Second Amendment Agreement To Acquisition Agreement Dated March 26, 2007
Exhibit
10.3
Second
Amendment Agreement
To
Acquisition
Agreement Dated March 26, 2007
This
Second Amendment Agreement is made
as of the 16th day of November 2007, to that certain Acquisition Agreement
dated
March 26, 2007, as amended on August 22, 2007 and subject to a Variation
Agreement dated June 14, 2007, by and among (a) the Four Rivers BioEnergy
Company, Inc., a Kentucky corporation (“4Rivers” or “Company”), (b) Xxxxx Xxxx
Xxxxxxxxx, Xxxxxx Xxxxxxx Xxxxxxx, Xxxx X. Xxxxxxx, Xxxx Xxxxxx, Xxxxxxxx X.
Xxxx, Xxxxxxx Xxxx Xxxxxxx and Xxxxxx Xxxxxxxxx (together the “Shareholders”)
and (c) Med-Tech Solutions Inc., a Nevada corporation (“Med Tech”).
WHEREAS,
Med Tech, the Shareholders
listed in the preamble above and 4Rivers have entered into an Acquisition
Agreement, dated March 26, 2007 and as previously amended and varied
(“Acquisition Agreement”), pursuant to which it was agreed that Med Tech would
acquire all the issued and outstanding shares of Four Rivers, not already owned
by Med Tech, from the Shareholders, in exchange for shares of capital stock
of
Med Tech, and the other terms more particularly set forth in the Acquisition
Agreement; and
WHEREAS,
the parties hereto have agreed
to amend the terms of the Acquisition Agreement on the terms herein
provided.
NOW,
THEREFORE, IT IS AGREED AS
FOLLOWS, that,
A. Clause
8.4 of the Acquisition Agreement will be amended hereby, by the replacement
of
the lead-in to be as follows: “If Completion has not occurred prior to November
30, 2007, due to non-fulfillment of any one or more of the conditions precedent
to Completion set out in Clause 8.1 above or any other condition to consummation
of the Acquisition Agreement (including in any amendment or variation thereto)
and the Purchaser has not served a notice pursuant to 16.2 then:”
B. The
Acquisition Agreement is hereby generally modified as follows:
(a) Med
Tech shall have the right to create a class of preferred stock with two shares
for the principal purpose of the holder(s) thereof electing one or two directors
of Med Tech, and such director(s) to have oversight authority in respect of
the
Acquisition Agreement and the implementation of the business purpose of 4Rivers,
such preferred stock to be non – economic equity securities of the
company. The terms of the preferred stock will be as set forth in
Exhibit A hereto. Med Tech shall be authorized to file the
certificate of designations with the Secretary of State of Nevada and issue
the
preferred stock, as it determines.
1
(b) In
contemplation of the closing of the acquisition of 4Rivers and subject to
4Rivers and its shareholders receiving satisfactory tax advice, 4Rivers will
use
it reasonable best efforts to effect a reallocation of share ownership amongst
its shareholders by paying cash bonuses to various of its shareholders, the
net
bonus payments, after deduction of tax, shall be used by the persons to
subscribe for numbers of shares of common stock as is set forth opposite their
names in the following table, such shares to be newly authorized and approved
by
the shareholders of 4Rivers, and to be duly authorized, validly issued, and
fully paid and non-assessable.
|
Xxxxx
Xxxx Xxxxxxxxx
|
76
|
|
Xxxxxx
Xxxxxxx Xxxxxxx
|
0
|
|
Xxxx
X. Xxxxxxx
|
109
|
|
Xxxx
Xxxxxx
|
259
|
|
Xxxxxxxx
X. Xxxx
|
0
|
|
Xxxxx
Xxxxxx
|
8
|
|
Xxxxxxx
Xxxx Xxxxxxx
|
209
|
|
Xxxxxx
Xxxxx
|
17
|
|
Xxxxxx
Xxxxxxxxx
|
128
|
|
Xxxxxxx
Xxxxxx
|
44
|
|
Med
Tech Solutions, Inc.
|
150
|
(c) Upon
successful conclusion of the xxxxxx contemplated by paragraph (b) hereof,
Schedule 2 “Details of the Shareholders” shall be amended such that the shares
that may be owned as of the consummation of the Acquisition Agreement by the
Shareholders in 4Rivers and the equivalent number of Consideration Shares in
Med
Tech will be as follows:
|
NAME
|
Shares
Following Bonus Issue
|
Equivalent
Consideration Shares
|
||||||
|
Xxxxx
Xxxx Xxxxxxxxx
|
174
|
4,162,182
|
||||||
|
Xxxxxx
Xxxxxxx Xxxxxxx
|
81
|
1,937,568
|
||||||
|
Xxxx
X. Xxxxxxx
|
170
|
4,066,500
|
||||||
|
Xxxx
Xxxxxx
|
475
|
11,362,279
|
||||||
|
Xxxxxxxx
X. Xxxx
|
178
|
4,257,865
|
||||||
|
Xxxxx
Xxxxxx
|
8
|
191,365
|
||||||
|
Xxxxxxx
Xxxx Xxxxxxx
|
247
|
5,908,386
|
||||||
|
Xxxxxx
Xxxxx
|
17
|
406,650
|
||||||
|
Xxxxxx
Xxxxxxxxx
|
306
|
7,319,700
|
||||||
|
Xxxxxxx
Xxxxxx
|
44
|
1,052,506
|
||||||
|
TOTAL
|
1,700
|
40,665,000
|
||||||
For
purposes of clarity in the
Acquisition Agreement, the aggregate number of shares of Med Tech to be issued
in exchange for the outstanding common stock of 4Rivers will not change as
a
result of the increase in the issued and outstanding shares of common stock
of
4Rivers.
It
is agreed that in connection with
any issuance of additional shares of common stock of 4Rivers to any of above
scheduled persons or any other persons, that Med Tech will be issued such number
of additional shares of common stock of 4Rivers to maintain its 15% ownership
interest therein, the consideration for such shares to be certain expenses
undertaken on behalf of 4Rivers relating to tax and other advice related to
the
change in share allocations and issuance of additional shares of common
stock. It is further agreed that 4Rivers will not issue additional
shares of its equity securities without the permission of Med Tech, which
permission shall not require a formal amendment to the Acquisition
Agreement.
2
(c) Upon
successful conclusion of the xxxxxx contemplated by paragraph (b) hereof, the
following persons, Xxxxx Xxxxxx, Xxxxxx Xxxxx and Xxxxxxx Xxxxxx, shall be
deemed to be, and hereby consent to being, made parties to the Acquisition
Agreement (other than Clause 11, pursuant to which certain warranties are made)
as Shareholders, and the definition of Shareholders in this Amendment Agreement
and the Acquisition Agreement as otherwise amended and varied, where applicable
will include such additional persons. Notwithstanding the foregoing,
it is agreed that for purposes of the Acquisition Agreement, as amended, the
aforementioned persons in this paragraph will not be Shareholders until the
shares of 4Rivers for which they have been approved are authorized by all
requisite corporate action.
(d) As
a condition to this amendment, each of the Shareholders will agree to a lock-up
and sale agreement, as set forth in either Exhibit B (three year) hereto,
governing the sale and transfer of the shares of common stock of Med Tech
received in exchange for their equity securities of 4Rivers, consistent with
Clause 9, and to the extent different the terms of such lock-up agreement will
supersede Clause 9.
(e) Upon
successful conclusion of the xxxxxx contemplated by paragraph (b) hereof,
4Rivers and Med Tech will negotiate in good faith with each of the Shareholders
to provide for loans of up to a maximum of $100,000 to each of the Shareholders,
to the extent permitted by the United States federal securities laws and
applicable corporate law, for the purpose of paying income taxes to the extent
assessed and imposed by any the local, state or national governments of the
United States and United Kingdom on the Shareholders as a result of the issuance
of shares of common stock of 4Rivers on or after October 1, 2007, and 4Rivers
and Med Tech will negotiate in good faith with each of the Shareholders to
provide indemnification in respect of any income taxes due in excess of $100,000
per Shareholder imposed by any local, state or national government as a result
of the issuance of shares of 4Rivers to the Shareholders on or after October
1,
2007. For purposes of clarity only, this provision does not apply to
any taxes of any nature or jurisdiction imposed on the Shareholders as a result
of the exchange of shares pursuant to the Acquisition Agreement. The
general terms of any permitted loans shall be as follows: (a) the loans will
be
solely for the payment of any income taxes that may be due, (b)the maximum
loan
will be not to exceed the lesser of (i) the regular compensation income tax
(but
no other taxes, including for example social security, xxxxxxx’x comp and
Medicare and similar kinds of taxes) due thereon, without any gross up, (ii)
$100,000 times the number of shares issued to the Shareholder divided by 260,
and (iii) $100,000, such loans, (c) the loan must be specifically requested
by
the Shareholder, (d) the loan shall be a demand note, bearing interest at the
minimum rate for deemed interest under the Internal Revenue Code, (e) the loan
will be due on the earlier of than five years from the date of making (or such
shorter term as the shareholder requests) or termination of employment, (f)
the
interest on the loan will be due and payable not less frequently than annually,
(g) the loan will be full recourse to the shareholder, and (h) the loan will
contain such other terms as may be deemed prudent by the officers of the Med
Tech and 4Riversat the time of the making of such loan. The terms of
the indemnification agreement will be as follows: (a) the indemnification will
be only for any tax liability finally determined that is based on the value
of
the stock greater than $290 per share (based on an enterprise valuation of
4Rivers as of October 1, 2007) and less than $3,000 per share, (b) the agreement
will include reimbursement of fees (up to a jurisdictional total of $10,000)
and
expenses of one counsel for all such Shareholders in each national jurisdiction
in connection with any inquiry by a taxing authority, provided that the
Shareholders take steps on or before the filing due date of the Shareholders’
next annual tax return to make such elections to indicate their tax positions
in
respect of the receipt of the shares, (c) the indemnification agreement will
not
exceed a period of five years unless a tax claim is asserted within such period
of the agreement in which case the agreement and indemnification will extend
until the date of final resolution of the tax claim, and (d) the indemnification
agreements for the Shareholders will be substantially similar among all the
Shareholders.
3
(f) Med
Tech may enter into such agreements as it deems to be in its best interests
in
respect of raising additional capital, which may include modifications to its
agreements with International Capital Partners SA, payment of termination fees,
letters of intent with selling agents, and other agreements as it deems
necessary thereto, which agreements will be subject to the approval of
4Rivers. 4Rivers may enter into such agreements as it deems to be in
the best interests in respect of raising additional capital which agreements
will be subject to the approval of Med Tech.
(g) As
a closing condition, Med Tech will be provided with a legal opinion of counsel
to 4Rivers, admitted in the State of Kentucky, to the effect that (i) the
Acquisition Agreement dated March 26, 2007, as amended and varied prior to
closing and related agreements (pursuant to such acquisition agreement) have
been duly authorized by all required corporate action, including board of
director and shareholder approvals, as appropriate, and (ii) the entire issued
share capital of 4Rivers immediately prior to the consummation of the
acquisition agreement, as amended and varied, is duly authorized, validly issued
and fully paid and non-assessable.
(h) The
Purchaser obligation to have “$35,000,000 net” in funds, specified on Schedule 7
of the Acquisition Agreement is hereby modified to be “$22,500,000
net.” Additionally the Definitions Section is hereby modified to
reflect that the Main Funding shall result in not less than net proceeds to
the
Purchaser of $22,500,000, and accordingly the definition of Private Placement
is
amended.
(i) The
Shareholder Warranties set forth in Part II of Schedule 4 and the corresponding
Purchaser Warranties set forth in Schedule 5, shall not survive the consummation
of the acquisition transaction under the Acquisition Agreement.
(j) The
wording agreed under Section 1 (a) of Variation Agreement dated June 14, 2007
is
hereby amended to say:
“The
discussions of the Company with financing sources are sufficiently far advanced
with relevant banks and financial institutions to justify the view that
necessary loan financing and credit facilities will become available within
a
period of not more than six months from Completion in sufficient amounts to
fund
the Project based on the criteria referred to in the Completion Agreements,
the
Purchaser will not require the delivery of executed agreements with banks and/or
financial institutions as a necessary prerequisite to Completion.”
(k) The
wording agreed under Section 1 (c) of the Variation Agreement dated June 14,
2007 is hereby amended to say:
4
“The
employment agreements may be with such persons as the full-time executive
management of the Company decide, provided that they are with persons with
the
requisite skills to implement the Project and the Business and the terms of
the
agreements are reasonably acceptable to the Purchaser.”
(j) The
wording agreed under Section 2(c) of the Variation Agreement dated June 14,
2007
is hereby amended to say:
“Section
3.3. is hereby modified to
permit the percentage therein set forth to be adjusted depending on the number
of Shares are sold in the Main Funding, such that the percentage may be between
25.82% and 35.97%. It is further understood that immediately after
the Completion Date, the Company will have adjusted its outstanding shares
of
common stock so that it will have no more than 113,042,778 shares issued and
outstanding if the Main Funding is $25,000,000 in gross proceeds and 157,487,222
shares issued and outstanding if the Main Finding is $65,000,000 in gross
proceeds, all in accordance with a schedule agreed between the Shareholders
and
the Company.”
(k) Section
8.1.2(iii) of the Acquisition Agreement, referring to the Purchaser
Representative being a necessary signatory to the escrowed funds of the Main
Funding, is hereby deleted effective as of the Completion Date.
(l) Section
10 of the Acquisition Agreement, referring to the shareholders of the Purchaser
having the right to have a director elected to the board of the Company after
the acquisition, is hereby deleted effective as of the Completion
Date.
IN
WITNESS WHEREOF, this Amendment
Agreement has been signed by and on behalf of the parties, the day and year
first set forth above,
|
Name
|
Signature
|
||
|
1.
|
Med
Tech Solutions Inc, by Xxxx XxXxxxx, President
|
________________________
|
|
|
2.
|
The
Four Rivers BioEnergy Company Inc., by Xxxx Xxxxxx
|
________________________
|
|
|
3.
|
Xxxxx
Xxxx Xxxxxxxxx
|
________________________
|
|
|
4.
|
Xxxxxx
Xxxxxxx Xxxxxxx
|
________________________
|
|
|
5.
|
Xxxx
X. Xxxxxxx
|
________________________
|
|
|
6.
|
Xxxx
Xxxxxx
|
________________________
|
|
|
7.
|
Xxxxxxxx
X. Xxxx
|
________________________
|
|
|
8.
|
Xxxxxxx
Xxxx Xxxxxxx
|
________________________
|
|
|
9.
|
Xxxxxx
Xxxxxxxxx
|
________________________
|
|
|
10.
|
Xxxxx
Xxxxxx
|
________________________
|
|
|
11.
|
Xxxxxx
Xxxxx
|
________________________
|
|
|
12.
|
Xxxxxxx
Xxxxxx
|
________________________
|
5
