party will give prompt written notice to
the other Party of any material adverse development causing a breach of any of
its own representations and warranties in (S)3 and (S)4 above. No disclosure by
any Party pursuant to this (S)5(f), however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
(g) Exclusivity. Neither the Sellers nor the Company will (i) solicit,
initiate, or encourage the submission of any proposal or offer from any Person
relating to the acquisition of any share capital or other voting securities, or
any substantial portion of the assets, of the Company (including any acquisition
structured as a merger, consolidation, amalgamation or share exchange) or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Company will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) Each of the representations and warranties of Sellers contained
in this Agreement that are qualified as to materiality shall be true and
complete and any such representations and warranties that are not so
qualified shall be true and complete in all
25
material respects, in each case as of the date of this Agreement and as of
the Closing Date;
(ii) each of the Sellers shall have performed and complied with all
of its covenants hereunder in all material respects through the Closing;
(iii) the Sellers shall have procured all of the third party consents
specified in (S)5(b) above;
(iv) no action, suit, or proceeding shall be pending or threatened
before any Governmental Body wherein an unfavorable Order would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause any of the Contemplated Transactions to be rescinded following
consummation, or (C) affect adversely the right of the Buyer to own the
Shares or to operate the businesses of the Company;
(v) the Sellers shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in (S)6(a)(i)-(iv)
is satisfied in all respects;
(vi) the Sellers and the Buyer shall have received all Consents
referred to in (S)3(c) above;
(vii) the Buyer shall have received from counsel to the Company and
the Sellers an opinion in a form and substance acceptable to Buyer,
addressed to the Buyer, and dated as of the Closing Date;
(viii) the Buyer shall have received documentary evidence that the
Affiliates' Intellectual Property is owned by the Company, free and clear
of any Security Interest, claims or encumbrances;
(ix) the Buyer shall have received the Performance Escrow Agreement,
in the form of Exhibit C, duly executed by the Sellers and the Escrow Agent
name therein;
(x) the Buyer shall have received the resignations, effective as of
the Closing, of each director, manager and officer of the Company other
than those whom the Buyer shall have specified in writing prior to the
Closing;
(xi) the Buyer shall have received an indemnification agreement in a
form and substance acceptable to Buyer, whereby certain of the Sellers
shall have agreed to indemnify the Buyer against all Adverse Consequences
related to any of the Company's Liabilities accruing before the Closing
Date and Liabilities arising out of those matters set forth in (S)3(l) of
the Disclosure Schedule;
(xii) the Buyer shall have received duly executed certificates in
respect of the Shares, with signatures guaranteed by a commercial bank,
along with such other documents that are necessary to convey the Shares to
the Buyer;
26
(xiii) the Buyer shall have been satisfied, in its sole discretion,
with its due diligence examination of (i) the Company, (ii) the business or
proposed business of the Company, (iii) the results of the Contemplated
Transactions, and (iv) the contents and documents referenced in the
Disclosure Schedule; and
(xiv) all actions to be taken by the Sellers in connection with
consummation of the Contemplated Transactions and all certificates,
opinions, instruments, and other documents required to effect the
Contemplated Transactions will be reasonably satisfactory in form and
substance to the Buyer.
The Buyer may waive any condition specified in this (S)6(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of each of
the Sellers to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in (S)4 above shall
be true and correct in all material respects at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or threatened
before any Governmental Body wherein an unfavorable Order would (A) prevent
consummation of any of the transactions contemplated by this Agreement, or
(B) cause any of the Contemplated Transactions to be rescinded following
consummation;
(iv) the Buyer shall have delivered to the Sellers a certificate to
the effect that each of the conditions specified above in (S)6(b)(i)-(iii)
is satisfied in all respects;
(v) the Sellers shall have received the Performance Escrow Agreement,
in the form of Exhibit C, duly executed by the Buyer and the Escrow Agent
name therein;
(vi) the Buyer shall have delivered a resolution of the Board of
Directors and taken all other actions necessary to appoint Simon Orange,
Xxx Xxxxxxxxxx, and Xxxxxxxx Xxxxxxxx to the Board of Directors of the
Buyer, effective as of the Closing Date; and
(vii) all actions to be taken by the Buyer in connection with
consummation of the Contemplated Transactions and all certificates,
opinions, instruments, and other documents required to effect the
Contemplated Transactions will be reasonably satisfactory in form and
substance to the Sellers.
The Sellers may waive any condition specified in this (S)6(b) if it executes a
writing so stating at or prior to the Closing.
7. TERMINATION.
27
(a) Termination of Agreement. The Parties may terminate this Agreement
only as provided below:
(i) the Buyer and the Sellers may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written notice
to the Sellers at any time prior to the Closing (A) in the event the
Sellers have breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Buyer has notified
the Sellers of the breach, and the breach has continued without cure for a
period of 10 days after the notice of breach or (B) if the Closing shall
not have occurred on or before May 18, 2001, by reason of the failure of
any condition precedent under (S)6(a) hereof (unless the failure results
primarily from the Buyer itself breaching any representation, warranty, or
covenant contained in this Agreement); and
(iii) the Sellers may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (A) in the event the
Buyer has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Sellers have
notified the Buyer of the breach, and the breach has continued without cure
for a period of 10 days after the notice of breach or (B) if the Closing
shall not have occurred on or before May 18, 2001, by reason of the failure
of any condition precedent under (S)6(b) hereof (unless the failure results
primarily from the Sellers themselves breaching any representation,
warranty, or covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to (S)7(a) above, all rights and obligations of the Parties hereunder
shall terminate without any Liability of any Party to any other Party (except
for any Liability of any Party then in breach).
8. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing:
(a) General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party may request, all at
the sole cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under (S)9 below). The Sellers
acknowledge and agree that from and after the Closing the Buyer will be entitled
to possession of all documents, books, records (including Tax records),
agreements, and financial data of any sort relating to the Company.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any Contemplated Transaction or (ii) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving
the Company, each of the
28
other Parties will cooperate with the contesting or defending Party and his or
its counsel in the contest or defense, make available his or its personnel, and
provide such testimony and access to his or its books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or defending
Party is entitled to indemnification therefor under (S)9 below).
(c) Transition. None of the Sellers will take any action that is designed
or intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Company from maintaining the same
business relationships with the Company after the Closing as it maintained with
the Company prior to the Closing. Each of the Sellers will refer all customer
inquiries relating to the Business to the Company from and after the Closing.
(d) Confidentiality. Each of the Sellers will treat and hold as
confidential all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to the Buyer or destroy, at the request and option of the Buyer, all
tangible embodiments (and all copies) of the Confidential Information which are
in his or its possession. In the event that any of the Sellers is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, that Seller will notify the
Buyer promptly of the request or requirement so that the Buyer may seek an
appropriate protective order or waive compliance with the provisions of this
(S)8(d). If, in the absence of a protective order or the receipt of a waiver
hereunder, any of the Sellers is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, that Seller may disclose the Confidential Information to the tribunal;
provided, however, that the disclosing Seller shall use his or its Best Efforts
to obtain, at the request of the Buyer, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the Buyer shall designate.
(e) Covenant Not to Compete.
(i) For the period commencing on the Closing Date and continuing
until the earlier of (i) three years after the Closing Date or (ii) the
occurrence of a Buyer Insolvency Event (as defined below), none of the
Sellers will engage directly or indirectly in any business that is
competitive with the Business in the Restricted Area; provided, however,
that no owner of less than 1% of the outstanding stock of any publicly
traded corporation shall be deemed to engage solely by reason thereof in
any of its businesses; provided, further, that no owner of any of the
outstanding capital interest of AAE Holdings PLC, or any subsidiary or
Affilliate thereof, shall be deemed to engage in such Person's business
solely by reason of such ownership. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this (S)8(e)
is invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term
or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and
29
this Agreement shall be enforceable as so modified after the expiration of
the time within which the judgment may be appealed.
(ii) For purposes of this (S)8(e), a "Buyer Insolvency Event" shall
be deemed to have occurred in the event any one (1) of the following events
shall have occurred: Buyer shall:
(A) Admit in writing its inability to pay its debts as they
become due;
(B) File a petition in bankruptcy or for reorganization or for
the adoption of an agreement under the Bankruptcy Act as now or in the
future amended or file a pleading asking such relief;
(C) Make an assignment for the benefit of creditors;
(D) Consent to the appointment of a trustee or receiver for all
or a major portion of its property;
(E) Be finally adjudicated as bankrupt or insolvent under any
federal or state law;
(F) Suffer the entry of a final and non-appealable court order
under any federal or state law appointing a receiver or trustee for
all or a major part of its property or ordering the winding-up or
liquidation of its affairs, or approving a petition filed against it
under the Bankruptcy Act, as now or in the future amended, which
order, if not consented to by it shall not be vacated, denied, set
aside or stayed within sixty (60) days after the day of entry; or
(G) Suffer a writ or warrant of attachment or any similar
process to be issued by any court against all or any substantial
portion of its property, and such writ or warrant of attachment or any
similar process is not contested, stayed, or is not released within
sixty (60) days after the final entry or levy or after any contest is
finally adjudicated or any stay is vacated or set aside.
(f) Buyer Support of Company. Buyer agrees that, from and after the
Closing Date, it shall use its Best Efforts to assist the operations of the
Company, or any successor entity or division of Buyer resulting from Buyer's
restructuring, in all commercially reasonable respects to, which, in any event,
such efforts shall not be less than the efforts used by the Buyer to support any
other similarly situated Affiliate, subsidiary or division of Buyer.
9. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Buyer and the Sellers contained in this
Agreement shall survive the Closing (even if the damaged Party knew or had
reason to know of any misrepresentation or breach of warranty at the time of
Closing) and continue in full force and effect for a period of thirteen (13)
months thereafter; except that the representations contained in (S)(S) 3(d),
3(e), 3(n), 3(z), and 3(bb)
30
shall survive the Closing and continue in full force and effect until the
expiration of the applicable statute of limitations.
(b) Indemnification Provisions for Benefit of the Buyer. In the event any
of the Sellers breaches any of their representations, warranties, and covenants
contained in this Agreement, then each of the Sellers agrees to, jointly and
severally (except for those representations and warranties contained in (S)3(ee)
that are made by each Seller individually, and not jointly, for which each
Seller agrees to severally, and only for a breach of such representation or
warranty by such Seller), indemnify the Buyer and the Company from and against
the entirety of any Adverse Consequences suffered by the Buyer resulting from,
arising out of, relating to, or caused by the breach. In furtherance of the
foregoing, each of the Sellers, jointly and severally, agrees to indemnify the
Buyer and the Company from and against the entirety of any Adverse Consequences
the Buyer or the Company may suffer resulting from, arising out of, relating to,
in the nature of, or caused by any Liability of the Company arising or accruing
before the Closing Date.
(c) Indemnification Provisions for Benefit of the Sellers. In the event the
Buyer breaches any of its representations, warranties, and covenants contained
in this Agreement, then the Buyer agrees to indemnify each of the Sellers from
and against the entirety of any Adverse Consequences suffered by the Sellers
resulting from, arising out of, relating to, or caused by the breach.
(d) Limitation of Indemnification Claims. The aggregate amount payable by
the Sellers pursuant to (S)9(b) and the sole recourse of Buyer and Company to
enforce such obligations shall be limited to the forfeiture of Buyer Shares held
in the Escrow Account as provided in the Performance Escrow Agreement; provided,
however, that this limit shall be increased to the total Buyer Shares delivered
pursuant to the Contemplated Transactions in the event a right to
indemnification arises out of (i) a breach of any of (S)(S) 3(d), 3(e), 3(n),
3(z), or 3(bb); or (ii) a breach of any representation contained in (S)3 as to
which a Seller had actual knowledge of such breach at the time of this
Agreement. The aggregate amount payable by the Buyer pursuant to (S)9(c) shall
be limited to the value (at the time of Closing) of the Buyer Shares held in the
Escrow Account.
(e) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this (S)9, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in notifying
any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (A) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party
31
Claim that the Indemnifying Party will indemnify the Indemnified Party from
and against the entirety of any Adverse Consequences suffered by the
Indemnified Party resulting from, arising out of, relating to, or caused by
the Third Party Claim, (B) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the
Third Party Claim and fulfill its indemnification obligations hereunder,
(C) the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish a precedential
custom or practice adverse to the continuing business interests of the
Indemnified Party, and (E) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with (S)9(e)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party (not
to be withheld unreasonably).
(iv) In the event any of the conditions in (S)9(e)(ii) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend against,
and consent to the entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (C) the
Indemnifying Parties will remain responsible for any Adverse Consequences
suffered by the Indemnified Party resulting from, arising out of, relating
to, or caused by the Third Party Claim to the fullest extent provided in
this (S)9.
(f) Determination of Adverse Consequences. All indemnification payments
under this (S)9 shall be deemed adjustments to the Purchase Price.
(g) Escrow; Right of Set-Off. In accordance with the terms of the
Performance Escrow Agreement, any amount to which Buyer is entitled pursuant to
this (S)9 shall be set off against the Escrow Fund (as that term is defined in
the Performance Escrow Agreement). The exercise of such right of set-off by
Buyer in good faith, whether or not ultimately determined to be justified, will
not constitute an event of default under any obligation of Buyer to any of the
Sellers or the Performance Escrow Agreement.
10. Tax Matters. The following provisions shall govern the allocation of
responsibility as between Buyer and Sellers for certain tax matters following
the Closing Date:
32
(a) Tax Periods Ending on or Before the Closing Date. Buyer shall prepare
or cause to be prepared and file or cause to be filed all Tax Returns for the
Company for all periods ending on or prior to the Closing Date which are filed
after the Closing Date. Sellers shall reimburse Buyer for Taxes of the Company
with respect to such periods within fifteen (15) days after payment by Buyer or
the Company of such Taxes.
(b) Tax Periods Beginning Before and Ending After the Closing Date. Buyer
shall prepare or cause to be prepared and file or cause to be filed any Tax
Returns of the Company for Tax periods which begin before the Closing Date and
end after the Closing Date. Sellers shall pay to Buyer within fifteen (15) days
after the date on which Taxes are paid with respect to such periods an amount
equal to the portion of such Taxes which relates to the portion of such Taxable
period ending on the Closing Date. For purposes of this Section, in the case of
any Taxes that are imposed on a periodic basis and are payable for a Taxable
period that includes (but does not end on) the Closing Date, the portion of such
Tax which relates to the portion of such Taxable period ending on the Closing
Date shall (x) in the case of any Taxes other than Taxes based upon or related
to income or receipts, be deemed to be the amount of such Tax for the entire
Taxable period multiplied by a fraction the numerator of which is the number of
days in the Taxable period ending on the Closing Date and the denominator of
which is the number of days in the entire Taxable period, and (y) in the case of
any Tax based upon or related to income or receipts be deemed equal to the
amount which would be payable if the relevant Taxable period ended on the
Closing Date. Any credits relating to a Taxable period that begins before and
ends after the Closing Date shall be taken into account as though the relevant
Taxable period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with
prior practice of the Company.
(c) Cooperation on Tax Matters. Buyer and Sellers shall cooperate fully, as
and to the extent reasonably requested by the other Party, in connection with
the filing of Tax Returns pursuant to this (S)10 and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding. The Sellers agree (A) to retain all books and records with respect
to Tax matters pertinent to the Company relating to any taxable period beginning
before the Closing Date until the expiration of the statute of limitations (and,
to the extent notified by Buyer, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements entered into
with any taxing authority, and (B) to give the Buyer reasonable written notice
prior to transferring, destroying or discarding any such books and records and,
if the Buyer so requests, the Sellers shall allow the Buyer to take possession
of such books and records.
(d) Certificates. Buyer and Sellers further agree, upon request, to use
their Best Efforts to obtain any certificate or other document from any Taxing
authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the Contemplated Transactions).
(e) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by Sellers
when due, and Sellers will, at their own expense, file all
33
necessary Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees.
11. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of the other Party; provided,
however, Buyer may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its Best
Efforts to advise the other Party prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties
(except that certain Confidentiality Undertaking entered into by the Buyer in
favor of the Company dated on or about April 24, 2001), written or oral, to the
extent they related in any way to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that the Buyer may (i) assign any or all
of its rights and interests hereunder to one or more of its Affiliates and (ii)
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases the Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
34
If to the Sellers:
Simon Orange
Xxxxxx Xxxxx, Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx XX000XX
Xxxxxxx
Copy to:
Xxxx Xxxx X'Xxxxxxx
Husch & Eppenberger, LLC
000 X. Xxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
If to the Buyer:
Xxxxxxx X. Xxxxxxxxxxx
President
International Fuel Technology, Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Copy to:
Xxxxxxxxx Xxxxxxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Missouri without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Missouri or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Missouri.
(i) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Buyer and
the Sellers. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of
35
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.
(k) Expenses. Each of the Buyer and the Sellers will bear his or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the Contemplated Transactions. The Sellers agree that
the Company shall not pay any amount to any third party, and will not pay any
amount to any third party until after the Closing, with respect to any of the
costs and expenses of either the Company or the Sellers (including any of their
legal fees and expenses) in connection with this Agreement or any of the
Contemplated Transactions.
(l) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception with particularity and describes the relevant facts in detail.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself). The Parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any Party has
breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first representation,
warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) Specific Performance. Each of the Parties acknowledges and agrees that
the other Party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the other
Party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which it may be entitled, at law or
in equity.
(o) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in St. Louis, Missouri, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties
36
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety, or other security that might
be required of any other Party with respect thereto. Any Party may make service
on the other Party by sending or delivering a copy of the process to the Party
to be served at the address and in the manner provided for the giving of notices
in (S)11(g) above. Nothing in this (S)11(o), however, shall affect the right of
any Party to bring any action or proceeding arising out of or relating to this
Agreement in any other court or to serve legal process in any other manner
permitted by law or in equity. Each Party agrees that a final judgment in any
action or proceeding so brought shall be conclusive and may be enforced by suit
on the judgment or in any other manner provided by law or in equity.
(p) Seller Representative.
(i) Each of the Sellers hereby irrevocably constitutes and appoints
Seller Representative, acting as hereinafter provided, as his, her, or its
attorney-in-fact and agent in his, her or its name, place and stead in
connection with the transactions contemplated by this Agreement and matters
arising therefrom subsequent to the date hereof, and acknowledges that such
appointment is coupled with an interest. By executing and delivering this
Agreement, Seller Representative hereby (A) accepts his appointment and
authorization as Seller Representative to act as attorney-in-fact and agent
in the name, place and stead of each of the Sellers in accordance with the
terms of this Agreement, and (B) agrees to perform his duties and
obligations hereunder.
(ii) Seller Representative agrees to serve as provided in this
(S)11(p).
(iii) Each Seller authorizes the Seller Representative in the name and
on behalf of such Seller:
(A) to give and receive any notice required or permitted under
this Agreement;
(B) to exercise any rights and to take any action required or
permitted to be taken under this Agreement;
(C) to negotiate, execute and deliver any amendment to or
modification of this Agreement or any of the provisions hereof and any
waiver or consent hereunder;
(D) to dispute or to refrain from disputing any claim made by
Buyer under this Agreement and any other agreements, instruments and
documents to be delivered by or on behalf of such Seller pursuant to
this Agreement;
(E) to negotiate and compromise any dispute which may arise, and
to exercise or refrain from exercising remedies available under this
Agreement and the other agreements, instruments and documents
delivered or to be delivered by or on behalf of such Seller pursuant
to this Agreement and to sign any releases or other documents with
respect to any such dispute or remedy; and
37
(F) to give such instructions and to do such other things and
refrain from doing such other things as the Seller Representative
shall deem necessary or appropriate to carry out the provisions of
this Agreement and any other agreements, instruments and documents
delivered or to be delivered by or on behalf of such Seller pursuant
to this Agreement.
(iv) Each of the Sellers agrees to be bound by all agreements and
determinations made, and agreements, documents and instruments negotiated,
executed and delivered by the Seller Representative under this Agreement.
(v) Each of the Sellers hereby expressly acknowledges and agrees that
the Seller Representative is authorized to act in his, her, or its name and
on his, her, or its behalf. Notwithstanding any dispute or disagreement
among the Sellers and/or the Seller Representative, Buyer shall be entitled
in good faith to rely on any and all action taken by the Seller
Representative under this Agreement and the other agreements, instruments
and documents to be delivered by or on behalf of the Sellers pursuant to
this Agreement without any liability to, or obligation to inquire of, any
of the Sellers. Buyer is hereby expressly authorized in good faith to rely
on the genuineness of the signatures of the Seller Representative, and upon
receipt of any writing which reasonably appears to have been signed by the
Seller Representative, Buyer may act upon the same in good faith without
any further duty of inquiry as to the genuineness of the writing.
(vi) If the Seller Representative, ceases to function for any reason
whatsoever, then Sellers who prior to the transactions contemplated by this
Agreement held (or their successors in interest) a majority of the Shares
may appoint a successor; provided, however, that if for any reason no
successor has been appointed pursuant to the foregoing within thirty (30)
days, then Buyer shall have the right but not the obligation to petition a
court of competent jurisdiction for appointment of a successor.
(vii) The authorization of the Seller Representative shall be
effective until such rights and obligations under this Agreement terminate
by virtue of the termination of any and all obligations of the Sellers
hereunder.
(viii) The Seller Representative shall not be liable for any acts or
omissions under this (S)11(p) except for its own gross negligence or
willful misconduct. Each Seller agrees to indemnify and to save and hold
harmless the Seller Representative of, from, against and in respect of any
claim, action, cause of action, cost, liability or expense suffered or
incurred by or asserted against the Seller Representative based upon or
arising out of the performance by the Seller Representative of any act,
matter or thing pursuant to the appointment herein made, except that no
Seller shall be held or required to indemnify or to save or hold harmless
the Seller Representative for the gross negligence or willful misconduct of
the Seller Representative in the performance of his duties hereunder.
38
In Witness Whereof, the undersigned have entered into this Agreement as of
this date and year first above written.
Buyer
International Fuel Technology, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
------------------------------
Printed Name: Xxxxxxx X. Xxxxxxxxxxx
Title: President
Sellers
/s/ Simon Orange
---------------------------------
/s/ Xxxxxxxxx Xxxxxxx Simon Orange
---------------------------------
Xxxxxxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxxx
---------------------------------
/s/ Xxxxxxxx Xxxxxxx Xxxxx Xxxxxxxx
---------------------------------
Xxxxxxxx Xxxxxxx
/s/ Xxxxxxxx Xxxxx
---------------------------------
Xxxxxxxx Xxxxx
/s/ Xxxxx Xxx
---------------------------------
Xxxxx Xxx
/s/ Xxxxxxx Xxxxxxx
---------------------------------
/s/ Xxxx Xxxxx Xxxxxxx Xxxxxxx
---------------------------------
Xxxx Xxxxx
/s/ Xxxxxxx Xxxxxxx
---------------------------------
/s/ Xxxxx Xxxx Xxxxxxx Xxxxxxx
---------------------------------
Xxxxx Xxxx
/s/ Xxxxxxx Xxxxxxx
---------------------------------
/s/ Xxxxxxx Xxxxxxxx Xxxxxxx Xxxxxxx
---------------------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx
---------------------------------
/s/ Xxxxxx Xxxxxxxx Xxxxxx Xxxxxxxx, as nominee
---------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxx Xxxxxxxxxx
---------------------------------
Xxx Xxxxxxxxxx
39
Exhibit A--List of Sellers
Xxxxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxx
Xxxxx Xxx
Xxxxx Xxxxx
Xxxx Xxxxx
Xxxxx Xxxx
Xxxxx Orange
Xxxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
Xxx Xxxxxxxxxx
Xxxxxx Xxxxxxxx, as nominee
Exh.-1
Exhibit B--Sellers' Interest
---------------------------------------------------------------------------------------------------
Number of Number of
Proportionate Buyer Shares Buyer Shares
Name of Interest in Number of to Receive at to be Held in
Seller Company Shares Held Closing Escrow
---------------------------------------------------------------------------------------------------
Xxxxxxxx Xxxxx 24.310% 12,505,000 3,038,688 2,066,308
---------------------------------------------------------------------------------------------------
Xxx Xxxxxxxxxx 24.310% 12,505,000 3,038,688 2,066,308
---------------------------------------------------------------------------------------------------
Simon Orange 12.369% 6,362,500 1,546,074 1,051,330
---------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx 9.112% 4,687,500 1,139,052 774,556
---------------------------------------------------------------------------------------------------
Xxxx Xxxxx 4.374% 2,250,000 546,745 371,787
---------------------------------------------------------------------------------------------------
Xxxxx Xxx 3.694% 1,900,000 461,696 313,953
---------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxx 2.702% 1,390,000 337,767 229,682
---------------------------------------------------------------------------------------------------
Xxxxx Xxxx 1.944% 1,000,000 242,998 165,239
---------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxxx 1.944% 1,000,000 242,998 165,239
---------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx .972% 500,000 121,499 82,619
---------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx .194% 100,000 24,300 16,524
---------------------------------------------------------------------------------------------------
Xxxxxxxxx Xxxxxxx .097% 50,000 12,150 8,262
---------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx .097% 50,000 12,150 8,262
---------------------------------------------------------------------------------------------------
Xxxxxxxx Xxxxxxx .097% 50,000 12,150 8,262
---------------------------------------------------------------------------------------------------
Exh.-2
---------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx, 13.784% 7,090,788 1,723,046 1,171,671
as nominee
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
Exh.-3
DISCLOSURE SCHEDULE
to
SHARE PURCHASE AGREEMENT
BETWEEN
INTERNATIONAL FUEL TECHNOLOGY, INC.
AND
THE SELLERS
As set forth on the signature page thereof
Dated: April 30, 2001
Except as otherwise defined herein, capitalized terms used in these Schedules
have the definitions ascribed to such terms in the Share Purchase Agreement (the
"Agreement").
Section 3(a)
Directors, Managers and Officers
Directors of Company:
Simon Orange
Xxx Xxxxxxxxxx
Xxxxxxxx Xxxxxxxx
Officers of Company
Xxxxxx Xxxxxxxx Secretary
Section 3(j)(i)
Bank Accounts; Authorized Signers
Barclays Bank - demand deposit account
Sole signatory - Simon Orange
Section 3(j)(ii)
Power of Attorney
None
Section 3(l)
Liabilities
(1) The Company has not withheld taxes from compensation to Xxxxxxxx Xxxxxxxx,
Xxxxx Orange, Xxx Xxxxxxxxxx and Xxxxx Xxxxx for consulting services. The
Sellers believe the maximum potential liability to the Company (in the event
such persons fail to pay required taxes on such compensation) is (Pounds)60,000.
(2) The Company is the lessee under an automobile lease for a vehicle driven by
Xxx Xxxxxxxxxx.
(3) Any liabilities related to the arrangements set forth in Section 3(z) of
this Disclosure Schedule.
16
Section 3(n)(iii)
Tax Returns
The Company files quarterly VAT returns. The Company's initial VAT return was
reviewed by the relevant taxing authorities in ordinary course.
Section 3(p)(ii)
Intellectual Property owned by Sellers or Affiliates
None.
Section 3(p)(iv)
Patent or Registration issued to Company
None re patents, registrations (and applications for same) and licenses
Tradenames:
Interfacial Technology (UK) Ltd.
IFT
NOXIT
RVPIT
LUBIT
M111
MIT
Polyanna
Polyanna NOXIT
Polyanna RVPIT
Xxxxxxxx XXXXX
Polyanna M111
Polyanna MIT
DIESOL
Schedule 3(p)(v)
IP licensed to Company
The Company is the licensee under a License Agreement with IFT (IPR), which will
be terminated prior to Closing.
17
Section 3(s)
Contracts
(1) The Company is the licensee under a License Agreement with IFT (IPR), which
will be terminated prior to Closing.
(2) The Company is the lessee under an automobile lease for a vehicle driven by
Xxx Xxxxxxxxxx.
(3) The Company is party to a Consulting Agreement with Simon Orange, which
will be terminated prior to Closing.
(4) The Company is party to a non-executive director's appointment with
Xxxxxxxx Xxxxxxxx, which will be terminated prior to Closing.
(5) The Company is a party to the arrangements set forth in Section 3(z) of
this Disclosure Schedule.
Section 3(z)
Employee Benefits
The Company provides:
(1) Reimbursement of reasonable expenses incurred by each of Simon Orange,
Xxxxxxxx Xxxxx, Xxx Xxxxxxxxxx, and Xxxxxxxx Xxxxxxxx in furtherance of
their services to the Company.
(2) Car Allowance in the amount of (Pounds)700 per month to each of Xxxxxxxx
Xxxxx and Simon Orange.
Section 3(bb)
Permits and Licenses re Environmental, Health
and Safety Matters
None
Section 3(ee)
Accredited Investor Explanation
Each Seller either:
(i) has a net worth (alone or together with his or her spouse) of at least
$1,000,000,
18
or
(ii) had individual income in excess of $200,000 in each of 1999 and 2000
and anticipates income in excess of $200,000 during 2001,
or
(iii) together with such Seller's spouse had income in excess of $300,000
in each of 1999 and 2000 and anticipates income in excess of $300,000 in 2001.
19
