EXHIBIT 99.2
THIS DEED AND DOCUMENT OF CONVEYANCE is made this 7th day of November of the
year 2002.
BETWEEN: THE TRUSTEE OF THE PROPERTY OF XXXXXXX XXXX XXXXXX AND XXXXXXX
XXXX XXXXXX (BANKRUPTS) of Vincents, Insolvency and
Reconstruction, Xxxxx 00, 000 Xxxxxx Xxxxxx, Xxxxxxxx in the State
of Queensland ("the Trustee")
AND: SAVE THE WORLD AIR, INC, having its principal executive offices at
00000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxxxx 00000
("STWA")
WHEREAS:
A. Xxxxxxx Xxxx Xxxxxx and Xxxxxxx Xxxx Xxxxxx were adjudged and declared
bankrupt by order of the Federal Magistrates Court of Australia on 1
March 2002 and Xxxx Xxxxxx was appointed trustee in bankruptcy of their
bankrupt estates.
B. There is in existence a patent application in relation to an invention
known as the "Zero Emission Fuel Saver Device" ("the Device").
C. The patent application for the device is known as "international patent
application no. PCT/AU01/00585" ("the Patent") and the bankrupt, Xxxxxxx
Xxxx Xxxxxx, is listed as the inventor.
D. By virtue of the Bankruptcy Xxx 0000, the Patent is an asset of the
bankrupt estate of Xxxxxxx Xxxx Xxxxxx and/or Xxxxxxx Xxxx Xxxxxx.
E. The Trustee has agreed to dispose, transfer and convey the Patent to
STWA and STWA has agreed to acquire the Patent on the terms and
conditions of this deed and document of conveyance.
NOW HEREFORTH THIS DEED AND CONVEYANCE WITNESSES AS FOLLOWS:
1. ASSIGNMENT OF PATENT
1.1 The Trustee shall execute and deliver to STWA an assignment of all his
right title and interest in and to the Patent in the form attached
hereto in item 1 of the Schedule.
1.2 Upon the assignment in terms of clause 1.1 hereof:
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(a) Any rights of the Trustee so assigned shall from the date hereof
be rights applying for the benefit of STWA;
(b) All obligations of the Trustee, if any, under the Patent shall
to the extent of the assignment be assumed by STWA and shall to
that extent cease to be obligations of the Trustee.
1.3 For the purposes of the assignment in terms of clause 1.1 hereof, the
Trustee will do everything reasonably required by STWA to give effect to
the said assignment PROVIDED THAT STWA must pay and be responsible for
all costs associated with the assignment and/or extension of the patent
and its application and that if STWA wishes the Trustee to assist in
this regard, the Trustee reserves his right to agree, in his absolute
discretion, to do so but all costs and expenses payable to any patent
attorneys and other advisors engaged by STWA must be paid by and be the
responsibility of STWA.
1.4 In the event of any inconsistency between this deed and the form of
assignment contained in item 1 of the Schedule, the parties agree that
the terms of this deed shall prevail to the extent of the inconsistency.
2. WARRANTIES
2.1 The Trustee warrants to STWA that:
(a) He was appointed trustee in bankruptcy of Xxxxxxx Xxxx Xxxxxx
and Xxxxxxx Xxxx Xxxxxx by order of the Federal Magistrates
Court of Australia on 1 March 2002:
(b) He is entitled by virtue of the Xxxxxxxxxx Xxxxxxxxxx Xxx 0000
to acquire and to dispose by sale, deed or conveyance of any
property of the bankrupts, Xxxxxxx Xxxx Xxxxxx and Xxxxxxx Xxxx
Xxxxxx, including the Patent.
2.2 STWA warrants and agrees that:
(a) STWA has the capacity to enter into this transaction and to
execute the deed and conveyance described herein;
(b) By entering into this deed, STWA is not breaching any law of the
United States of America or any requirement of the United States
Securities and Exchange Commission;
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(c) It has the capacity to fully comply with this deed including but
not limited to having the injunction referred to in clause
4.1(d) released or discharged with respect to this transaction;
(d) STWA will take all steps that are necessary to prevent the
Patent from lapsing and to register the patent for protection in
certain National Venues, Territories and Jurisdictions selected,
including to make timely payment of whatever moneys are
necessary to patent attorneys and other advisors to prevent the
lapsing of the Patent and to cause the registrations as
described;
(e) It will provide whatever reasonable assistance the Trustee
requests to enable him to acquire, market and/or to dispose of
the Shares to be transferred in accordance with the
consideration provision of this agreement.
3. CONSIDERATION FOR ASSIGNMENT
3.1 In consideration for the assignment in terms of clause 1.1 hereof, STWA
shall:
(a) Grant to the Trustee an irrevocable option to purchase 500,000
shares of STWA at a purchase price of US$1.00 per share,
exercisable by the Trustee for a period of up to ten (10) years
from the date of this document hereof, subject to compliance
with applicable U.S. federal and state securities laws and
regulations, including Rule 144, as set out in item 2 of the
Schedule;
(b) Execute and deliver to the Trustee a royalty agreement providing
for the payment by STWA to the trustee of an ongoing royalty of
US $0.20 per device sold by or on behalf of STWA. The royalty
agreement will provide for quarterly written reports as to the
number of devices' sold, together with an appropriate royalty
calculation in arrears for the last quarterly period;
(c) Release to the Trustee any and all claims over shares (including
causing such shares to be released from the pending injunction
issued by the Federal District Court in United States of
America, in the Southern District of New York) that are directly
owned in the name of Xxxxxxx Xxxx Xxxxxx and Xxxxxxx Xxxx
Xxxxxx, including:
(i) 6,717 shares owned by Xxxxxxx Xxxx Xxxxxx; and
(ii) 111,150 shares owned by Xxxxxxx Xxxx Xxxxxx,
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hereinafter called the "Shares";
(d) Release to the Trustee any and all claims over such shares
(including causing such shares to be released from the pending
injunction issued by the Federal District Court in United States
of America, in the Southern District of New York) that are
directly owned in the name of Xxxxxxx Xxxx Xxxxxx and Xxxxxxx
Xxxx Xxxxxx as of the date of the above referenced Bankruptcy on
1 March 2002, under whatever circumstances those shares are
capable of being released to the trustee in the future, and
specifically to include those share that may have been
transferred by Xxxxxxx Xxxx Xxxxxx and Xxxxxxx Xxxx Xxxxxx after
notice of the above Bankruptcy;
(e) Provide to the Trustee such assistance as is reasonably
requested by the Trustee, including the provision of any
documents requested by the Trustee in relation the any dealing
by Xxxxxxx Xxxx Xxxxxx and Xxxxxxx Xxxx Xxxxxx with their shares
in STWA since the date of their bankruptcy on 1 March 2002.
4. ACKNOWLEDGEMENTS
4.1 The parties to this deed and conveyance each acknowledge that, subject
to the warranties contained in clause 2:
(a) The Trustee gives no warranties other than those contained in
clause 2 above;
(b) The terms of this deed do not dispose of or otherwise resolve
certain ongoing disputes between STWA on the one hand and
Xxxxxxx Xxxx Xxxxxx and Xxxxxxx Xxxx Xxxxxx on the other
concerning other issues including claims by these parties in
relation to a certain 10 million share option, alleged loans and
other moneys owed;
(c) The issues referred to in subparagraph 4.1(b) hereof and the
respective claims by both STWA on the one hand and Xxxxxxx Xxxx
Xxxxxx and Xxxxxxx Xxxx Xxxxxx on the other, otherwise remain
intact and unaffected by this deed and conveyance in so far as
they are the subject of the proceedings before the US Federal
District Court, SDNY, in case number 01-CIV-11586 (GBD);
(d) STWA will cause the current injunction issued by the US Federal
District Court in relation to the Patent and Shares as described
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above to be released and/or discharged to enable the terms of
this deed and conveyance to be performed;
(e) STWA shall notify the Trustee that the injunction issued by the
US Federal District Court in relation to the Patent and Shares
has been released and/or discharged, when released and/or
discharged and will provide such proof that the action has been
taken;
(f) The parties enter into this deed and conveyance fully and
voluntarily on their own information and investigation;
(g) Each is aware that it or its advisors, agents or lawyers may
discover facts different from or in addition to the facts that
they now know or believe to be true with respect to the subject
matter of this deed and conveyance that, it is their intention
to and they do, fully, finally, absolutely and forever settle
according to the provisions of this deed and conveyance any and
all liabilities, claims, disputes and differences which now
exist, or may exist or have ever existed between them relating
in any way to the matters the subject of this transaction.
5. JURISDICTION
5.1 This deed and conveyance shall be governed and construed in accordance
with the laws of Queensland and the parties submit to the jurisdiction
of the courts of Queensland.
5.2 In the event that any person (other than the trustee), including Xxxxxxx
Xxxx Xxxxxx and Xxxxxxx Xxxx Xxxxxx (in the event of their discharge
from bankruptcy) challenge or seek to challenge the terms and execution
of this agreement, that dispute shall be governed by International
Treaty between Australia and the United States. The Parties agree that
any dispute will be submitted and resolved by International Arbitration
Rules of the International Chamber of Commerce. To the extent patent or
contractual law permit ownership or patent rights described under this
agreement to be resolved under US law, such proceedings will be held in
an appropriate jurisdiction of the United States.
6. COUNTERPARTS
6.1 This deed and conveyance may be executed in any number of counterparts
and all of those counterparts taken together shall constitute one and
the same instrument.
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7. FURTHER ASSURANCES
7.1 Each party shall take all steps, execute all documents and do everything
reasonably required by the other party to give effect to the
transactions contemplated by this deed and conveyance.
8. ENTIRE AGREEMENT
8.1 This deed embodies the entire agreement between the parties with respect
to the subject matter of this deed and sets out the only conduct relied
on by the parties and, to the fullest extent permissible by law,
supersedes any prior negotiation, arrangement, understanding or
agreement and all earlier conduct made by or existing between the
parties with respect to the subject matter or any term of this deed.
9. WAIVER
9.1 Any waiver of any provision of this deed or any consent to any departure
from any provision of this deed by any party shall be in writing and
signed by all parties affected by such waiver or departure.
10. PROHIBITION AND ENFORCEABILITY
10.1 If it is held by a court of competent jurisdiction that:
(a) Any part of this deed is void, voidable, illegal or
unenforceable; or
(b) This deed would be void, voidable, illegal or unenforceable
unless any part of this deed was severed;
then that part shall be severable from and shall not affect or derogate
from the enforceability or validity of the parties' obligations or the
continued operation of the rest of this deed. If the ownership and
rights to the patent is valid under the laws of any forum either in the
United States or Australia, such rights are enforceable.
11. DEFINITIONS
11.1 In this deed the following words shall have the following meanings:
(a) "COMBIS" - means Xxxx Xxxxxx, the trustee in bankruptcy of
Xxxxxxx Xxxx Xxxxxx and Xxxxxxx Xxxx Xxxxxx;
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(b) "DEVICE" - means the "Zero Emission Fuel Saver Device";
(c) "PATENT" - means "international patent application no.
PCT/AU01/00585", including any related patent application filed
in Australia or elsewhere;
(d) "SHARES" - means the shares described in clause 3.1(c);
(e) "TRUSTEE" - means Combis.
12. INTERPRETATION
12.1 In this deed, unless inconsistent:
(a) a reference to a clause, schedule is a reference to a clause of
or schedule to this deed and a reference to this deed includes a
recital, or schedule;
(b) a reference to this deed or another instrument is a reference to
this deed or that instrument as amended, varied, novated or
substituted from time to time;
(c) a reference to a statute, ordinance, code or other law, includes
regulations and other instruments under it and consolidations,
amendments, re-enactments or replacements of any of them;
(d) a word importing the singular includes the plural and vice
versa, a word importing a gender includes each other gender and
a reference to a person includes an individual, firm, body
corporate, unincorporated association, government or
governmental semi-government or local authority or agency;
(e) a reference to a person includes the person's executors,
administrators, successors, substitutes (including persons
taking, where permitted, by novation) permitted transferees and
assigns;
(f) agreements on the part of two or more persons or for the benefit
of two or more persons bind and benefit the persons jointly and
severally where any act is to be performed by more than one
person the obligation to do so is joint and several;
(g) a reference to writing shall include typing, telex, facsimile
and all other means of reproducing words in a permanent and
visible form;
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(h) a reference to an act, matter or thing includes the whole or any
part of that act, matter or thing and a reference to a group of
acts, matters or things or persons includes each act, matter or
thing or person in that group;
(i) headings are inserted for convenience only and are not part of
this deed;
(j) if time expires of any day which is not a business day in the
City of Brisbane then time will be taken to expire on the next
day following which is a business day;
(k) any money payable pursuant to this deed shall be paid in US
dollars and any reference herein to "dollars" or "$" is a
reference to US dollars, unless stated otherwise.
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SCHEDULE
Item 1: (Clause 1.1) - Form of Assignment
PATENT ASSIGNMENT
This Agreement is by and between Xxxx Xxxxxx, Trustee, for Xxxxxxx X. Xxxxxx
("Assignor") and Save the World Air, Inc. ("Assignee ").
WHEREAS, Assignor, has initiated actions to register rights to a certain
invention call the ZEFS device (the "Invention") and Assignor has filed a
pending patent application related thereto, both of which are described in
Exhibit A attached hereto (the "Patent"); and
WHEREAS, Assignee, wishes to acquire the entire rights, title, and interest in
the Invention and the Patent;
NOW, the parties agree as follows:
1. ASSIGNMENT. Assignor does hereby irrevocably assign to Assignee all
rights, title, and interest (including but not limited to, the Patent
claims, all rights to prepare derivative mechanisms, the existing
device, all related works, all goodwill and all other rights), in and to
the Patent and the Invention.
2. CONSIDERATION. In consideration for the assignment set forth in
Section 1, Assignor shall pay Assignee in accordance with a separate
agreement executed between Xxxx Xxxxxx, as trustee and STWA, of even
date and the sum of $US 10.00, payable immediately.
3. REPRESENTATIONS AND WARRANTIES. Assignor represents and warrants to
Assignee:
(a) Assignor has the right, power and authority to enter into this
Agreement;
(b) Assignor is conveying all its rights and claims as an owner of all
right, title and interest, including all intellectual property rights,
in the Invention and the Patent;
(c) That to the best of his knowledge information and belief, the
Invention and Patent are free of any actual or known liens, security
interests, encumbrances or licenses, except for those held by the
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assignee, other than a xxxx of sale allegedly granted in favor of a
Xxxxxx Xxxxx, details of which have not been provided by Xx Xxxxx;
4. ATTORNEY'S FEES. Should either party hereto, or any heir, personal
representative, successor or assign of either party hereto, resort to
litigation to enforce this Agreement, the party prevailing in such
litigation shall be entitled, in addition to such other relief as may be
granted, to recover its or their reasonable attorneys' fees and costs in
such litigation from the party against whom enforcement was sought.
5. ENTIRE AGREEMENT. This Agreement, contains the entire understanding
and agreement between the parties hereto with respect to its subject
matter and supersedes any prior or contemporaneous written or oral
agreements, representations or warranties between them respecting the
subject matter hereof.
6. AMENDMENT. This Agreement may be amended only by a writing signed by
both parties.
7. SEVERABILITY. If any term, provision, covenant or condition of this
Agreement, or the application thereof to any person, place or
circumstance, shall be held by a court of competent jurisdiction to be
invalid, unenforceable or void, the remainder of this Agreement and such
term, provision, covenant or condition as applied to other persons,
places and circumstances shall remain in full force and effect.
8. AGREEMENT TO PERFORM NECESSARY ACTS. Assignor agrees to perform any
further acts and execute and deliver any documents that may be
reasonably necessary to carry out the provisions of this Agreement.
9. GOVERNING LAW. This Agreement shall be construed in accordance with
the Laws of the State of Queensland, Australia.
10. APPLICATION OF ASSIGNMENT. This Agreement is to be applicable for
all national filings and submission for registration in any jurisdiction
or forum where the patent rights may be acquired or claimed.
Xxxx Xxxxxx, Trustee Save the World Air, Inc
-------------------- -----------------------
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Item 2: (Clause 3.1(a)) - United States of America, Securities Act of 1933, as
amended, and the Securities Act of 1934, and the rules of the U.S. Securities
and Exchange Commission promulgated thereunder - Rule 144
GENERAL RULES AND REGULATIONS
PROMULGATED
UNDER THE
SECURITIES ACT OF 1933
RULE 144 -- PERSONS DEEMED NOT TO BE ENGAGED IN A DISTRIBUTION AND THEREFORE NOT
UNDERWRITERS
--------------------------------------------------------------------------------
PRELIMINARY NOTE TO RULE 144
Rule 144 is designed to implement the fundamental purposes of the Act, as
expressed in its preamble, "To provide full and fair disclosure of the character
of the securities sold in interstate commerce and through the mails, and to
prevent fraud in the sale thereof . . . " The rule is designed to prohibit the
creation of public markets in securities of issuers concerning which adequate
current information is not available to the public. At the same time, where
adequate current information concerning the issuer is available to the public,
the rule permits the public sale in ordinary transactions of limited amounts of
securities owned by persons controlling, controlled by or under common control
with the issuer and by persons who have acquired restricted securities of the
issuer.
Certain basic principles are essential to an understanding of the requirement of
registration in the Act:
1. If any person utilizes the jurisdictional means to sell any
non-exempt security to any other person, the security must be
registered unless a statutory exemption can be found for the
transaction.
2. In addition to the exemptions found in Section 3, four
exemptions applicable to transactions in securities are
contained in Section 4. Three of these Section 4 exemptions are
clearly not available to anyone acting as an "underwriter" of
securities. (The fourth, found in Section 4(4), is available
only to those who act as brokers under certain limited
circumstances.) An understanding of the term "underwriter" is
therefore important to anyone who wishes to determine whether or
not an exemption from registration is available for his sale of
securities.
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The term underwriter is broadly defined in Section 2(11) of the Act to mean any
person who has purchased from an issuer with a view to, or offers or sells for
an issuer in connection with, the distribution of any security, or participates
or has a direct or indirect participation in any such undertaking, or
participates or has a participation in the direct or indirect underwriting of
any such undertaking. The interpretation of this definition has traditionally
focused on the words "with a view to" in the phrase "purchased from an issuer
with a view to . . . distribution." Thus, an investment banking firm which
arranges with an issuer for the public sale of its securities is clearly an
"underwriter" under that Section. Individual investors who are not professionals
in the securities business may also be "underwriters" within the meaning of that
term as used in the Act if they act as links in a chain of transactions through
which securities move from an issuer to the public. Since it is difficult to
ascertain the mental state of the purchaser at the time of his acquisition,
subsequent acts and circumstances have been considered to determine whether such
person took with a view to distribution at the time of his acquisition. Emphasis
has been placed on factors such as the length of time the person has held the
securities and whether there has been an unforeseeable change in circumstances
of the holder. Experience has shown, however, that reliance upon such factors as
the above has not assured adequate protection of investors through the
maintenance of informed trading markets and has led to uncertainty in the
application of the registration provisions of the Act.
It should be noted that the statutory language of Section 2(11) is in the
disjunctive. Thus, it is insufficient to conclude that a person is not an
underwriter solely because he did not purchase securities from an issuer with a
view to their distribution. It must also be established that the person is not
offering or selling for an issuer in connection with the distribution of the
securities, does not participate or have a direct or indirect participation in
any such undertaking, and does not participate or have a participation in the
direct or indirect underwriting of such an undertaking.
In determining when a person is deemed not to be engaged in a distribution
several factors must be considered.
First, the purpose and underlying policy of the Act to protect investors
requires that there be adequate current information concerning the issuer,
whether the resales of securities by persons result in a distribution or are
effected in trading transactions. Accordingly, the availability of the rule is
conditioned on the existence of adequate current public information.
Secondly, a holding period prior to resale is essential, among other reasons, to
assure that those persons who buy under a claim of a Section 4(2) exemption have
assumed the economic risks of investment, and therefore are not acting as
conduits for sale to the public of unregistered securities, directly or
indirectly, on behalf of an issuer. It should be noted, that there is nothing in
Section 2(11) which places a time limit on a person's status as an underwriter.
The public has the same need for protection afforded by registration whether the
securities are distributed shortly after their purchase or after a considerable
length of time.
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A third factor, which must be considered in determining what is deemed not to
constitute a "distribution," is the impact of the particular transaction or
transactions on the trading markets. Section 4(1) was intended to exempt only
routine trading transactions between individual investors with respect to
securities already issued and not to exempt distributions by issuers or acts of
other individuals who engage in steps necessary to such distributions.
Therefore, a person reselling securities under Section 4(1) of the Act must sell
the securities in such limited quantities and in such a manner as not to disrupt
the trading markets. The larger the amount of securities involved, the more
likely it is that such resales may involve methods of offering and amounts of
compensation usually associated with a distribution rather than routine trading
transactions. Thus, solicitation of buy orders or the payment of extra
compensation are not permitted by the rule.
In summary, if the sale in question is made in accordance with all of the
provisions of the rule, as set forth below, any person who sells restricted
securities shall be deemed not to be engaged in a distribution of such
securities and therefore not an underwriter thereof. The rule also provides that
any person who sells restricted or other securities on behalf of a person in a
control relationship with the issuer shall be deemed not to be engaged in a
distribution of such securities and therefore not to be an underwriter thereof,
if the sale is made in accordance with all the conditions of the rule.
a. Definitions. The following definitions shall apply for the
purposes of this rule.
1. An "affiliate" of an issuer is a person that directly,
or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common
control with, such issuer.
2. The term "person" when used with reference to a person
for whose account securities are to be sold in reliance
upon this rule includes, in addition to such person, all
of the following persons:
i. Any relative or spouse of such person, or any
relative of such spouse, any one of whom has the
same home as such person;
ii. Any trust or estate in which such person or any
of the persons specified in paragraph (a)(2)(i)
of this section collectively own ten percent or
more of the total beneficial interest or of
which any of such persons serve as trustee,
executor or in any similar capacity; and
iii. Any corporation or other organization (other
than the issuer) in which such person or any of
the persons specified in paragraph (a)(2)(i) of
this section are the beneficial owners
collectively of ten
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percent or more of any class of equity
securities or ten percent or more of the equity
interest.
3. The term restricted securities means:
i. Securities acquired directly or indirectly from
the issuer, or from an affiliate of the issuer,
in a transaction or chain of transactions not
involving any public offering;
ii. Securities acquired from the issuer that are
subject to the resale limitations of Rule 502(d)
under Regulation D or Rule 701(c);
iii. Securities acquired in a transaction or chain of
transactions meeting the requirements of Rule
144A;
iv. Securities acquired from the issuer in a
transaction subject to the conditions of
Regulation CE;
v. Equity securities of domestic issuers acquired
in a transaction or chain of transactions
subject to the conditions of Rule 901 or Rule
903 under Regulation S;
vi. Securities acquired in a transaction made under
Rule 801 to the same extent and proportion that
the securities held by the security holder of
the class with respect to which the rights
offering was made were as of the record date for
the rights offering "restricted securities"
within the meaning of this paragraph (a)(3); and
vii. Securities acquired in a transaction made under
Rule 802 to the same extent and proportion that
the securities that were tendered or exchanged
in the exchange offer or business combination
were "restricted securities" within the meaning
of this paragraph (a)(3).
b. Conditions to Be Met. Any affiliate or other person who sells
restricted securities of an issuer for his own account, or any
person who sells restricted or any other securities for the
account of an affiliate of the issuer of such securities, shall
be deemed not to be engaged in a distribution of such securities
and therefore not to be an underwriter thereof within the
meaning of Section 2(11) of the Act if all of the conditions of
this rule are met.
c. Current Public Information. There shall be available adequate
current public information with respect to the issuer of the
securities. Such information shall be deemed to be available
only if either of the following conditions is met:
1. Filing of Reports. The issuer has securities registered
pursuant to Section 12 of the Securities Exchange Act of
1934, has been subject to the reporting requirements of
Section 13 of that Act for a period of at least 90 days
immediately preceding the sale of the securities and has
filed all the
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reports required to be filed thereunder during the 12
months preceding such sale (or for such shorter period
that the issuer was required to file such reports); or
has securities registered pursuant to the Securities Act
of 1933, has been subject to the reporting requirements
of Section 15(d) of the Securities Exchange Act of 1934
for a period of at least 90 days immediately preceding
the sale of the securities and has filed all the reports
required to be filed thereunder during the 12 months
preceding such sale (or for such shorter period that the
issuer was required to file such reports). The person
for whose account the securities are to be sold shall be
entitled to rely upon a statement in whichever is the
most recent report, quarterly or annually, required to
be filed and filed by the issuer that such issuer has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
issuer was required to file such reports) and has been
subject to such filing requirements for the past 90
days, unless he knows or has reason to believe that the
issuer has not complied with such requirements. Such
person shall also be entitled to rely upon a written
statement from the issuer that it has complied with such
reporting requirements unless he knows or has reason to
believe that the issuer has not complied with such
requirements.
2. Other Public Information. If the issuer is not subject
to Section 13 or 15(d) of the Securities Exchange Act of
1934, there is publicly available the information
concerning the issuer specified in paragraphs (a)(5)(i)
to (xiv), inclusive, and paragraph (a)(5)(xvi) of Rule
15c2-11 under that Act or, if the issuer is an insurance
company, the information specified in Section
12(g)(2)(G)(i) of that Act.
d. Holding Period for Restricted Securities. If the securities sold
are restricted securities, the following provisions apply:
1. General Rule. A minimum of one year must elapse between
the later of the date of the acquisition of the
securities from the issuer or from an affiliate of the
issuer, and any resale of such securities in reliance on
this section for the account of either the acquiror or
any subsequent holder of those securities. If the
acquiror takes the securities by purchase, the one-year
period shall not begin until the full purchase price or
other consideration is paid or given by the person
acquiring the securities from the issuer or from an
affiliate of the issuer.
2. Promissory Notes, Other Obligations or Installment
Contracts. Giving the issuer or affiliate of the issuer
from whom the securities were purchased a promissory
note or other obligation to pay the purchase price, or
entering into an installment purchase contract with such
person, shall not be deemed full payment of the purchase
price unless the promissory note, obligation or
contract:
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i. provides for full recourse against the purchaser
of the securities;
ii. is secured by collateral, other than the
securities purchased, having a fair market value
at least equal to the purchase price of the
securities purchased; and
iii. shall have been discharged by payment in full
prior to the sale of the securities.
3. Determination of Holding Period. The following
provisions shall apply for the purpose of determining
the period securities have been held:
i. Stock Dividends, Splits and Recapitalizations.
Securities acquired from the issuer as a
dividend or pursuant to a stock split, reverse
split or recapitalization shall be deemed to
have been acquired at the same time as the
securities on which the dividend or, if more
than one, the initial dividend was paid, the
securities involved in the split or reverse
split, or the securities surrendered in
connection with the recapitalization;
ii. Conversions. If the securities sold were
acquired from the issuer for a consideration
consisting solely of other securities of the
same issuer surrendered for conversion, the
securities so acquired shall be deemed to have
been acquired at the same time as the securities
surrendered for conversion;
iii. Contingent Issuance of Securities. Securities
acquired as a contingent payment of the purchase
price of an equity interest in a business, or
the assets of a business, sold to the issuer or
an affiliate of the issuer shall be deemed to
have been acquired at the time of such sale if
the issuer or affiliate was then committed to
issue the securities subject only to conditions
other than the payment of further consideration
for such securities. An agreement entered into
in connection with any such purchase to remain
in the employment of, or not to compete with,
the issuer or affiliate or the rendering of
services pursuant to such agreement shall not be
deemed to be the payment of further
consideration for such securities.
iv. Pledged Securities. Securities which are bona
fide pledged by an affiliate of the issuer when
sold by the pledgee, or by a purchaser, after a
default in the obligation secured by the pledge,
shall be deemed to have been acquired when they
were acquired by the pledgor, except that if the
securities were pledged without recourse they
shall be deemed to have been acquired by the
pledgee at the time of the pledge or by the
purchaser at the time of purchase.
17
v. Gifts of Securities. Securities acquired from an
affiliate of the issuer by gift shall be deemed
to have been acquired by the donee when they
were acquired by the donor;
vi. Trusts. Where a trust settlor is an affiliate of
the issuer, securities acquired from the settlor
by the trust, or acquired from the trust by the
beneficiaries thereof, shall be deemed to have
been acquired when such securities were acquired
by the settlor;
vii. Estates. Where a deceased person was an
affiliate of the issuer, securities held by the
estate of such person or acquired from such an
estate by the beneficiaries thereof shall be
deemed to have been acquired when they were
acquired by the deceased person, except that no
holding period is required if the estate is not
an affiliate of the issuer or if the securities
are sold by a beneficiary of the estate who is
not such an affiliate.
------------------------------------------------
Note. While there is no holding period or amount
limitation for estates and beneficiaries thereof
which are not affiliates of the issuer,
paragraphs (c), (h) and (i) of the rule apply to
securities sold by such persons in reliance upon
the rule.
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viii. Rule 145(a) transactions. The holding period for
securities acquired in a transaction specified
in Rule 145(a) shall be deemed to commence on
the date the securities were acquired by the
purchaser in such transaction. This provision
shall not apply, however, to a transaction
effected solely for the purpose of forming a
holding company.
e. Limitation on amount of securities sold. Except as hereinafter
provided, the amount of securities which may be sold in reliance
upon this rule shall be determined as follows:
1. Sales by affiliates. If restricted or other securities
sold for the account of an affiliate of the issuer, the
amount of securities sold, together with all sales of
restricted and other securities of the same class for
the account of such person within the preceding three
months, shall not exceed the greater of
i. one percent of the shares or other units of the
class outstanding as shown by the most recent
report or statement published by the issuer, or
18
ii. the average weekly reported volume of trading in
such securities on all national securities
exchanges and/or reported through the automated
quotation system of a registered securities
association during the four calendar weeks
preceding the filing of notice required by
paragraph (h), or if no such notice is required
the date of receipt of the order to execute the
transaction by the broker or the date of
execution of the transaction directly with a
market maker, or
iii. the average weekly volume of trading in such
securities reported through the consolidated
transaction reporting system contemplated by
Rule 11Aa3-1 under the Securities Exchange Act
of 1934 during the four-week period specified in
subdivision (ii) of this paragraph.
2. Sales by persons other than affiliates. The amount of
restricted securities sold for the account of any person
other than an affiliate of the issuer, together with all
other sales of restricted securities of the same class
for the account of such person within the preceding
three months, shall not exceed the amount specified in
paragraphs (e)(1)(i), (1)(ii) or (1)(iii) of this
section, whichever is applicable, unless the conditions
in paragraph (k) of this rule are satisfied.
3. Determination of Amount. For the purpose of determining
the amount of securities specified in paragraphs (e)(1)
and (2) of this rule, the following provisions shall
apply:
i. Where both convertible securities and securities
of the class into which they are convertible are
sold, the amount of convertible securities sold
shall be deemed to be the amount of securities
of the class into which they are convertible for
the purpose of determining the aggregate amount
of securities of both classes sold;
ii. The amount of securities sold for the account of
a pledgee thereof, or for the account of a
purchaser of the pledged securities, during any
period of three months within one year after a
default in the obligation secured by the pledge,
and the amount of securities sold during the
same three-month period for the account of the
pledgor shall not exceed, in the aggregate, the
amount specified in paragraph (e)(1) or (2) of
this section, whichever is applicable.
iii. The amount of securities sold for the account of
a donee thereof during any period of three
months within one year after the donation, and
the amount of securities sold during the same
three-month period for the account of the donor,
shall not exceed, in the
19
aggregate, the amount specified in paragraph
(e)(1) or (2) of this section, whichever is
applicable;
iv. Where securities were acquired by a trust from
the settlor of the trust, the amount of such
securities sold for the account of the trust
during any period of three months within one
year after the acquisition of the securities by
the trust, and the amount of securities sold
during the same three-month period for the
account of the settlor, shall not exceed, in the
aggregate, the amount specified in paragraph
(e)(1) or (2) of this paragraph, whichever is
applicable;
v. The amount of securities sold for the account of
the estate of a deceased person, or for the
account of a beneficiary of such estate, during
any period of three months and the amount of
securities sold during the same period for the
account of the deceased person prior to his
death shall not exceed, in the aggregate, the
amount specified in subparagraph (1) or (2) of
this paragraph, whichever is applicable;
Provided, That no limitation on amount shall
apply if the estate or beneficiary thereof is
not an affiliate of the issuer;
vi. When two or more affiliates or other persons
agree to act in concert for the purpose of
selling securities of an issuer, all securities
of the same class sold for the account of all
such persons during any period of three months
shall be aggregated for the purpose of
determining the limitation on the amount of
securities sold;
vii. The following sales of securities need not be
included in determining the amount of securities
sold in reliance upon this section: securities
sold pursuant to an effective registration
statement under the Act; securities sold
pursuant to an exemption provided by Regulation
A under the Act; securities sold in a
transaction exempt pursuant to Section 4 of the
Act and not involving any public offering; and
securities sold offshore pursuant to Regulation
S under the Act.
f. Manner of sale. The securities shall be sold in "brokers'
transactions" within the meaning of section 4(4) of the Act or
in transactions directly with a "market maker," as that term is
defined in section 3(a)(38) of the Securities Exchange Act of
1934, and the person selling the securities shall not
1. solicit or arrange for the solicitation of orders to buy
the securities in anticipation of or in connection with
such transaction, or
2. make any payment in connection with the offer or sale of
the securities to any person other than the broker who
executes the order to sell the
20
securities. The requirements of this paragraph, however,
shall not apply to securities sold for the account of
the estate of a deceased person or for the account of a
beneficiary of such estate provided the estate or
beneficiary thereof is not an affiliate of the issuer;
nor shall they apply to securities sold for the account
of any person other than an affiliate of the issuer,
provided the conditions of paragraph (k) of this rule
are satisfied.
g. Brokers' Transactions. The term "brokers' transactions" in
Section 4(4) of the Act shall for the purposes of this rule be
deemed to include transactions by a broker in which such
broker--
1. does no more than execute the order or orders to sell
the securities as agent for the person for whose account
the securities are sold; and receives no more than the
usual and customary broker's commission;
2. neither solicits nor arranges for the solicitation of
customers' orders to buy the securities in anticipation
of or in connection with the transaction; provided, that
the foregoing shall not preclude
i. inquiries by the broker of other brokers or
dealers who have indicated an interest in the
securities within the preceding 60 days,
ii. inquiries by the broker of his customers who
have indicated an unsolicited bona fide interest
in the securities within the preceding 10
business days; or
iii. the publication by the broker of bid and ask
quotations for the security in an inter-dealer
quotation system provided that such quotations
are incident to the maintenance of a bona fide
inter-dealer market for the security for the
broker's own account and that the broker has
published bona fide bid and ask quotations for
the security in an inter-dealer quotation system
on each of at least twelve days within the
preceding thirty calendar days with no more than
four business days in succession without such
two-way quotations;
------------------------------------------------
Note to Subparagraph g(2)(ii): The broker should
obtain and retain in his files written evidence
of indications of bona fide unsolicited interest
by his customers in the securities at the time
such indications are received.
------------------------------------------------
3. after reasonable inquiry is not aware of circumstances
indicating that the person for whose account the
securities are sold is an underwriter with
21
respect to the securities or that the transaction is a
part of a distribution of securities of the issuer.
Without limiting the foregoing, the broker shall be
deemed to be aware of any facts or statements contained
in the notice required by paragraph (h) below.
----------------------------------------------------------------
Notes
i. The broker, for his own protection, should obtain and
retain in his files a copy of the notice required by
paragraph (h).
ii. The reasonable inquiry required by paragraph (g)(3) of
this section should include, but not necessarily be
limited to, inquiry as to the following matters:
a. The length of time the securities have been held
by the person for whose account they are to be
sold. If practicable, the inquiry should include
physical inspection of the securities;
b. The nature of the transaction in which the
securities were acquired by such person;
c. The amount of securities of the same class sold
during the past three months by all persons
whose sales are required to be taken into
consideration pursuant to paragraph (e) of this
section;
d. Whether such person intends to sell additional
securities of the same class through any other
means;
e. Whether such person has solicited or made any
arrangement for the solicitation of buy orders
in connection with the proposed sale of
securities;
f. Whether such person has made any payment to any
other person in connection with the proposed
sale of the securities; and
g. The number of shares or other units of the class
outstanding, or the relevant trading volume
--------------------------------------------------------
h. Notice of proposed sale. If the amount of securities to be sold in
reliance upon the rule during any period of three months exceeds 500
shares or other units or has an
22
aggregate sale price in excess of $10,000, three copies
of a notice on Form 144 shall be filed with the
Commission at its principal office in Washington, D. C.;
and if such securities are admitted to trading on any
national securities exchange, one copy of such notice
shall also be transmitted to the principal exchange on
which such securities are so admitted. The Form 144
shall be signed by the person for whose account the
securities are to be sold and shall be transmitted for
filing concurrently with either the placing with a
broker of an order to execute a sale of securities in
reliance upon this rule or the execution directly with a
market maker of such a sale. Neither the filing of such
notice nor the failure of the Commission to comment
thereon shall be deemed to preclude the Commission from
taking any action it deems necessary or appropriate with
respect to the sale of the securities referred to in
such notice. The requirements of this paragraph,
however, shall not apply to securities sold for the
account of any person other than an affiliate of the
issuer, provided the conditions of paragraph (k) of this
rule are satisfied.
i. Bona Fide Intention to Sell. The person filing the
notice required by paragraph (h) shall have a bona fide
intention to sell the securities referred to therein
within a reasonable time after the filing of such
notice.
j. Non-exclusive rule. Although this rule provides a means
for reselling restricted securities and securities held
by affiliates without registration, it is not the
exclusive means for reselling such securities in that
manner. Therefore, it does not eliminate or otherwise
affect the availability of any exemption for resales
under Securities Act that a person or entity may be able
to rely upon.
k. Termination of certain restrictions on sales of
restricted securities by persons other than affiliates.
The requirements of paragraphs (c), (e), (f) and (h) of
this rule shall not apply to restricted securities sold
for the account of a person who is not an affiliate of
the issuer at the time of the sale and has not been an
affiliate during the preceding three months, provided a
period of at least two years has elapsed since the later
of the date the securities were acquired from the issuer
or from an affiliate of the issuer. The two-year period
shall be calculated as described in paragraph (d) of
this section.
23
IN WITNESS WHEREOF the parties hereto have hereunto set their hands and seals on
the day and year first hereinbefore mentioned.
SIGNED SEALED AND DELIVERED for and on behalf of )
SAVE THE WORLD AIR, INC by )
)
/s/ XXXXXX X. XXXXXXX
........................................................
Xxxxxx X. Xxxxxxx
by authority of its Board of Directors in the )
presence of: )
)
/s/ XXXXXXXXX XXXXXX
........................................................
(Xxxxxxxxx XxXxxx)
Name and Signature of Witness
SIGNED SEALED AND DELIVERED by the )
said XXXX XXXXXX, THE TRUSTEE OF )
THE PROPERTY OF XXXXXXX XXXX )
XXXXXX AND XXXXXXX XXXX XXXXXX
(BANKRUPTS) in the presence of:
/s/ ILLEGIBLE
........................................................
Name and Signature of Witness
