Exhibit 10.1 c.
THIS AGREEMENT is made on April 6th 2001
BETWEEN:
(1) THE PERSONS whose names and addresses are set out in Schedule 1
(the "Directors");
(2) BORDER BIOFUELS LIMITED (registered in Scotland under number SC137495)
whose registered office is situate at 00 Xxxxxx Xxxxxx Xxxx Xxxxxxxxxxxx
XX00 0XX (the "Company");
(3) DYNAMOTIVE EUROPE LIMITED (registered in England and Wales under number
3244426) whose registered office is at 0 Xxxxxxxxxx Xxxx, Xxxxxxx XX00
0XX ("Dynamotive"); and
(4) DYNAMOTIVE TECHNOLOGIES CORPORATION [registered in Canada under member
403911 whose corporate headquarters is situate at 0000 Xxxxx Xxxxxx, 0000
Xxxx Xxxxxxx Street, XX Xxx 00000, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
Xxxxxx] ("DTC").
WHEREAS:
(A) The Company owes certain sums to the Directors, details of which are set
out in Schedule 1 to this Agreement.
(B) Dynamotive has agreed to purchase 75% of the issued share capital of the
Company on the terms and subject to the conditions of the Share Purchase
Agreement.
(C) In compliance with the terms of the Share Purchase Agreement Dynamotive
and the Directors have agreed to conversion of the Loans to shares in
Dynamotive Technologies Corporation, the ultimate holding company of
Dynamotive on the terms and subject to the conditions set out in this
Agreement.
NOW IT IS AGREED as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, unless the context requires otherwise:
"ACCOUNTING PERIOD" means each period in relation to which the Company
produces statutory accounts;
"ACCOUNTS" means the audited consolidated financial statements of the
Company and its Subsidiaries for an Accounting Period (including, in each
case, the balance sheet, profit and loss account, cashflow statement and
statement of total recognised gains and losses) together with the
directors' and auditors' reports on such financial statements and all
notes thereto;
"ACCUMULATED LIABILITIES" means the sum of the aggregate amount
outstanding from the Group to its bankers and the net amount of any
debts(other than trading debts incurred in the ordinary course) owed by
the Group to Dynamotive or any holding Company or subsidiary of
Dynamotive and the loan specified in Part 1 of Schedule 7 to the Share
Purchase Agreement;
"ACT" means the Companies Xxx 0000;
"BUSINESS DAY" means a day which is not a Saturday or Sunday or a public
holiday in England and/or Scotland;
"CONSIDERATION SHARES" means Ordinary Shares credited as fully paid and
ranking pari passu in all respects with the existing Ordinary Shares save
that they shall not rank for any dividend declared or payable prior to
the date of allotment;
"DIRECTORS' SOLICITORS" means Xxxx Xxxxx & Partners of 00 Xxxxxx Xxxxxx,
Xxxx, XX00 0XX, Xxxxxxxx;
"DYNAMOTIVE'S SOLICITORS" means Xxxxxxxxx Xxxxxx & Xxxxx of 000 Xxxxxx
Xxxxxx, Xxxxxx XX0X 0XX;
"EXPIRY DATE" means the date being 6 months after completion of
acquisition of all of the Loans;
"GROUP" means the Company and the Subsidiaries and "Group Company" means
a member of the Group;
"HOLDING COMPANY" has the meaning given to it by sections 736 and 736A of
the Act;
"ISSUE PRICE" means the higher of US$3.00 and the average of the middle
market closing prices of an Ordinary Share on the NASDAQ Stock Exchange
on the 30 Business Days before the issue of the Loan Accounts Report in
respect of each year ("the Average Middle Market Price");
"LOANS" means the amounts due and owing from the Company to the Directors
in the amounts set against their respective names in Schedule 1;
"ORDINARY SHARES" means ordinary shares of Canadian $( each in the
capital DTC;
"RETAINED PROFIT" means the profits available for distribution by the
Company in any year;
"RELEVANT PROFIT" means, at any given time, the amount obtained by
deduction of the Accumulated Liabilities from the Retained Profit;
"SHARE PURCHASE AGREEMENT" means the agreement, made on the same date as
this agreement, between Dynamotive and (amongst others) the Directors;
"SUBSIDIARIES" means the companies briefly described in Part 2 of
Schedule 1;
"SUBSIDIARY" has the meaning given to it by sections 736 and 736A of the
Act;
1.2 In this Agreement, unless the context requires otherwise:
(a) references to Clauses, Recitals and Schedules are references to
clauses and recitals of and schedules to this Agreement and references
within a sub-clause to "this Clause" shall refer to the whole Clause
and not merely to the sub-clause in which it appears;
(b) the Recitals and Schedules form part of and are incorporated in this
Agreement;
(c) headings and sub-headings are included for ease of reference only and
shall not affect the interpretation of this Agreement;
(d) the singular shall include the plural and vice versa and references to
any gender shall include the other genders;
(e) the expression "PERSON" shall mean any natural person, partnership,
joint venture, corporation (wherever incorporated), trust, firm,
association, government, governmental (or supra-governmental) agency,
authority or department, or any other entity, whether acting in an
individual, fiduciary or other capacity;
(f) any reference to a time of day is to London time;
(g) any reference to a party shall mean any party to this Agreement;
(h) any reference to the parties shall include their respective successors
in title, permitted assigns and personal representatives;
(i) any reference to a document as being "IN THE AGREED FORM" means that
document in a form agreed between the parties such agreement being
signified by the signature or initialling of a draft for the purposes
of identification by or on behalf of each of the parties;
(j) any reference to any statute or statutory provision shall include that
statute or statutory provision as from time to time amended, modified,
replaced or re-enacted (whether before or after the date of this
Agreement) and any order, regulation, instrument, bye-law or other
subordinate legislation made under it;
(k) any agreement, covenant, representation, warranty or undertaking on
the part of 2 or more parties is made or given by such parties jointly
and severally; and
(l) any reference to any English legal term for any action, remedy, method
of judicial proceeding, legal document, legal status, court, official,
person or any other legal concept shall, in respect of any other
jurisdiction, be treated as including that which in their nature and
effect most nearly approximate in that jurisdiction to the English
legal term.
2. SATISFACTION OF LOANS
On and subject to the terms and conditions of this Agreement, the
Company,Dynamotive, DTC and each of the Directors agree that each of the
Loans (or such part thereof as shall be determined in accordance with
Clause 5 of this Agreement) shall be acquired by DTC in consideration of
the issue of Consideration Shares.
3. CONDITIONS
3.1 Acquisition of the Loans is conditional upon the Company achieving net
positive Relevant Profits.
3.2 DTC (but not the Directors) shall be entitled by written notice to the
Directors to waive the condition in Clause 3.1
4. CONSIDERATION
The consideration for the acquisition of the Loans shall be (a) such
number of Consideration Shares at the Issue Price as shall be determined
in accordance with Clause 5 below, and (b) if the Average Middle Market
Price for a Consideration Share is less than U$3.00 then, additional
consideration shall be due which, at the option of DTC, shall consist of
either allotment of such number of additional Consideration Shares
(issued at the Average Middle Market Price), or payment of a cash amount,
in either case having an aggregate value equal to the difference between
the value of those Consideration Shares to be issued at the Issue Price
and the Average Middle Market Price thereof (the "Balancing
Consideration")
5. CALCULATION OF CONSIDERATION SHARES
5.1 In each Accounting Period:
(a) the amount of the Loans to be converted shall be equal to the
elevant Profit of the Company for that Accounting Period;
(b) the number of Consideration Shares to be allotted in accordance with
Clause 4 shall be such number of Ordinary Shares allotted and issued
at the Issue Price as have an aggregate value equal to the Relevant
Profit;
(c) the proportion of Consideration Shares to be issued to, and the
amount of the Loans (the "LOAN AMOUNTS") to be acquired from, each
Director, shall be equal to the proportion which each Director's Loan
represents of the total amount of the Loans owed to the Directors in
such period;
Provided that if the aggregate consideration payable by DTC in respect of
any Accounting Period shall be less than 5,000 pound sterling then no
part of the Loans shall be acquired and no Consideration Shares shall be
issued in respect of such period.
5.2 (a) DTC shall procure that as soon as reasonably practicable after and in
any event within 150 days after the end of each Accounting Period a
report shall be prepared and delivered to the Directors, Dynamotive
and the Company (the "LOAN ACCOUNTS REPORT") specifying the Relevant
Profit in respect of such period, which report shall be certified by
an officer of DTC to be true and accurate in all material respects
and in respect thereof such report shall certify in respect of such
period:-
(i) the amount of the Retained Profit;
(ii) the amount of the Accumulated Liabilities;
(iii) the amount of the Relevant Profit;
(iv) the Loan Amounts; and
(v) the number of Ordinary Shares to be issued in consideration of
the Loan Amounts.
(b) Upon the Directors' written request DTC shall provide, or procure
provision of, to the Directors such relevant data and information
which the Directors shall reasonably require to substantiate the Loan
Accounts Report including (without limitation) all accounting records
and copies of all material contracts and leases between the Company
and any third parties (including (but without limitation) lenders,
manufacturers, vendors, distributors and co-venturers) related to the
Company.
(c) For not less than two years following each Accounting Period DTC will
maintain or procure that there is maintained by the Group all relevant
records for transactions relating to the calculation of the Retained
Profits.
(d) Any professional adviser (who shall be a chartered accountant)
selected by not less than 50% of the Directors may upon reasonable
notice at any time, but such that there shall be not more than one
such inspection by the Directors, or any of them, in respect of each
Accounting Period, conduct an audit and during normal business hours
inspect at any Group premises any of the records referred to in Sub-
Clause 5.2(b). Any such professional adviser shall keep any
information obtained at such audit and/or inspection confidential and
shall if required by DTC enter into a confidentiality undertaking in a
form reasonably satisfactory to DTC. If, upon performing such audit
the Directors shall not agree with the Loan Accounts Report they shall
inform DTC thereof detailing in writing the reason therefor and that
element of the Retained Profit requiring adjustment and DTC shall
consider the proposals of the Directors with a view to agreeing a
revision to the Loan Amounts and number of Consideration Shares.
(e) If after a reasonable period for due and proper discussion (but not
exceeding twenty Business Days) of any notice served by the Directors
pursuant to Sub-Clause 5.2(d) the Directors and DTC are unable to
reach agreement on the matters specified therein then the Directors
shall be entitled to give notice (the "REVIEW NOTICE") to DTC
initiating the agreed review procedures set out in Sub-Clause 5.2(f).
(f) As soon as possible and in any event within ten Business Days
following the giving of a Review Notice pursuant to Sub-clause 5.2(e)
DTC and the Directors shall appoint an independent chartered
accountant (to be appointed failing agreement between the Directors
and DTC within five Business Days after the expiry of the said period
of ten Business Days by the President for the time being of the
Institute of Chartered Accountants in England and Wales on the
application of the Directors or DTC) to act as expert (the "EXPERT")
to determine the appropriate adjustments which need to be made to the
Relevant Profits and consequently to the number of Consideration
Shares and in respect thereof the determination of such independent
chartered accountant shall be final and binding on the Directors and
DTC (save in the case of manifest error) and the said independent
chartered accountant shall certify the amount of the Relevant Profit
and accordingly the number of Consideration Shares which shall then be
deemed to be approved by the Directors and DTC for the purposes of
this Agreement.
(g) In the event that the independent chartered accountant shall certify
and/or the Directors and DTC shall agree in writing that the Loan
Amounts are in excess of the amount calculated by DTC in accordance
with Clause 5.1 then the Company shall forthwith upon the issue of
such certificate and/or agreement pay to the Directors an amount equal
to such excess, which amount shall be satisfied by the issue of
further Consideration Shares by DTC.
(h) If the amount of the Relevant Profit determined in accordance with
Clause 5.3(f) exceeds by more than five per cent the amount certified
in the Loan Accounts Report then DTC will bear all expenses and costs
relating to such audit and the costs of the independent chartered
accountant in all other cases such expenses and costs shall be borne
by the Directors in the proportion of the Loans held by them at the
date hereof.
(i) DTC shall give to the Directors and to their professional advisers and
shall use all its reasonable endeavours to procure that its auditors
shall give to the Directors all assistance and information within
their respective powers including in the case of its auditors the
production of their working papers and in the case of DTC access to
any premises where the business of the Company is being carried on and
the personnel and papers, books, accounts, records and returns of the
Company (provided that such access shall not unduly or unreasonably
interfere with or interrupt the operations or business of the Company)
in order that the said statement can be approved and/or determined as
aforesaid.
5.3 The Directors shall at any time during the period from the issue of the
first Loan Accounts Report to the Expiry Date be entitled to apply for an
adjustment to the calculation of the items included in any such report in
the event that the Directors have reasonable cause to believe that the
ability of the Company to earn any Relevant Profit has been or may become
adversely affected by any act or omission taken or not taken, other than
in the ordinary course, in respect of the business of the Company during
that period.
5.4 The purpose of any adjustment to the calculation of the Relevant Profit
is to ensure that the entitlement of the Directors to Sale of the Loans
is not adversely affected by any matter outside the ordinary course of
business and if the Directors wish to apply for such an adjustment to the
calculation of the Relevant Profit then not less than 50% of the
Directors at such time shall notify DTC in writing providing all
reasonable details of the reason therefor and DTC shall consider the
proposals of the Directors with a view to agreeing appropriate
adjustments (if any) to the provisions contained in this Agreement for
determining the Relevant Profit.
5.5 If after a reasonable period for due and proper discussion (but not
exceeding twenty Business Days) of any proposal made pursuant to Clause
5.4 the Directors and DTC are unable to reach agreement on the matters
specified therein then the Directors shall be entitled to give notice
(the "REVIEW NOTICE") to DTC initiating the agreed review procedure set
out in Clause 5.6.
5.6 As soon as possible and in any event within ten Business Days following
the giving of a Review Notice pursuant to Clause 5.5 DTC and the
Directors shall appoint an independent chartered accountant (to be
appointed failing agreement between the Directors and DTC within five
Business Days after the expiry of the said period of twenty Business Days
by the President for the time being of the Institute of Chartered
Accountants in England and Wales on the application of the Directors or
DTC to act as experts (the "EXPERT") to determine the appropriate
adjustments (if any) referred to in Clause 5.4 and in respect thereof:
(a) each of DTC and the Directors shall reduce their ideas on what should
be the appropriate adjustments to writing and refer such view to the
Expert within fourteen days of its appointment hereunder;
(b) any "appropriate adjustments" for the purposes of this Clause 5.6
shall include an adjustment or adjustments to ensure that the
entitlement of the Directors to the Consideration Shares is not
adversely affected by the act or omission or proposed act or omission
give rise to the relevant Review Notice;
(c) the Expert shall act as expert and not as arbitrator in determining
appropriate adjustments and/or a procedure for determining the same
(including any accounting procedures or other records it may deemed
necessary to be kept for such purpose);
(d) the determination of the Expert shall be final and binding on the
parties hereto and shall be adopted for all purposes of this
Agreement as the agreement of the parties hereto;
(e) all costs of the Expert in connection with such determination shall
be apportioned between the parties as the Expert shall determine; and
(f) each of the parties hereto shall co-operate to ensure (insofar as
they are able) that the Expert is provided with all information that
it may reasonably request in order to make such determination.
6. ISSUE OF SHARES
6.1 Not later than 4 weeks after issue of any Loan Accounts Report to the
Directors which (subject to Clause 5.1) shows Loans available for
acquisition, DTC shall serve a notice on the Directors' Solicitors,
Dynamotive and the Company (the "NOTICE") showing the Loan Amounts to be
acquired.
6.2 If the Notice requires Loans to be purchased:-
(a) the Directors shall, within 10 Business Days of service of the same
deliver or procure to be delivered to DTC (and each of the Directors
shall execute and deliver to DTC at the date of this Agreement such
powers of attorney, deeds and documents as may be required of them
for this purpose) Deeds of Assignment in respect of the Loans held by
each of the Directors in such amounts as are required by the Notice
in favour of DTC and all other documents required to give good title
to such Loans; and
(b) DTC shall on receipt of the items described in Clause 6.2(a) allot
such Consideration Shares in such amounts as are referred to in the
Notice to the Directors, and DTC shall pay to them the Balancing
Consideration (if any).
7. WARRANTIES
7.1 Each of the Directors represents, warrants and undertakes to DTC that:
(a) he is and will be each time Loans are to be purchased from such
director pursuant to this Agreement the sole beneficial owner of such
Loans free from all encumbrances;
(b) he has full power and authority to convert his Loan on the terms of
this Agreement without any approval or authority which has not been
unconditionally obtained; and
(c) the obligations on his part contained in this Agreement are legal,
valid and binding obligations, enforceable against him in accordance
with their terms.
8. COSTS
The parties shall pay their own costs in connection with this Agreement
and no such costs shall be borne by any Group Company.
9. NOTICES
9.1 Any notice or other communication to be given under or in relation to
this Agreement ("NOTICE") shall be in writing and may be given by leaving
it at or sending it by prepaid first class post or facsimile transmission
to the address or facsimile number set out in this Agreement (or such
other address or facsimile number in England as may be notified from time
to time by any of the parties to the others by notice given in accordance
with this Clause). Any notice so given shall be deemed to have been
received:
(a) in the case of delivery by hand, at the time of delivery;
(b) in the case of first class post, 48 hours from the time of posting;
and
(c) in the case of facsimile transmission, at the time of despatch,
provided that if a notice is, or would (but for this proviso) be deemed
to be, received on a day that is not a Business Day or after 5:30 pm on a
Business Day, it shall instead be deemed to be received at 9.00 am on the
Business Day next following that day.
9.2 The addresses and facsimile numbers of the parties for the purposes of
Clause 9.1 are as follows:
DTC:
Address: [ ]
Fax: [ ]
For the attention of: [ ]
DIRECTORS:
Address: c/o Xxxx Xxxxx & Partners, 00 Xxxxxx Xxxxxx, Xxxx,
Xxxxxxxxxxxx, XX00 0XX
Fax: 00000 000000
For the attention of: Xxxxx Xxxxxxxx, Esq
DYNAMOTIVE:
Address: [4th Floor, 00 Xxxxxx Xxxxxx, Xxxxxx X0X 0XX]
Fax: 000 0000 0000
For the attention of: Xxxxxx Xxxxxx Esq
The Company:
Address: Tweed Horizons Centre,
Xxxxxxx Xx Xxxxxxxx, Xxxxxxx,
Xxxxxxxxxxxxx, Xxxxxxxx XX0 0XX
Fax: 00000 000000
For the attention of: [Xxxx Xxxx, Esq]
9.3 In proving service it shall be sufficient to prove that (as the case may
be):
(a) the envelope containing the notice was properly addressed and
delivered to the appropriate address;
(b) the envelope containing the notice was posted as a first class
prepaid letter; or
(c) the facsimile transmission was made and acknowledgment of the
transmission was obtained by the sender's facsimile machine.
10. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with
English law. Each of the parties submits to the non-exclusive
jurisdiction of the courts of England.
11. ASSIGNMENT
11.1 Except as provided in Clause 11.2, none of the parties shall, without
the prior written consent of the others, be entitled to assign the
benefit of, or any right or interest in or under or arising from, this
Agreement.
11.2 The benefit of, or any right or interest in or under or arising from,
this Agreement may be assigned by DTC to any subsidiary from time to
time of DTC or to any other person to whom DTC may transfer the Shares.
12. CONTRACTS (RIGHTS OF THIRD PARTIES) XXX 0000
12.1 A person who is not a party to this Agreement shall have no right under
the Contracts (Rights of Third Parties) Xxx 0000 to enforce any term of
this Agreement but this shall not affect any right or remedy of a third
party which exists or is available apart from that Act.
AS WITNESS the hands of the parties hereto or their duly authorised
representatives the day and year first before written.
SCHEDULE 1
THE DIRECTORS
=============================================================================
1 2
----------------------------------------------------------------------------
NAMES AND ADDRESSES LOAN AMOUNT
----------------------------------------------------------------------------
Xxxx Xxxxxxx Xxxx [ 19,086.00 ]
Xxxxxxx Xxxx
Xxxx
Xxxxxxxxxxxx
XX00 0XX
----------------------------------------------------------------------------
Xxxxx Xxxxxxxxx Seed [ 17,216.00 ]
Xxxxxxx Xxxx
Xxxx
Xxxxxxxxxxxx
XX00 0XX
----------------------------------------------------------------------------
Xxxxx Xxxxxxx Xxxx [ 17,144.00 ]
Xxxxxx Brae
Foulden
Berwick-upon-Tweed
----------------------------------------------------------------------------
Doctor Xxxxxx Xxxxx Xxxxxx [ 19,553.19 ]
Xxxxx Xxxxxxx
Xxxxxx
Xxxxxxx
Xxxxxxxxx
XX0 0XX
----------------------------------------------------------------------------
Doctor Xxxx Xxxx Xxxxx [ 22,200.00 ]
000 Xxxxxx Xxxxxx Xxxxxxxxx
Xxxx
Xxxxxxxxxx
XX0 0XX
----------------------------------------------------------------------------
Xxxx Xxxxxxx Seed [ 17,009.00 ]
Polwarth Bank
Duns
Berwickshire
============================================================================
TOTAL: [ 112,208.19 ]
============================================================================
SCHEDULE 2
Part 1 : Details of the Company
Registered Office: 00 Xxxxxx Xxxxxx,
Xxxx
Xxxxxxxxxxxx
XX00 0XX
Company Number: SC137495
Date of Incorporation: 1 April 1992
PART 2 : DETAILS OF THE SUBSIDIARIES
Name: THE ELECTRIC TREE COMPANY LIMITED
Company Number: SC152492
Date of Incorporation: 12 August 1994
Name: INCETEC LIMITED
Company Number: 3150777
Date of Incorporation: 24 January 1996
Name: EMISARY LIMITED
Company Number: 3150758
Date of Incorporation: 24 January 1996
Name: BORDER BIOFUELS (CHARLESFIELD) LIMITED
Company Number: SC152491
Date of Incorporation: 12 August 1994
Name: BIOMASS ENERGY LIMITED
Company Number: SC160403
Date of Incorporation: 15 September 1995
Name: ECOGEN KIELDER BIOMASS LIMITED
Company Number: 3328637
Date of Incorporation: 6 March 1997
Name: WOOD POWER (SCOTLAND) LIMITED
Company Number: SC161260
Date of Incorporation: 27 October 1995
Name: BIOMASS HEATING INVESTMENTS LIMITED
Company Number: SC194722
Date of Incorporation: 29 March 1999
Name: BIOMASS PROCESSING LIMITED
Company Number: SC137351
Date of Incorporation: 25 March 1992
Name: THIRD GENERATION LIMITED
Company Number: SC152057
Date of Incorporation: 21 July 1994
SIGNED by Xxxxx Xxxx
for and on behalf of
DYNAMOTIVE TECHNOLOGIES
CORPORATION ......./Signature/..............
SIGNED by Xxxxxxx Xxxxxx
for and on behalf of
DYNAMOTIVE EUROPE LIMITED ......./Signature/..............
SIGNED by
for and on behalf of
BORDER BIOFUELS LIMITED ......./Signature/..............
SIGNED by
XXXX XXXXXXX XXXX ......./Signature/..............
SIGNED by
XXXXX XXXXXXXXX SEED ......./Signature/..............
SIGNED by
XXXXX XXXXXXX XXXX ......./Signature/..............
SIGNED by
DR ADRIAN XXXXX XXXXXX ......./Signature/..............
SIGNED by
DR XXXX XXXX XXXXX ......./Signature/..............
SIGNED by
XXXX XXXXXXX SEED ......./Signature/..............
DATED April 6th 2001
XXXX XXXXXXX XXXX and others
- and -
BORDER BIOFUELS LIMITED
- and -
DYNAMOTIVE EUROPE LIMITED
- and -
DYNAMOTIVE TECHNOLOGIES CORPORATION
-----------------------------------------------------------
LOAN ACQUISITION
AGREEMENT
-----------------------------------------------------------
XXXXXXXXX XXXXXX & XXXXX
000 Xxxxxx Xxxxxx, Xxxxxx XX0X 0XX
Tel: 000 0000 0000
Fax: 000 0000 0000
Ref: KXM/D386-5
Email: xxxxx.xxxxxxxxxx@xxx.xx.xx
16
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00 Xxxxx 0000
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00 Xxxxx 0000
