SHARE PURCHASE AGREEMENT
Exhibit 10.1
This Share Purchase Agreement (this “Agreement”) is entered into effective June 9, 2011 by and
between Synthesis Energy Systems, Inc., a Delaware corporation (hereinafter referred to as SES,
which expression shall unless the context otherwise required, include its successors) and Zuari
Industries Ltd., a company duly incorporated in India under the Companies Xxx 0000, with registered
xxxxxx xx Xxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx 000000 and a subsidiary of ZUARI Industries Limited,
(hereinafter referred to as ZUARI, which expression shall unless the context otherwise requires
mean and include its representatives, successors, affiliates and subsidiaries). The parties to this
Agreement are sometimes referred to individually as a “Party” and together as the “Parties.”
RECITALS
WHEREAS:
| 1. | SES is a company duly incorporated under the laws of the State of Delaware, United States of
America, and is a global energy and gasification technology company that provides products and
solutions to the energy and chemical industries. |
| 2. | The authorized share capital of SES is 200,000,000 shares of common stock, par value US$.01
per share (the “Common Stock”). |
| 3. | ZUARI is a company inter alia dealing with the manufacture and sale of fertilizers and other
agricultural inputs. |
| 4. | On June 9, 2011 SES, ZUARI and SIMON INDIA LIMITED entered into a Memorandum of Understanding
(the “MOU”), whereby ZUARI agreed, among other things, to invest five million U.S. dollars
(US$5,000,000) to purchase shares of the Common Stock. |
| 5. | The Parties are desirous of entering into this Agreement in order to set out the rights and
obligations of the Parties in relation to the purchase by ZUARI and the issuance of the Shares
by SES and other matters in connection therewith. |
NOW, THEREFORE, In reliance of and based on certain representations, warranties as mentioned
in Schedules 2 and 3 herein, and covenants as set forth in this Agreement, and subject to
all the applicable statutory, corporate and other approvals, and for other good and valuable
consideration, the sufficiency of which is acknowledged by the Parties, the Parties hereby
agree as follows:
CLAUSE 1
DEFINITIONS AND INTERPRETATION
| 1.1 | In addition to the terms defined in the introduction and the text of this Agreement, wherever
used in this Agreement, unless the context otherwise requires, the following words and terms
shall have the meanings set out
below: |
“Affiliate” with respect to any Person, means any other Person which is a holding company or
Subsidiary of such Person, or any Person which, directly or indirectly, (a) Controls such
Person; (b) is Controlled by such Person; (c) is Controlled by the same Person who, directly
or indirectly, Controls such Person; or (d) is a Subsidiary of the same Person of which such
Person is a Subsidiary;
“Agreement” means this Share Purchase Agreement and all instruments supplemental to or in
amendment or confirmation of this Agreement, entered into by the Parties in writing, and the
same as amended, modified or supplemented from time to time;
“Agreement Date” means the date of this Agreement;
“Approvals” means all authorizations, consents, approvals and permissions required by any
Government Authority for or in respect of the purchase by ZUARI of, and the sale by SES of,
the Shares;
“Board” or “Board of Directors” shall mean the Board of Directors of SES;
“Common Stock” shall have the meaning set forth under No.2 of the Recitals hereinabove;
“Control” in relation to a Person, whether natural or juristic, means the power, direct or
indirect, to direct or cause the direction of the management and policies of such Person
whether by Contract or otherwise and, in any event, includes ownership, directly or
indirectly, whether by itself or through Affiliates, in excess of 25.00% of the voting
securities, including preference shares on which voting rights may have accrued in
accordance with Law, of such Person, and the words “Controlled” and “Controlling” shall have
a correlative meaning;
“Encumbrances” means any form of legal, equitable charge (whether fixed or floating), or
security interests, including but not limited to any mortgage, assignment of receivables,
debenture, lien, charge, pledge, title retention, right to acquire, security interest,
hypothecation, options, rights of first refusal, proxies, voting trusts or agreements,
restrictions on title or transfer, any preferred arrangement (including title transfers and
retention arrangements or otherwise) and any other encumbrance or condition whatsoever or
any other arrangements having similar effect (and for the avoidance of doubt includes any
right granted by a transaction which, in legal terms, is not the granting of security but
which has an economic or financial effect similar to the granting of security in each case
under any applicable Law including comfort letters, undertakings etc.), and the terms
“Encumber”, “Encumbered” and “Encumbering” shall be construed accordingly;
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended from time
to time;
“Government Authority” means any national, federal, state, provincial, local
or other government authority, statutory authority, government department, agency,
commission, board, tribunal or court or other law, rule or regulation-making entity (or any
tribunal, board or court;
“Law” means any statute, notification, by-law, rules and regulation, notification,
guideline, policy, direction, directive, ordinance, order or instruction having the force of
law, enacted or issued by any Government Authority;
“Material Adverse Effect” shall mean any change or effect that is materially adverse to the
business, assets, liabilities, results of operations or condition (financial or otherwise)
of SES and its Subsidiaries, taken as a whole, except any such effect resulting from or
arising in connection with (i) conditions affecting global coal, gasification or methanol
industries generally, (ii) events affecting the global economy or capital or financial
markets generally, (iii) changes in general economic conditions affecting the industries in
which SES or any of its Subsidiaries operate, (iv) changes in Law or changes in accounting
standards, (v) the effect of any war, act of terrorism, civil unrest, act of God or similar
event, (vi) the compliance by SES with the terms of, or taking of any action contemplated or
permitted by this Agreement, (vii) actions and omissions of SES (or any of the SES’s
Subsidiaries) taken with the prior informed written consent of ZUARI in contemplation of the
transactions and (viii) the direct effects of compliance with this Agreement on the
operating performance of SES, in each case of clauses (i) through (v), that does not have a
materially disproportionate effect on SES and any SES Subsidiary to other business entities
similarly affected in the relevant jurisdiction or market;
“MOU” shall have the meaning set forth under No.4 of the Recitals hereinabove;
“Party” and “Parties” shall have the meaning set forth in the Preamble;
“Person” includes any individual, sole proprietorship, partnership, unincorporated
association, unincorporated syndicate, unincorporated organization, trust, body corporate
and a natural person in his capacity as trustee, executor, administrator, or other legal
representative;
“Purchase Price” shall have the meaning set out in Clause 3 herein;
“SEC” means the U.S Securities and Exchange Commission;
“Securities Act” means the United States Securities Act of 1933, as amended from time to
time;
“Shares” means 2,222,222 shares of the Common Stock;
“Subsidiary” means each Person with respect to which another Person, directly or indirectly,
owns or Controls of outstanding securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or others performing similar
functions;
“US$” means United States dollars, the lawful currency of the United States of America;
| 1.2 | Certain Rules of Interpretation. |
In this Agreement:
| 1.2.1 | The descriptive headings of Clauses are inserted solely for convenience of
reference and are not intended as complete or accurate descriptions of content thereof
and shall not be used to interpret the provisions of this Agreement; |
| 1.2.2 | The use of words in the singular or plural, or with a particular gender, shall
not limit the scope or exclude the application of any provision of this Agreement to
any Person or Persons or circumstances except as the context otherwise permits; |
| 1.2.3 | The terms “hereof”, “herein”, “hereto”, “hereunder” or similar expressions
used in this Agreement mean and refer to this Agreement and not to any particular
Clause of this Agreement. The terms “Clause” or “sub-clause” mean and refer to the
Clause or sub-clause of this Agreement; |
| 1.2.4 | The words “asset” and “property” shall be construed to have the same meaning
and effect and to refer to any right or interest in or to assets and properties of any
kind whatsoever, whether real, personal or mixed and whether tangible or intangible; |
| 1.2.5 | Wherever the word “include,” “includes,” or “including” is used in this
Agreement, it shall be deemed to be followed by the words “without limitation”; |
| 1.2.6 | Unless otherwise specified, where any warranty or any other provision refers
to the knowledge, information, belief or awareness (or similar expression) of a Party
to this Agreement, the Party shall be deemed to have such knowledge, information,
belief or awareness of a particular matter, where: |
| (a) | the Party actually had such knowledge, information, belief or
awareness; or |
| (b) | a reasonable person in a similar position as the Party would
have had such knowledge, information, belief or awareness, based on it making
all reasonable and proper enquiries into the subject matter of that warranty or
other provision; and |
| 1.2.7 | The recitals and schedules of this Agreement form an integral part of this
Agreement. |
CLAUSE 2
PURCHASE OF THE SHARES
| 2.1 | SES hereby issues the Shares to ZUARI and ZUARI, relying on SES’s Representations and
Warranties, hereby agrees to purchase the Shares on the date hereof in exchange for the
Purchase Price, free and clear of all encumbrances and from all other rights or claims by
third parties as guaranteed by SES. Upon acquisition of the Shares, ZUARI will hold
approximately 4.4% of the Common Stock. |
CLAUSE 3
PURCHASE PRICE
| 3.1 | The aggregate consideration paid by ZUARI to SES on the date hereof for the issuance of the
Shares is five million U.S. dollars (US$5,000,000), or US$2.25 per share (the “Purchase
Price”), payable to a bank account specified in writing by SES. |
| 3.2 | Notwithstanding the above, the Parties agree that, should the closing market price of the
Common Stock (ticker symbol SYMX) on the NASDAQ Stock Market on trading day immediately
preceding the date of remittance of the aggregate consideration by Zuari be lower than US$2.25
per share, the Purchase Price shall be the reduced from US$2.25 per share to a per share equal
to such lower price and the number of shares of Common Stock to be purchased by ZUARI shall be
recalculated. |
| 3.3 | The Parties agree that the Purchase Price represents the entire consideration and no further
amounts shall be payable by ZUARI to SES for the issuance of the Shares in accordance with
this Agreement. |
CLAUSE 4
CLOSING
| 4.1 | On or prior to the date hereof, to complete the issuance of the Shares to ZUARI, the
following actions have occurred: |
| 4.1.1 | No court or other Government Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any law, determination, injunction or
other (whether temporary, preliminary or permanent) that is in effect and restrains,
enjoins or otherwise prohibits consummation of the transactions contemplated by this
Agreement; |
| 4.1.2 | SES has provided ZUARI with certified true copies of the resolutions so passed
by the Board approving the transactions contemplated by this Agreement; |
| 4.1.3 | SES has obtained all the necessary approvals and consents under all applicable
laws or from Government Authorities, including that of corporate, creditors,
shareholders, and those under provisions of insurance policies, as may be required for
the consummation of the transactions contemplated by this Agreement, other than blue
sky filing under the Securities Act; |
| 4.1.4 | SES has provided to ZUARI true and correct copies of all policies
relating to directors’ and officers’ liability coverage, errors and omissions
coverage, and commercial general liability coverage insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as management of SES believes to be prudent and customary in the businesses
in which SES and its Subsidiaries are engaged; |
| 4.1.5 | ZUARI has provided SES with certified true copies of the resolutions so passed
by the board of directors and shareholders of ZUARI, as applicable, approving the
transactions contemplated by this Agreement; |
| 4.1.6 | ZUARI has obtained all the necessary approvals and consents under all
applicable laws or from Government Authorities as may be required for the consummation
of the transactions contemplated by this Agreement; |
| 4.1.7 | SES has provided ZUARI with new share certificates in respect of the Shares;
and |
| 4.1.7 | SES shall issue irrevocable instructions to its transfer agent to issue
certificates, registered in the name of ZUARI or its nominee, for the Shares in such
amounts as specified from time to time by ZUARI to SES in accordance with the terms
thereof. Prior to registration of the Shares under the Securities Act or the date on
which the Shares may be sold pursuant to Rule 144 without any restriction as to the
number of Shares as of a particular date that can then be immediately sold, all such
certificates shall bear the restrictive legend specified in Clause 1.2.4 of Schedule 2
of this Agreement. If ZUARI provides SES, at the cost of ZUARI, with (i) an opinion of
U.S. counsel in form, substance and scope reasonably acceptable to SES, to the effect
that a public sale or transfer of such Shares may be made without registration under
the Securities Act and such sale or transfer is effected or (ii) ZUARI provides
reasonable assurances that the Shares can be sold pursuant to Rule 144, SES shall
permit the transfer, and, in the case of the Shares, promptly instruct its transfer
agent to issue one or more certificates, free from restrictive legend, in such name and
in such denominations as specified by ZUARI. |
CLAUSE 5
CONSEQUENCE OF BREACH
| 5.1 | Indemnity by SES: SES hereby agrees to indemnify and keep indemnified, save, defend and hold
harmless, ZUARI from and against any and all lawful losses, claims, demands, notices of claims
issued by any third party, actions, causes of actions, suits, litigation, damages, and
reasonable out of pocket costs and expenses incurred in pursuing any of the foregoing and any
proceeding in relation to the foregoing in any jurisdiction promptly upon demand at any time
and from time to time, to the fullest extent permitted by applicable Law, which may arise out
of, result from or be payable by virtue of: |
| 5.1.1 | misrepresentation or breach of SES’s representations and warranties; or |
| 5.1.2 | any breach of or default of any SES’s covenants or obligations under this
Agreement; or |
| 5.1.3 | any breach of undertaking, confirmation, covenant or agreement of SES agreed
to be performed under this Agreement or in any certificate, instrument or document
delivered by SES pursuant hereto. |
| 5.2 | Indemnity by ZUARI: ZUARI hereby agrees to indemnify and keep indemnified, save, defend and
hold harmless, SES from and against any and all lawful losses, claims, demands, notices of
claims issued by any third party, actions, causes of actions, suits, litigation, damages, and
reasonable out of pocket costs and expenses incurred in pursuing any of the foregoing and any
proceeding in relation to the foregoing in any jurisdiction promptly upon demand at any time
and from time to time, to the fullest extent permitted by applicable Law, which may arise out
of, result from or be payable by virtue of: |
| 5.2.1 | misrepresentation or breach of ZUARI’s representations and warranties; or |
| 5.2.2 | any breach of or default of any covenants or obligations of ZUARI under this
Agreement; or |
| 5.2.3 | any breach of undertaking, confirmation, covenant or agreement of ZUARI agreed
to be performed under this Agreement or in any certificate, instrument or document
delivered by ZUARI pursuant hereto. |
CLAUSE 6
MISCELLANEOUS
| 6.1 | The representations and warranties of the Parties in this Agreement shall survive until the
first anniversary of the date of this Agreement, after which neither Party may make a claim
against the other Party for a breach of representations and warranties. |
| 6.2 | Each Party will obtain the approval of the other Party before issuing, or permitting any
agent or Affiliate to issue, any press releases or otherwise making or permitting any agent or
Affiliate to make any public statements with respect to this Agreement and the transactions
contemplated hereby; provided, however, that the foregoing shall not restrict disclosures to
the extent (i) required (upon advice of counsel) by applicable securities or other laws or
regulations or the applicable rules of any stock exchange having jurisdiction over the Parties
or their respective affiliates or (ii) such Party has given the other Party a reasonable
opportunity to review such disclosure prior to its release and no objection is raised; and
provided, further, that, in the case of clauses (i) and (ii), each Party shall use its
commercially reasonable efforts to consult with the other Party regarding the contents of any
such
release or announcement prior to making such release or announcement. |
| 6.3 | Each of the Parties shall pay their respective legal, accounting, and other professional
advisory and other fees, costs and expenses incurred in connection with the acquisition of the
Shares and the preparation, execution and delivery of this Agreement and all documents and
instruments executed pursuant to this Agreement. |
| 6.4 | Neither this Agreement nor any benefits or obligations under this Agreement shall be
assignable by any Party without the prior written consent of the other Parties. Subject to
the foregoing, this Agreement shall inure to the benefit of and be binding upon the Parties
and their respective successors (including any successor by reason of amalgamation or merger
of any Party) and permitted assigns. |
| 6.5 | Each Party, shall, with reasonable diligence do all such things and provide all such
reasonable assurances as may be required to consummate the transactions contemplated by this
Agreement and provide such further documents or instruments required by any other Party as
may be reasonably necessary or desirable to effect the purpose of this Agreement and carry out
its provisions after the closing of the transactions contemplated by this Agreement, provided
that such co-operation shall not extend to joining in or commencing litigation or arbitration
proceedings. |
| 6.6 | This Agreement, along with the Non-Disclosure Agreement among the Parties dated June 30,
2010, constitutes the entire agreement between the Parties with respect to the subject matter
hereof. Neither this Agreement nor any provision hereof shall be waived, modified, changed,
discharged, terminated, revoked or canceled except by an instrument in writing signed by the
Party effecting the same against whom any change, discharge or termination is sought. |
| 6.7 | Notices required or permitted to be given hereunder shall be in writing and shall be deemed
to be sufficiently given when personally delivered or sent by Federal Express and by e-mail
(i) if to SES, to Synthesis Energy Systems, Inc., Xxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000, Attention: Xxxxx Xxxxx, e-mail: Xxxxx.xxxxx@xxxxxxxxxxxxxxx.xxx, with a copy to Xxxxxx
Xxxxxx LLP, 0000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention: Xxxxxx
X. Xxxxx, e-mail: xxxxxx@xxxxxxxxxxxx.xxx, or (ii) if to ZUARI, to ZUARI INDUSTRIES LIMITED,
Jai Kisaan Bhawan, Zuarinagar, Goa- India, 403 726, Attention: Xx. X. X. XXXXX, e-mail:
xxx@xxxxx.xx.xx. |
| 6.8 | Failure of a Party to exercise any right or remedy under this Agreement or otherwise, or a
delay by a Party in exercising such right or remedy, will not operate as a waiver thereof. No
waiver by a Party will be effective unless and until it is in writing and signed by such
Party. |
| 6.9 | This Agreement shall be enforced, governed and construed in all respects in accordance with
the laws of the State of Delaware, United States of America. |
| 6.10 | If any provision of this Agreement is found to be invalid or unenforceable, such provision
shall be reduced or modified to the extent deemed
reasonable and enforceable under the circumstances, and as so reduced or modified, shall
remain in full force and effect. The Parties further agrees that if any provision of this
Agreement is found to be invalid or against public policy, the remaining provisions of this
Agreement shall not be affected thereby, and shall remain in full force and effect. |
| 6.11 | Any dispute, controversy, claim or disagreement of any kind whatsoever, arising out of this
Agreement, between or among the Parties, which cannot be solved amicably, shall be referred to
arbitration as per arbitration rules established by the International Chamber of Commerce to
be conducted in English and the seat of arbitration shall be at Singapore. Any award of the
arbitrators shall be final and binding on both Parties. |
| 6.12 | Nothing expressed or implied in this Agreement is intended or shall be construed to confer
upon or give any Person, other than the Parties hereto any rights or remedies under or by
reason of this Agreement or any transaction contemplated by this Agreement. |
| 6.13 | This Agreement may be executed through the use of separate signature pages or in any number
of counterparts (including by facsimile or Portable Document Format (pdf) transmission), and
each of such counterparts shall, for all purposes, constitute one agreement binding on all the
Parties, notwithstanding that all Parties are not signatories to the same counterpart. |
[Signature Page Follows]
IN WITNESS WHEREOF, SES and ZUARI have caused this Agreement to be executed by a duly
authorized officer on the day and year indicated at the beginning of this Agreement.
| SES | ||||||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||||||
| Name: | Xxxxxxx X. Xxxxxxx | |||||||
| Title: | Senior Vice President | |||||||
| ZUARI | ||||||||
| By: | /s/ N. Xxxxxx Xxxxxxxx | |||||||
| Name: | N. Xxxxxx Xxxxxxxx | |||||||
| Title: | ||||||||
SIGNATURE PAGE TO SHARE PURCHASE AGREEMENT
SCHEDULE 1
SUBSIDIARIES OF SES
| • | Synthesis Energy Holdings, Inc. (Florida Corporation) |
| • | Owns 100% of: |
| • | Synthesis Energy Systems, Inc. (British Virgin Islands corporation) |
| • | Owns 100% of: |
| • | Synthesis Energy
Systems Investments, Inc. (Mauritius corporation) |
||
| • | Synthesis Energy
Investment Holdings, Inc. (Mauritius corporation) |
||
| • | Synthesis Energy
Technology Holdings, Inc. (Mauritius corporation) |
||
| • | SES New Energy
Technologies, (Shanghai) Co., Ltd. (Chinese corporation) |
| • | Synthesis Energy Systems Technologies, LLC (Delaware limited liability company) |
SCHEDULE 2
REPRESENTATIONS, WARRANTIES AND GENERAL COVENANTS OF ZUARI
| 1.1 | Representations and Warranties. ZUARI hereby represents and warrants to, and
agrees with, SES as follows: |
| 1.1.1 | ZUARI is a corporation duly incorporated, validly existing,
and in good standing under the laws of India and has all requisite power and
authority to own and operate its properties and assets and to carry on its
business as now conducted and as presently proposed to be conducted, to execute
and deliver this Agreement, and to carry out the provisions of this Agreement. |
| 1.1.2 | All action on the part of ZUARI and its officers, directors
and control persons necessary for the authorization, execution and delivery of
this Agreement and the performance of all obligations of ZUARI hereunder has
been taken. This Agreement constitutes a valid and legally binding obligation
of ZUARI, enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to the rights of creditors generally. |
| 1.1.3 | No further consent, approval, qualification, order or
authorization of, or filing with, any Governmental Authority is required on the
part of ZUARI besides those already obtained in connection with the execution,
delivery, or performance of this Agreement. |
| 1.1.4 | In connection with the transactions contemplated by this
Agreement and the MOU, including the joint venture between ZUARI and SES,
neither ZUARI nor any of its senior management or directors has taken any
action in violation of the U.S. Foreign Corrupt Practices Act of 1977, as
amended. |
| 1.1.5 | The execution, delivery and performance of this Agreement by
ZUARI and the consummation by ZUARI of the transactions contemplated hereby
will not (i) conflict with or result in a violation of any provision of the
organizational documents of ZUARI, or (ii) violate or conflict with, or result
in a breach of any provision of, or constitute a default (or an event which
with notice or lapse of time or both could become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture, patent, patent license or instrument to which ZUARI
or any of its Subsidiaries is a party, or (iii) result in a violation of any
Law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and regulations of any self-regulatory
organizations to which |
ZUARI are subject) applicable to ZUARI or any of its
Subsidiaries or by which any property or asset of ZUARI or any of its Subsidiaries is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect). Neither ZUARI nor
any of its Subsidiaries is in violation of its organizational documents and
neither ZUARI nor any of its Subsidiaries is in default (and no event has
occurred which with notice or lapse of time or both could put ZUARI or any
of its Subsidiaries in default) under, and neither ZUARI nor any of its
Subsidiaries has taken any action or failed to take any action that would
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which ZUARI or
any of its Subsidiaries is a party or by which any property or assets of
ZUARI or any of its Subsidiaries is bound or affected, except for possible
defaults as would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect. The businesses of ZUARI and its
Subsidiaries, if any, are not being conducted, in violation of any Law,
ordinance or regulation of any Government Authority except for possible
violations as would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect. Except as specifically
contemplated by this Agreement, ZUARI is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court, governmental agency, regulatory agency, self regulatory organization
or stock market or any third party in order for it to execute, deliver or
perform any of its obligations under this Agreement, in accordance with the
terms hereof or to purchase the Shares in accordance with the terms hereof.
| 1.2 | General Covenants. |
ZUARI acknowledges its understanding that the Shares is intended to be
exempt from registration under the Securities Act by virtue of Section 4(2) of
the Securities Act and the provisions of Regulation D promulgated thereunder
(“Regulation D”). In furtherance thereof but subject to terms and conditions
laid down in this Agreement, ZUARI represents and warrants to SES as follows:
| 1.2.1 | ZUARI is acquiring the Shares solely for ZUARI’s own beneficial
account, for investment purposes, and not with a view towards, or resale in
connection with, any distribution of the Shares. |
| 1.2.2 | ZUARI has the financial ability to bear the economic risk of loss of
ZUARI’s investment, has adequate means for providing for its current needs and
contingencies, and has no need for liquidity with respect to an investment in SES. |
| 1.2.3 | ZUARI will not sell or otherwise transfer any Shares without
registration under the Securities Act or an exemption therefrom, and fully
understands and acknowledges and agrees that the Shares have not been registered
under the Securities Act or under the securities laws of any state and, therefore,
cannot be resold, pledged,
assigned or otherwise disposed of unless they are subsequently registered under
the Securities Act and under the applicable securities laws of such states, or an
exemption from such registration is available. In particular, ZUARI is aware
that the Shares are “restricted securities,” as such term is defined in Rule 144
promulgated under the Securities Act (“Rule 144”), and they may not be
sold pursuant to Rule 144 unless all of the conditions of Rule 144 are met. |
| 1.2.4 | ZUARI understands and agrees that the certificates for the Shares
shall bear substantially the following legend until (i) such Shares shall have been
registered under the Securities Act and effectively disposed of in accordance with
a registration statement that has been declared effective or (ii) in the opinion of
counsel for SES, such Shares may be sold without registration under the Securities
Act, as well as any applicable “blue sky” or state securities laws: |
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE OFFERED
FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED BY THE ISSUER WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION COVERING SUCH SECURITIES UNDER THE SECURITIES
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS
NOT REQUIRED.
| 1.2.6 | ZUARI is unaware of, is in no way relying on, and did not become
aware of, the offering of the Shares through or as a result of, any form of general
solicitation or general advertising, including, without limitation, any article,
notice, advertisement or other communication published in any newspaper, magazine
or similar media or broadcast over television or radio, or electronic mail over the
Internet, in connection with the offering of the Shares and is not subscribing for
Shares and did not become aware of the offering of the Shares through or as a
result of any seminar or meeting to which ZUARI was invited by, or any solicitation
of a purchase by, a person not previously known to ZUARI in connection with
investments in securities generally. |
| 1.2.7 | ZUARI is, and on each date on which ZUARI continues to own restricted securities
from the Offering will be, an “Accredited Investor” as defined in Rule 501(a) under
Regulation D. |
| 1.2.8 | ZUARI shall not sell, assign or transfer any Shares for a period of
6 months from the date of issue of shares by SES to ZUARI. Notwithstanding this,
until the eighteen month anniversary of the date of this Agreement, ZUARI shall
sell no more than 100,000 shares
in a single day and no more than an aggregate of 400,000 shares in any seven day
period. |
| 1.2.9 | ZUARI has been furnished by SES all information (or has been provided
by SES access to all information) regarding the business and financial condition of
SES, the attributes of the Shares and the merits and risks of an investment in the
Shares which ZUARI has requested or otherwise needs to evaluate the investment in
SES. ZUARI has had an opportunity to read the SEC Documents (as defined in Clause
8 of Schedule 3). |
| 1.2.10 | ZUARI has not authorized any person or entity to act as its Purchaser
Representative (as that term is defined in Regulation D of the General Rules and
Regulations under the Securities Act) in connection with the Offering. |
SCHEDULE 3
REPRESENTATIONS, WARRANTIES AND GENERAL COVENANTS OF SES
Representations and Warranties. SES hereby represents and warrants to ZUARI that:
| 1. | Organization and Qualification |
SES and each of its Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is formed, with full power and authority
(corporate and other) to own, lease, use and operate its properties and to carry on its
business as and where now owned, leased, used, operated and conducted. Schedule 1 sets forth
a list of all of the Subsidiaries of SES and the jurisdiction in which each has been formed.
SES and each of its Subsidiaries is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which its ownership or use of property or
the nature of the business conducted by it makes such qualification necessary except where
the failure to be so qualified or in good standing would not reasonably be expected to have
a Material Adverse Effect.
| 2. | Authorization; Enforcement |
(i) SES has all requisite corporate power and authority to enter into and perform this
Agreement and to consummate the transactions contemplated hereby and to issue the Shares, in
accordance with the terms hereof, (ii) the execution and delivery of this Agreement by SES
and the consummation by it of the transactions contemplated hereby have been duly authorized
by the Board of Directors and no further consent or authorization of SES, its Board of
Directors, or its stockholders is required, (iii) this Agreement has been duly executed and
delivered by SES by its authorized representative, and such authorized representative is the
true and official representative with authority to sign this Agreement and the other
documents executed in connection herewith and bind SES accordingly, and (iv) this Agreement
constitutes a legal, valid and binding obligation of SES enforceable against SES in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to the rights of creditors
generally.
| 3. | Capitalization |
As of the date hereof, the authorized capital stock of SES consists of 200,000,000 shares of
Common Stock, of which 48,627,998 shares are issued and outstanding. There are no
authorized shares of Preferred Stock. All of such outstanding shares of Common Stock are
duly authorized, validly issued, fully paid and non-assessable. No shares of capital stock
of SES are subject to preemptive rights or any other similar rights of the stockholders of
SES or any liens or Encumbrances imposed through the actions or failure to act of SES.
Except as set forth in the SEC Documents, as of the effective date of this Agreement, (i)
there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments or rights
of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for any shares of capital stock
of SES or any of its Subsidiaries, or arrangements by which SES or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of SES or any of its
Subsidiaries, (ii) there are no agreements or arrangements under which SES or any of its
Subsidiaries is obligated to register the sale of any of its or their securities under the
Securities Act and (iii) there are no anti-dilution or price adjustment provisions contained
in any security issued by SES (or in any agreement providing rights to security holders)
that will be triggered by the issuance of Shares.
| 4. | Issuance of Shares |
The Shares are duly authorized and reserved for issuance and will be validly issued, fully
paid and non-assessable, and free from all taxes, liens, claims and Encumbrances with
respect to the issue thereof (other than the resale restrictions under the Securities Act
acknowledged and agreed to by ZUARI pursuant to this Agreement) and shall not be subject to
preemptive rights or other similar rights of stockholders of SES and will not impose
personal liability upon the holder thereof.
| 5. | Subsidiaries and Investments |
Except for the Subsidiaries set forth on Schedule 1, SES has no Subsidiaries. Except as set
forth in the SEC Documents, SES does not own, directly or indirectly, any capital stock or
other equity ownership or proprietary interests in any other corporation, association,
trust, partnership, joint venture or other entity. Except as set forth in the SEC Documents,
SES owns all of the capital stock of the Subsidiaries, and there are no warranties, options,
agreements, convertible securities, preemptive rights to subscribe for or other commitments
pursuant to which any of the Subsidiaries may become obligated to issue any shares of its
capital stock or any other securities to any person other than SES. No actions have been
taken by SES or the Board of Directors with respect to the sale or disposition of the stock,
ownership interests or assets of the Subsidiaries.
| 6. | No Conflicts |
The execution, delivery and performance of this Agreement by SES and the consummation by SES
of the transactions contemplated hereby will not (i) conflict with or result in a violation
of any provision of the Certificate of Incorporation or Bylaws of SES, or (ii) violate or
conflict with, or result in a breach of any provision of, or constitute a default (or an
event which with notice or lapse of time or both could become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture, patent, patent license or instrument to which SES or any of its Subsidiaries is a
party, or (iii) result in a violation of any Law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and regulations of any
self-regulatory organizations to which SES or its securities are subject) applicable to SES
or any of its Subsidiaries or by which any property or asset of SES or any of its
Subsidiaries is bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect). Neither SES nor any of
its Subsidiaries is in violation of its Certificate of Incorporation or Bylaws or other
organizational documents and neither SES nor any of its Subsidiaries is in default (and no
event has occurred which with notice or lapse of time or both could put SES or any of its
Subsidiaries in default) under, and neither SES nor any of its Subsidiaries has taken any
action or failed to take any action that would give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or instrument to which
SES or any of its Subsidiaries is a party or by which any property or assets of SES or any
of its Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
The businesses of SES and its Subsidiaries, if any, are not being conducted in violation of
any Law, ordinance or regulation of any Government Authority except for possible violations
as would not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as specifically contemplated by this Agreement and as required under
the Securities Act and any applicable state securities laws, SES is not required to obtain
any consent, authorization or order of, or make any filing or registration with, any court,
governmental agency, regulatory agency, self-regulatory organization or stock market or any
third party in order for it to execute, deliver or perform any of its obligations under this
Agreement, in accordance with the terms hereof or to issue and sell the Shares in accordance
with the terms hereof.
| 7. | SEC Documents; Financial Statements |
SES has filed all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the Exchange Act (all of
the foregoing filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference therein, being
hereinafter referred to herein as the “SEC Documents”). As of their respective dates, the
SEC Documents complied as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to
the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. To the knowledge of SES,
none of the statements made in any such SEC Documents is, or has been, required to be
amended or updated under applicable law (except for such statements as have been amended or
updated in subsequent filings prior to the date hereof). As of their respective dates, the
financial statements of SES included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles, consistently
applied, during the periods involved and fairly present in all material respects the
consolidated
financial position of SES and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments). Except as set
forth in the financial statements of SES included in the SEC Documents, SES has no
liabilities, contingent or otherwise, other than liabilities as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
| 8. | Absence of Certain Changes |
Except as disclosed in the SEC Documents, since December 31, 2010, there has been no
material adverse change and no material adverse development in the assets, liabilities,
business, properties, operations, financial condition, results of operations, or Exchange
Act reporting status of SES or any of its Subsidiaries.
| 9. | Absence of Litigation |
Except as disclosed in the SEC Documents, there is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, Government Authority,
self-regulatory organization or body pending or, to the knowledge of SES or any of its
Subsidiaries, threatened against or affecting SES or any of its Subsidiaries, or their
officers or directors in their capacity as such, that could reasonably be expected to have a
Material Adverse Effect. SES and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.
| 10. | Acknowledgment Regarding Purchase of Shares |
SES acknowledges and agrees that ZUARI is acting solely in the capacity of arm’s length
purchasers with respect to this Agreement and the transactions contemplated hereby. SES
further acknowledges that ZUARI is not acting as a financial advisor or fiduciary of SES (or
in any similar capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by ZUARI or any of its respective representatives or agents in
connection with this Agreement and the transactions contemplated hereby is not advice or a
recommendation and is merely incidental to the purchase of the Shares by ZUARI.
| 11. | No Integrated Offering |
Neither SES, nor any of its Affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the Securities
Act of the issuance of the Shares to ZUARI. The issuance of the Shares to ZUARI will not be
integrated with any other issuance of SES’s securities (past, current or future) for
purposes of any stockholder approval provisions applicable to SES or its securities.
| 12. | No Brokers |
Other than InfrastructureWorld, LLC, SES has taken no action which would give rise to any
claim by any person for brokerage commissions, transaction fees or similar payments relating
to this Agreement or the transactions contemplated hereby.
| 13. | Environmental Matters |
There are, to SES’s knowledge, with respect to SES or any of its Subsidiaries or any
predecessor of SES, no past or present violations of any environmental Laws, releases of any
material into the environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 or similar federal, state, local or foreign Laws, except in all cases
for violations as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, and neither SES nor any of its Subsidiaries has received any
notice with respect to any of the foregoing, nor is any action pending or, to SES’s
knowledge, threatened in connection with any of the foregoing.
| 14. | Foreign Corrupt Practices |
To the knowledge of SES, neither SES, nor any of its Subsidiaries, nor any director,
officer, agent, employee or other person acting on behalf of SES or any Subsidiary has, in
the course of his actions for, or on behalf of, SES, (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating to political
activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in violation of
any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
| 15. | No Immunity |
To the knowledge of SES, SES are subject to civil and commercial Law and to suit as to its
obligations under this Agreement, and, to the knowledge of SES, neither SES, nor any of the
SES’s properties, assets or revenues have any right of immunity, on the grounds of
sovereignty, from any legal action, suit or proceeding, from the giving of any relief in any
such legal action, suit or proceeding, from setoff or counterclaim, from the jurisdiction of
any court, as the case may be, from service of process, attachment upon or prior to
judgment, or attachment in aid of execution of judgment, or from execution or enforcement of
a judgment, or other legal process or proceeding for the giving of any relief or for the
enforcement of a judgment, in any such court, with respect to its obligations or liabilities
or any other matter under or arising out of or in connection with this Agreement.
| 16. | Solvency |
As of the date of this Agreement, and after giving effect to the transactions contemplated
by this Agreement, SES is solvent (i.e., its assets have a fair market value in excess of
the amount required to pay its probable liabilities on its existing debts as they become
absolute and matured).
SES’s Covenants
| 1. | Delivery of SEC Documents |
Upon written request from ZUARI, SES will deliver to ZUARI true and complete copies of the
SEC Documents, except for such exhibits and documents incorporated by reference therein.
| 2. | Form D |
SES agrees to file a Form D with respect to the Shares as required under Regulation D and
provide a copy to ZUARI. There are no other filings required under the Securities Act in
connection with the issuance of the Shares
| 3. | Listing |
SES shall promptly secure the listing of the Shares upon the NASDAQ Stock Market.
| 4. | No Integration |
SES shall not make any offers or sales of any security (other than the Shares) under
circumstances that would require registration of the Shares being offered or sold hereunder
under the Securities Act or cause the offering of the Shares to be integrated with any other
offering of securities by SES for the purpose of any stockholder approval provision
applicable to SES or its securities.
