Exhibit 2(1)
DATED 10th August, 1995
RIBALTA HOLDINGS, INC.
as Vendor
- and -
FOUNTAIN OIL, INCORPORATED
as Purchaser
- and -
XXXX XXXXXXX XXXX
as Warrantor
--------------------------------------------
AGREEMENT
relating to the sale and purchase of
all the issued share capital of
GASTRON INTERNATIONAL LIMITED
--------------------------------------------
MARRIOTT XXXXXXXX
00 Xxxxx Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Tel: 0000 000 0000
Fax: 0000 000 0000
(Ref DJFI DJ50801C)
AGREEMENT dated 10th August, 1995
BETWEEN:-
(1) RIBALTA HOLDINGS, INC. of P.O. Box 438, Tropic Isle Building, Road Town,
Tortola, British Virgin Islands ("the Vendor");
(2) FOUNTAIN OIL, INCORPORATED, a corporation organised under the laws of the
state of Delaware USA of 0000 Xxxxxxxxxx, xxxxx 000, Xxxxxxx, Xxxxx 00000
Xxxxxx Xxxxxx of America ("the Purchaser"); and
(3) XXXX XXXXXXX XXXX of 000 Xxxxx Xxxxxx, Xxxxxx XX-00000 Xxxx, Xxxxxx Xxxxxx
of America ("the Warrantor").
WHEREAS:-
(A) Gastron International Limited ("the Company") is a company incorporated in
the British Virgin Islands and short particulars of the Company are
contained in Schedule 1. The Company is the owner of shares representing 31
per cent of the entire issued share capital of Intergas ("Intergas"), a
private joint stock company incorporated in the Russian Federation,
particulars of which are contained in Schedule 2.
(B) The Vendor is the owner and the holder of the certificate for one ordinary
share of US$1 in the Company issued to bearer ("the Sale Share") which
constitutes the entire issued share capital of the Company.
(C) The Vendor has agreed to sell and the Purchaser has agreed to purchase the
Sale Share upon the terms and subject to the conditions contained in this
Agreement.
NOW IT IS HEREBY AGREED as follows:-
1. DEFINITIONS
In this Agreement and in the Schedules, unless the context otherwise
requires:-
"the Accounts" means the financial statements of the Company
including its unaudited balance sheet as at the
Accounting Date and the unaudited profit and loss
account of the Company for the financial year ended on
the Accounting Date (including the Notes), a copy of
which is contained in the Disclosure Material;
"Accounting Date" means 31st December 1994;
1
"BVI" means the British Virgin Islands;
"Competent Authority" means any governmental authority or agency or other
body exercising powers pursuant to any Legislation or
any governmental, fiscal or judicial authority and
includes all local and governmental authorities
exercising powers pursuant to the legislation of the
BVI or, in relation to Intergas, pursuant to the
legislation of the Russian Federation;
"Completion" means completion of the matters referred to in
Clause 9;
"the Concessions" means the licences and rights granted by the
appropriate Competent Authority to explore and develop
the gas condensate field known as Maykop Field in the
Republic of Adygea, Russian Federation as described in
the Disclosure Material;
"Consideration Shares" means the Purchaser's Stock to be issued to the
Vendor as referred to in Clauses 5.2.(a), 5.2.(b) and
5.2.(c);
"the Disclosure Letter" means the letter from the Vendor to the Purchaser of
the same date as this Agreement;
"the Disclosure Material"means the documentation information and other
material concerning the Company and Intergas contained
in the Schedule to the Disclosure Letter;
"Encumbrance" includes any interest or equity of any person
(including, without prejudice to the generality of the
foregoing, any right to acquire, option or right of
pre-emption), or any mortgage, charge, pledge, lien,
assignment, hypothecation, security interest, title
retention or any other security agreement or
arrangement or any agreement, obligation or commitment
to grant, create or allow any of the foregoing;
"the Equipment" means the oil field equipment and consumables to be
supplied by the Company to Intergas under the Supply
Agreement as specified in the Disclosure Material;
2
"the Implementation Date" means the date on which Intergas confirms in
writing to the Purchaser that all the Equipment has
been delivered and accepted in Maykop in accordance
with the Supply Agreement;
"Intergas" means Intergas Private Joint Stock Company
particulars of which are set out in Schedule 2;
"the Intergas Interest" means the shares and/or stock in Intergas of which
the Company is the owner and registered holder as
shown in Schedule 2;
"Legislation" means all legislation, decrees, laws, regulations,
rules, codes and other governmental or quasi
governmental requirements and all orders and
instruments pursuant thereto and any other
legislation, decree, mandate or order having the
force of law whether in the BVI, the Russian
Federation or elsewhere;
"the Licence Date" means the date on which the Purchaser receives
confirmation in a form acceptable to it that Intergas
has been granted an irrevocable and unconditional
drilling licence by the appropriate Competent
Authority pursuant to the Concessions and that the
Licence and Licence Agreement of July 22, 1994 are
amended in a form acceptable to the Purchaser;
"the Production Date" means the date on which all the following have
occurred:-
(a) tests having been carried out to the Purchaser's
satisfaction on the first three xxxxx to be
drilled by Intergas in the Maykop field and the
results of such tests showing production of not
less than 12 MMCF per day from the Maykop field;
and
(b) the Purchaser having received confirmation in a
form satisfactory to it that Intergas has
received payment in US Dollars (or other foreign
currency freely convertible into US Dollars) at
the full open market international rate under
the Concessions for at least 30 days production
from the first three xxxxx as referred to above;
3
"the Purchaser's Solicitors" means Marriott Xxxxxxxx of 00 Xxxxx Xxxxx
Xxxxxx, Xxxxxx XX0X 0XX;
"Purchaser's Stock" means common stock of US$0.10 par value of the
Purchaser;
"the Sale Share" means the one ordinary share of US$1.00 of the
Company in bearer form;
"the Securities Act" mean the Securities Act of 1933 of the United
States of America (as amended);
"the Supply Agreement" means the agreement between the Company and
Intergas for the supply of the Equipment a copy
of which is included in the Disclosure Material;
"Tax" and "Taxation" means all forms of taxation, duties, imposts,
contributions and levies of whatever nature,
imposed by any competent fiscal authority, body
or official in each case whether local,
municipal, state, provincial, national or
federal, whether of the BVI, the Russian
Federation or elsewhere, and whether now in
force or hereinafter imposed or hitherto imposed
and any interest, surcharge, penalty or fine in
connection therewith; and
"US$" means the lawful currency of the United States
of America; and
"Warranties" means the representations and warranties set
out in Schedule 3.
2. INTERPRETATION
2.1 All references to statutory provisions shall be construed as references
to:
(a) any statutory modification or re-enactment thereof (whether before or
after the date hereof) for the time being in force;
(b) all statutory instruments or orders from time to time pursuant thereto;
and
4
(c) any statutory provisions of which that statutory provision is a re-
enactment or modification.
2.2 Unless otherwise stated, a reference to a Clause or a Schedule is a
reference to, respectively, a clause or a schedule to this Agreement; and a
reference to a sub-clause or paragraph is to, respectively, a sub-clause of
the Clause or paragraph of the sub-clause in which the reference appears.
2.3 Headings are for ease of reference only and shall not affect the
construction of this Agreement. This Agreement includes the Schedules.
2.4 References to any English legal term for an action, remedy, method of
judicial proceeding, legal document, legal status, court, official or any
legal concept or thing shall, in respect of any jurisdiction other than
England, be deemed to include what most nearly approximates in that
jurisdiction to the English legal term.
3. SALE OF SHARE
Subject to the provisions of this Agreement and in particular to Clause
4.1, the Vendor shall sell as legal and beneficial owner and the Purchaser
shall purchase the Sale Share free from all Encumbrances and together with
all rights and benefits attaching to the Sale Share at Completion for a
consideration of US$1.00 payable at Completion.
4. CONDITIONS PRECEDENT
4.1 Completion of the sale and purchase of the Sale Share shall be conditional
upon the following matters being fulfilled (or being waived in writing by
the Purchaser) on or before 30th September, 1995:-
(a) the Purchaser being satisfied that the agreement dated August 18, 1994
between Tredoux Trading Inc. and Intergas has been unconditionally
terminated on terms acceptable to the Purchaser;
(b) the arrangements between Xxx X. Xxxxxxxxx and the Warrantor/the Company
being terminated in a form satisfactory to the Purchaser; and
(c) the Equipment having been acquired by the Company and having left the
territory of the United States of America by ship for Adygea.
4.2 The payment of additional consideration under Clauses 5.1 and 5.2 is
conditional upon the following matters being fulfilled (or being waived in
writing by the Purchaser) on or before the second anniversary of the date
hereof:-
(a) the Purchaser having received, in a form satisfactory to it, all
information and documentation requested in the course of the due
diligence investigation
5
undertaken by its professional advisers in respect of the Company and
Intergas and having received a satisfactory report on the matters
disclosed thereby;
(b) the Purchaser having received legal opinions or memoranda, in a form
satisfactory to it, from Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. as
to the status of Intergas, the Concessions and any other matter which
the Purchaser may reasonably require;
(c) the charter and corporate documentation of Intergas being amended in a
form satisfactory to the Purchaser;
(d) any governmental or other consents required for transfer of ownership
of the Company including those (if any) required from Intergas
shareholders, having been obtained in a form satisfactory to the
Purchaser;
(e) the Purchaser having received confirmation that the Company has
received the sum of US$1,800,000 in free and clear funds without any
withholding or deduction in satisfaction of the amount owing by
Mostransgas to the Company specified in the Disclosure Material;
(f) the Licence Date and the Production Date having occurred; and
(g) the Purchaser having received written confirmation from Mostransgas
that gas from the Maykop field will be sold at open market
international rates.
4.3 (a) The Vendor covenants with and undertakes to the Purchaser that it will
use all reasonable endeavours to procure the satisfaction of the
conditions set out in Clause 4.1 and Clause 4.2 as soon as possible and
in any event in the case of the conditions in Clause 4.1 by not later
than 30th September, 1995 and in the case of the conditions in Clause
4.2 within two years of the date hereof or such later dates as the
Purchaser may, by notice in writing, allow. Should all of the said
conditions be met to the satisfaction of the Purchaser then such fact
will be confirmed by the Purchaser in writing.
(b) The Purchaser covenants with and undertakes to the Vendor that it will
use all reasonable endeavours to procure the satisfaction of the
conditions set out in Clause 4.1 (a) and (b) within two years of the
date hereof but with the express reservation that it will be under no
obligation to transport the Equipment from the United States of America
until the condition in Clause 4.2 (e) has been satisfied.
4.4 If the conditions contained in Clause 4.1 have not been fulfilled (or
waived in writing by the Purchaser) on or before 30th September, 1995 or
such letter date as the Purchaser may by notice in writing allow, this
Agreement shall ipso facto terminate and neither party shall have any claim
against the other in relation thereto.
6
4.5 If the conditions contained in Clause 4.2 have not been fulfilled (or
waived in writing by the Purchaser) within two years of the date hereof or
such later date as the Purchaser may, by notice in writing, allow, the
Vendor shall have no right to any of the additional consideration set out
in Clauses 5.1 or 5.2 and neither party shall have any claim against the
other in relation thereto.
5. ADDITIONAL CONSIDERATION
5.1 Subject to the satisfaction (or waiver by the Purchaser) of all of the
conditions set out in Clause 4, within two years of the date hereof, the
Purchaser shall, within seven days of the satisfaction or waiver of the
last condition, pay to the Vendor US$500,000.
5.2 As additional consideration (but subject to first receiving a certificate
and undertaking substantially in the form set out in Schedule 4) the
Purchaser shall issue up to three tranches of Consideration Shares to the
Vendor in the amounts set out below on the later of the date of
satisfaction of the last condition set out in Clause 4 or the dates
specified below:-.
(a) within seven days of the Implementation Date the Purchaser will issue
to the Vendor, credited as fully paid, 100,000, shares of the
Purchaser's Stock;
(b) within seven days of the Licence Date the Purchaser will issue to the
Vendor, credited as fully paid, 300,000, shares of the Purchaser's
Stock; and
(c) within seven days of the Production Date the Purchaser will issue to
the Vendor, credited as fully paid, 600,000 units of the Purchaser's
Stock.
5.3 If the Implementation Date, the Licence Date and the Production Date (or
any of them) have not occurred by the second anniversary of the date
hereof the Purchaser's obligations to issue Consideration Shares under
Clause 5.2 after that date shall cease and the Vendor shall have no
entitlement to receive any Consideration Shares in respect of an
Implementation Date, Licence Date or Production Date that occurs after
the second anniversary of the date hereof .
5.4 If the Production Date occurs on or before the second anniversary of the
date hereof the Purchaser shall, within seven days of such Production Date,
pay to the Vendor the sum of US$500,000.
6. THE CONSIDERATION SHARES
6.1 The Consideration Shares to be issued to the Vendor shall rank pari passu
with the existing Common Stock of the Purchaser and shall rank in full for
all dividends to be paid by the Purchaser on its Common Stock by reference
to a dividend record date after the date of issue thereof.
7
6.2 The parties will endeavour to procure that the Consideration Shares will be
listed for trading on the NASDAQ National Market and that the issue of the
Consideration Shares to the Vendor hereunder is exempt from the
registration requirements contained in Section 5 of the Securities Act
because the issue of the Consideration Shares to the Vendor will satisfy
the conditions of any suitable exemption from such registration
requirements which the parties consider applicable to the issue of the
Consideration Shares hereunder.
6.3 The parties will co-operate to seek to satisfy the requirements of any
such exemption insofar as they are able and will execute such certificates,
agreements and other instruments as may be reasonably necessary or
appropriate to confirm the application of any such available exemptions.
6.4 If the Purchaser consolidates or subdivides its Common Stock or makes an
issue by way of capitalisation or rights to holders of its Common Stock
prior to the date of the issue of any of the Consideration Shares, their
number shall (if and to the extent that the same shall not have previously
been determined) be adjusted in such manner as the Purchaser's Stockbrokers
(acting as experts and not as arbitrators) shall certify to be fair and
reasonable to take account of such event.
6.5 The Vendor hereby represents as follows:-
(a) the Consideration Shares have not been registered with the U.S.
Securities and Exchange Commission (the "SEC") or the securities agency
of any foreign government; and
(b) the Vendor agrees to resell the Consideration Shares, pursuant to
registration under the Securities Act, or pursuant to an available
exemption from registration.
6.6
(a) Certain Definitions. As used in this Clause 6.6, the following definitions
shall apply:-
8
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Registerable Securities" means the Consideration Shares, provided,
however, that Registerable Securities shall not include any Consideration
Shares which have previously been registered or sold to the public.
"Registration Expenses" means all expenses incurred by the Purchaser in
complying with Clause 6.6(b) including without limitation, all
registration, qualification and filing fees, printing expenses, fees and
disbursements of Counsel for the Purchaser, blue sky fees and expenses, and
the expense of any special audits incidental to or required in connection
with any such registration. Registration Expenses shall not include selling
commissions, discounts or other compensation paid to underwriters or other
agents or brokers to effect the sale of the fees and expenses of Vendor's
Counsel.
The terms "register", "registered", and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any post-effective amendments filed
in connection therewith), and the declaration of the effectiveness of such
registration statement.
(b) Registration
(i) Notice of Registration. If at any time or from time to time, but prior
to the second anniversary of the date hereof, the Purchaser shall
determine to register any Purchaser's Stock, either for its own account
or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans, or (ii) a
registration relating solely to a Rule 145 transaction, using a form
that would permit inclusion of Registerable Securities, the Purchaser
shall:
(aa) promptly give to the Vendor written notice thereof; and
(bb) (provided the Purchaser receives from the Vendor a Certificate and
undertaking substantially in the form of Schedule 4 and accepts
the same) include in such registration (and any related
qualification under Blue Sky laws or other compliance), and in any
underwriting involved therein, all the Registerable Securities
specified in a written request from the Vendor received by the
Purchaser within 15 days after the Purchaser gives such written
notice, subject to the provisions below.
(ii) Underwriting. The right of the Vendor to registration pursuant to
this Clause 6.6(b) shall be conditional upon the participation by such
Vendor in such underwriting, if any, as is contemplated in the
proposed registration and the inclusion of the Registerable Securities
of the Vendor in the underwriting to the extent provided herein. The
Vendor proposing to distribute securities through such underwriting
shall (together with the Purchaser and the other shareholders
9
distributing their securities through such underwriting shall
(together with the Purchaser and the other shareholders distributing
their securities through such underwriting) enter into an underwriting
agreement in customary form with the managing underwriter selected or
approved for such underwriting by the Purchaser or the shareholders
requiring the Purchaser to proceed with such registration.
Notwithstanding any other provision of this Clause 6.6(b), if the
managing underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, the managing
underwriter may limit the registration of Registerable Securities held
by the Vendor in such manner as the managing underwriter may determine
but, notwithstanding this, priority shall be given by such managing
underwriter to shares being registered by the Vendor as opposed to
shares being registered by the Purchaser for its own account or for
the account of any shareholders requiring the Purchaser to proceed
with such registration. If less than 5 per cent of the Vendor's shares
are included in the Company's Registration Statement, due to the
determination by the underwriter that the inclusion of additional
shares would not be advisable, the Company will include the remainder
of the Vendor's shares in a separate Registration Statement which it
will file with the SEC no later than 120 days after the closing of the
Company's registration offering. The Company shall use its best
efforts to have its Registration Statement declared effective and to
maintain such registration current for six (6) months. Thereafter, the
Company's registration obligations hereunder shall terminate.
(iii) Right to Terminate Registration. The Purchaser shall have the right
to terminate or withdraw any registration initiated by it under this
Clause 6.6(b) prior to the effectiveness of such registration, whether
or not the Vendor has elected to include securities in such
registration.
(c) Expenses of Registration. All Registration Expenses incurred in connection
with the registration, qualification or compliance pursuant to Clause 6.6(b)
shall be borne by the Purchaser.
(d) Letter or Opinion of Counsel in Lieu of Registration. If, in the opinion of
Counsel for the Purchaser, no registration under the Securities Act is
required in connection with the disposition of the Registerable Securities
covered by any request made under Clause 6.6(b) in the manner in which the
Vendor proposes to dispose of the Registerable Securities included in such
request, the Purchaser need not comply with such request; provided,
however, that the Purchaser shall not be so relieved of its obligations
under Clause 6.6(b) unless the Purchaser is prepared, at the request of the
Vendor, to remove from the certificates representing such Registerable
Securities all restrictive legends and to rescind any stop-transfer
instructions previously communicated to its transfer agent relating to such
Registerable Securities.
(e) Registration Procedures. If and whenever the Purchaser effects the
registration of Registerable Securities, the Purchaser shall employ
reasonable efforts to:
10
(i) furnish to the Vendor such number of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents, as the Vendor may reasonably
request in order to facilitate the public sale or other disposition of
the Registerable Securities of the Vendor; and
(ii) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection
therewith to keep such registration statement effective and current and
to comply with the provisions of the Securities Act with respect to the
sale or other disposition of Registerable Securities covered by such
registration statement, including such amendments and supplements as may
be necessary to reflect the Vendor's intended method of disposition of
such Registerable Securities; provided that the Purchaser shall have no
obligation to keep such registration statement effective and current for
any particular period.
(f) Indemnification. In order to include Registerable Securities in a
registration statement under this Clause 6.6 the Vendor will be required to
indemnify the Purchaser, each of its directors and officers, its legal
Counsel and independent accountants, each underwriter, if any, of the
Purchaser's securities covered by such registration statement, each person
who controls the Purchaser or such underwriter within the meaning of Section
15 of the Securities Act, and each other selling shareholder, each of its
officers and directors and partners and each person controlling such selling
shareholder within the meaning of Section 15 of the Securities Act, against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading and will reimburse
the Purchaser, such holders, such directors, officers, Counsel, accountants,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statements,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Purchaser by the Vendor
for use therein.
(g) Information by Holder. The Vendor shall furnish to the Purchaser such
information regarding the Vendor, the Registerable Securities and the
distribution proposed by the Vendor as the Purchaser may request in writing.
6.7 Notwithstanding any other provisions of this Agreement, for a period of two
years following the date of the Agreement, and in the absence of prior
approval by the Purchaser, the Vendor shall undertake not to dispose of any
of the Consideration Shares
11
unless pursuant to a registration statement as specified in Clause 6.6 or
unless permitted by an applicable exemption under the Securities Act in
either of which cases the number of shares it may sell shall be determined
as follows: If any Consideration Shares issued to the Vendor pursuant to
this Agreement are to be sold, the amount of such stock to be sold, together
with all sales of such stock sold within the preceding three months, shall
not exceed the greater of (i) one percent of the Purchaser's Stock
outstanding as shown by the most recent report or statement published by the
Purchaser, or (ii) the average weekly reported volume of trading in such
securities on all national securities exchanges during the four calendar
weeks preceding the date of the receipt of the order to execute the
transaction by the broker or the date of execution of the transaction
directly with the market maker, or (iii) the average weekly volume of
trading in such securities reported through the consolidated transaction
reporting system during the four week period specified in paragraph (ii) of
this sub-clause.
7. COMPANY'S OBLIGATIONS
7.1 The Purchaser undertakes to the Vendor that as soon as reasonably
practicable after Completion:-
(a) it will take no steps to prevent the Company satisfying and discharging
all of the obligations and liabilities of the Company to Intergas
existing at Completion and arising under the Supply Agreement if and
only to the extent that details are fully disclosed in the Disclosure
Material; and
(b) it will procure that the Company shall reimburse any expenses incurred
by third parties on behalf of the Company in complying with the
Company's obligations under the Supply Agreement if and only to the
extent that such expenditure is disclosed in the Disclosure Material and
has been expressly approved in writing by the Purchaser before the
signing of this Agreement.
7.2 Prior to Completion the Vendor shall keep the Purchaser fully informed as
to all material developments in respect of the Company and Intergas and
shall procure that, without the Purchaser's prior written consent, the
Company shall not issue any further shares, dispose of any material asset or
take on any additional obligations or liabilities.
8. WARRANTIES AND UNDERTAKINGS
8.1 Each of the Vendor and the Warrantor (together "the Warrantors") jointly
and severally represents and warrants to the Purchaser in the terms
contained in Schedule 3, subject to the following provisions of this Clause
8.
8.2 Insofar as the Warranties relate in whole or in part to matters of fact,
they shall constitute representations upon the faith of which the Purchaser
has entered into this Agreement.
12
8.3 The Warrantors shall not be liable for a claim for breach of any of the
Warranties -
(a) to the extent that the subject matter of the claim has been fully and
fairly disclosed in the Disclosure Letter;
(b) unless and except to the extent that the Purchaser gives to the
Warrantors in writing particulars of the claim within two years from the
date of Completion;
(c) to the extent that the claim would arise or be increased by reason only
of any legislation enacted after the date of Completion with
retrospective effect; and
(d) unless the amount payable under that claim would exceed US$5,000, and
the aggregate of the amounts payable under that and every other such
claim would exceed US$10,000 in which event the whole of the amount may
be claimed.
8.4 The total liability of the Warrantors under the Warranties shall not exceed
US$3,500,000.
8.5 The Warrantors shall indemnify the Purchaser, and hold it harmless from and
against, and pay or reimburse the Purchaser for, any and all direct or
indirect losses, damages to its interests, costs and legal, accounting or
other expenses which the Purchaser may sustain or incur as a result of any
misrepresentation, breach of Warranty or non-performance of any obligation
on the part of the Warrantors hereunder.
8.6 The Purchaser shall indemnify the Warrantors, and hold them harmless from
and against, and pay or reimburse the Warrantors for, any and all direct or
indirect losses, damages to their interests, costs and legal, accounting or
other expenses which the Warrantors may sustain or incur as a result of any
misrepresentation, or non-performance of any obligation on the part of the
Purchaser hereunder.
8.7 The Purchaser shall use its reasonable endeavours to cause the obligations
set forth under the terms "Production Date," "License Date," and
"Implementation Date" to be satisfied. If required to do so, the Purchaser
shall, within the time limitations set forth in this Agreement, vote the
Sale Share in favour of satisfying such obligations, or, if permitted,
shall cause a vote to be taken to require the satisfaction of such
obligations.
8.8 The Purchaser shall be entitled to rescind this Agreement (but without
prejudice to any other right or remedy it may have) by giving written
notice to the Vendor if within 2 years of Completion the Purchaser becomes
aware of any matter which is inconsistent with any of the Warranties which
has not been fairly disclosed in the Disclosure Letter or which is
inconsistent with any of the other provisions of this Agreement and which
would materially affect the willingness of a prudent purchaser for value to
purchase the Sale Share on the terms of this Agreement or which would
involve a material adverse change in the financial or trading position or
prospects of the Company.
13
8.9 If the Purchaser elects to rescind this Agreement in accordance with Clause
8.8:-
(a) the Purchaser shall return the Sale Share to the Vendor together with
the sum of US$1.00;
(b) the Vendor shall indemnify the Purchaser against all costs and expenses
(including all legal and other professional fees and expenses) incurred
by the Purchaser in the negotiation, preparation, execution or
rescission of this Agreement; and
(c) all rights and obligations of the parties shall cease to have effect
immediately upon rescission except that rescission shall not affect the
accrued rights and obligations of the parties at the date of
rescission.
9. COMPLETION
9.1 The sale and purchase of the Sale Share shall be completed immediately
after the satisfaction or waiver by the Purchaser of the conditions
contained in Clause 4.1 at the offices of the Purchaser's Solicitors in
London .
9.2 The Vendor shall on Completion:-
(a) deliver to the Purchaser:-
14
(i) the certificate for the Sale Share thereby transferring the same to
the Purchaser;
(ii) any waiver or consent which may be required to vest in the
Purchaser the full beneficial ownership of the Sale Share; and
(iii) a form of general proxy executed by the Company in favour of the
Purchaser, or such other person as it may nominate, for use at
general meetings of Intergas or otherwise in relation to the
Intergas Interest;
(b) procure that:-
(i) the Company makes such alterations to its articles of association
or adopts new articles of association in such form as the Purchaser
may require;
(ii) such changes as the Purchaser may require are made in the offices
of directors and secretary of the Company and that every officer
resigning gives an acknowledgement by deed that he has no claim
against the Company for directors' fees, loss of employment or
otherwise;
(iii) such changes as the Purchaser may require are made to the
mandates for the operation of each bank account maintained by the
Company; and
(iv) all moneys then owing to the Company by the Vendor are paid; and
(c) deliver to the Purchaser as agent for the Company:-
(i) the certificate of incorporation and common seal of the Company;
(ii) the statutory books of the Company duly made up to date;
(iii) the certificates and other title documents relating to the
Company's holding of stock and shares in Intergas and all other
deeds, certificates and other documents of title to the assets of
the Company; and
(iv) a certificate from the bank showing the balance standing to the
credit or debit of each bank account maintained by the Company at
the close of business on the last business day before Completion.
9.3 The Purchaser shall on Completion pay to the Vendor the sum of US$1.00 in
cash.
9.4 This Agreement shall, so far as it remains to be performed, continue in
full force and effect notwithstanding Completion.
10. NATURE OF OBLIGATIONS
15
10.1 Each of the obligations, warranties and undertakings of the Vendor in this
agreement ("the Obligations"), excluding any Obligation fully performed at
Completion, shall continue in full force and effect notwithstanding
Completion taking place.
10.2 No failure to exercise, and no delay in exercising, on the part of the
Purchaser, any right or remedy in respect of any Obligation shall operate
as a waiver of such right remedy or Obligation nor shall any single or
partial exercise of any right or remedy preclude any other or further
exercise of such right or remedy, or the exercise of any other right or
remedy.
10.3 If the Sale Share shall at any time be sold or transferred, the benefit of
each of the Warranties may be assigned to the purchaser or transferee of
the Sale Share and, accordingly, in this Agreement the expression "the
Purchaser" shall include any assignee of the benefit of the Warranties.
11. WHOLE AGREEMENT
11.1 This Agreement, including the Schedules, the Disclosure Letter and the
Disclosure Material, contains the whole agreement between the parties
relating to the transactions provided for and supersedes any previous
agreement or agreements between the parties relating to such transactions.
11.2 The Vendor acknowledges that the Purchaser shall have no liability to the
Vendor in respect of any representations or warranties which may have been
made to the Vendor in respect of the Purchaser, the Consideration Shares or
otherwise.
12. ANNOUNCEMENTS
12.1 No party shall make any announcement in relation to any of the transactions
provided for in this agreement other than as required by law, by NASDAQ
or by the Oslo Stock Exchange without the prior consent of the other party,
which consent shall not be unreasonably withheld. Each party shall give the
other reasonable notice of any announcement which it is required to make as
aforesaid and shall consult as to its terms.
12.2 Except as provided in sub-clause 12.1 or as otherwise agreed, the terms of
this agreement shall be confidential between the parties.
16
13. RESOLUTIONS, ETC
The Vendor shall procure the convening of all such meetings and the giving
or passing of all such consents and resolutions and do or procure all such
other acts and things as shall be necessary under the articles of
association of the Company or any applicable legislation to give effect to
the terms of this Agreement.
14. NOTICES
14.1 Any notice to be given under or in connection with this Agreement shall be
in writing and either shall be delivered personally, or sent by first class
recorded delivery post.
14.2 The address for service of each party shall be his address specified in
this Agreement unless he has in writing specified another address to the
party giving the notice.
14.3 A notice shall be deemed to have been served if personally delivered, at
the time of delivery, and, if posted, on the fifth day following posting
unless it is proved that delivery of such notice was delayed or prevented
by a strike or other disturbance outside of the control of the parties to
the notice.
14.4 In proving service it shall be sufficient to prove (as the case may be)
that personal delivery was made, or that the envelope containing the notice
was properly addressed and delivered into the custody of the postal
authorities as a pre-paid first class recorded delivery letter.
15. SUCCESSORS
This agreement shall be binding on, and enure for the benefit of the
successors in title to the Purchaser.
16. COSTS
Each party shall pay its own legal and other professional charges and
expenses incurred in connection with this Agreement.
17. PROPER LAW AND JURISDICTION
17.1 This Agreement and the documents to be entered into as provided in this
Agreement shall be governed by and construed in accordance with English
Law.
17.2 Each of the parties agrees to submit to the non-exclusive jurisdiction of
the English Courts as regards any claim or matter arising from, or in
connection with, this Agreement.
17
17.3 The Vendor and the Warrantor each hereby irrevocably appoints Integro
Finance (UK) Limited, Xxxxxx Bridge, 00 Xxxxxxx Xxxx, Xxxxxx, XX0X 0XX,
Xxxxxx Xxxxxxx as its agent to accept service on its behalf.
AS WITNESS whereof this agreement has been entered into the day and year first
above written.
18
SCHEDULE 1
THE COMPANY
An International Business Company incorporated in the British Virgin Islands on
15th January 1993 under The International Business Companies Ordinance (No. 8 of
1984).
Name: Gastron International Limited
Registered number: 76864
Date of Incorporation: 15th January, 1993
Registered Office: Tropic Isle Building
P.O. Box 438, Road Town
Tortola, British Virgin Islands
Registered Agent: Integro Trust (BVI) Limited
Tropic Isle Building
P.O. Box 438, Road Town
Tortola, British Virgin Islands
Authorised share capital: US$50,000 divided into 50,000 shares of US$1 each
Issued share capital: one share of US$1
Directors: Xxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx Xxxx
Secretary: Xxxxxxx - FK Secretaries Limited
19
SCHEDULE 2
INTERGAS
A Closed Private Joint Stock Company incorporated in Russia.
Registered number: P-2163.16.1
Legal Address: (Building 1) 00 Xxxxxxxxxx Xxxxxx
000000 Xxxxxx
Russian Federation
Registered share capital: R. 10,000,000 being 1,000 shares of R. 10,000 each.
Shareholders:
Name Shares Percentage
---- ------ ----------
Gastron International Limited 000 00
Xxxxxxxx of Adygea 250 25
Petrogas JSC 240 24
Mostransgas JSC 200 20
----- ---
1,000 100
20
SCHEDULE 3
WARRANTIES
A.1 DETAILS OF THE COMPANY
(1) The facts relating to the Company set out in Schedule 1 are true and
accurate in all respects.
(2) The Company:-
(a) neither holds, nor beneficially owns nor has agreed to acquire any
share or other capital of any other company or corporation other
than the Intergas Interest;
(b) is not and has not agreed to become a member of any partnership,
joint venture, consortium or other unincorporated association; or
(c) has no branch nor any permanent establishment outside the BVI.
A.2 MEMORANDUM AND ARTICLES OF ASSOCIATION AND STATUTORY BOOKS
(1) The copies of the memorandum of association and articles of association
of the Company, which have been produced to the Purchaser, are up-to-
date, accurate and complete in all respects.
(2) The register of members and other statutory books of the Company have
been properly kept and contain a true, accurate and complete record of
the matters with which they should deal.
A.3 DOCUMENTS
(1) All agreements to which the Company is a party and other documents owned
by or which ought to be in the possession of the Company are in the
possession of the Company and details of all such agreements and
documents are contained in the Disclosure Material
(2) All documents in the possession or under the control of the Company to
which the Company is a party and which attract stamp duty have been
properly stamped and all and/or similar duties and taxes in BVI and
Russia have been paid and all duty payable in respect of the capital of
the Company has been paid.
21
A.4 LITIGATION
(1) The Company is not engaged in any litigation or arbitration proceedings
(whether as plaintiff or defendant) there are no such proceedings
pending or threatened either by or against the Company and there are no
facts which are likely to give rise to any such litigation or
arbitration.
(2) No order has been made or petition presented or resolution passed for
the winding up of the Company, nor has any distress execution or other
process been levied against the Company, nor is there any unfulfilled
or unsatisfied judgement or court order outstanding against the
Company.
A.5 COMMISSION
No one is entitled to received from the Company or Intergas any finder's
fee, brokerage or other commission in connection with the purchase of
shares in the Company.
A.6 AGREEMENTS SELLING OR GRANTING OPTIONS OVER THE COMPANY'S SHARES
Save as provided in this Agreement, there are no agreements or commitments
in force which call for the present or future issue of, or accord to any
person the right (whether conditional or otherwise) to call for the issue
of, any share or loan capital of the Company (including any option or right
of pre-emption or conversion).
A.7 OWNERSHIP OF SALE SHARE
(1) The Sale Share constitutes the whole of the issued capital of the
Company.
(2) There is no Encumbrance on, over, affecting or concerning the Sale
Share. No claim has been made by any person to be entitled to the Sale
Share or any Encumbrance on, over, affecting or concerning the Sale
Share.
(3) The Vendor is entitled to transfer the full legal and beneficial
ownership in the Sale Share to the Purchaser in accordance with this
Agreement.
A.8 CAPACITY
The Vendor has full power to enter and perform this agreement which, when
executed, will constitute binding obligations on the Vendor in accordance
with its terms.
22
A.9 COMPLIANCE WITH LEGISLATION
Neither the Company nor any of its officers, agents or employees have
committed or omitted to do any act or thing the commission or omission of
which is in contravention to any Legislation.
A.10 FOREIGN CORRUPT PRACTICES
The Company directly or indirectly, has not offered, given, promised to
give or authorised the giving of anything of value and will not offer,
give, promise to give or authorise the giving of anything of value to any
officer or employee of or other person acting in an official capacity for
any government or department, agency or instrumentality thereof, any
political party or official of a political party, or any candidate for
political office for the purpose of influencing any act or decision of any
such person, party, government or governmental instrumentality in order to
obtain any business relating to Intergas, the Concessions or otherwise.
A.11 THE ACCOUNTS
The Accounts have been prepared under the historical cost convention in
accordance with accounting principles consistently applied and generally
accepted in the United Kingdom and the United States, show a true and fair
view of the assets and liabilities and the profits or loss of the Company
for the period to the Accounting Date.
A.12 ASSETS OF THE COMPANY
The assets in the Accounts and all assets acquired or agreed to be acquired
by the Company since the Accounting Date:-
(1) comprise all the assets, property and rights which the Company owns or
which it uses or requires for the purpose of its business and are the
absolute and sole property of the Company free from Encumbrances.
(2) The Equipment has been purchased by or supplied to the Company on arms
length terms on the basis disclosed in the Disclosure Material. The
Equipment is the absolute property of the Company, is in good condition
and capable of being sold to Intergas and registered in accordance with
the contractual arrangements for the supply of equipment to Intergas
which are contained in the Disclosure Material.
A.13 LIABILITIES OF THE COMPANY
Save as specifically provided in the Accounts or mentioned in the
Disclosure Material the Company has no liabilities or obligations (whether
present or future, ascertained or contingent) and there is not in existence
in relation to the Company any guarantee, indemnity, bond or similar
obligation by the Vendor or any other person including
23
(without limitation) any liability for money owing whether in respect of
remuneration for services rendered or in respect of money lent to the
Company or otherwise.
A.14 EXCHANGE CONTROL
The Company has not breached or been party to any breach of any exchange
control and/or other regulations in any country relative to foreign
investment and/or the remittances or transfers of funds of any nature
(whether capital interest, dividends or otherwise) which has not been
remedied and no Company is or has at any time been a party to any
transaction to which the provisions of Section 485 of the Income and
Corporation Taxes Xxx 0000 have been applied.
A.15 CORPORATE FORMATION
The Company has complied in all material respects with all provisions and
requirements of The International Business Companies Ordinance (No. 8 of
1984) of the BVI and corresponding legislation in any other relevant
jurisdiction as are or have been in force and so far as is material, all
returns, particulars, resolutions and other documents, including accounts
required under any such legislation to be delivered on behalf of the
Company to any governmental or other Competent Authority have been properly
made and delivered.
A.16 RECORDS
All registers, accounts, books, ledgers, financial and other records of the
Company have been fully and accurately maintained in all material respects,
are under its direct control or in its possession, contain true and
accurate records of all matters required to be entered therein by
Legislation and do not contain any material inaccuracies or discrepancies
and give and reflect a true and fair view of the financial, contractual and
trading position of the Company and of its plant and machinery, fixed and
current assets and liabilities (actual and contingent) debtors and
creditors and stock in trade and work in progress.
A.17 NON-ARM'S LENGTH TRANSACTIONS
The Company is not a party to any transaction or arrangement under which it
may be required to pay for any asset or any services or facilities of any
kind an amount which is in excess of the market value of that asset,
services or facilities or will receive any payment for an asset, services
or facilities of any kind that it has supplied or provided, or is liable to
supply or provide, which is less than the market value of that asset or
service.
A.18. THE COMPANY'S OFFICERS AND EMPLOYEES
24
In relation to the Company there are not in existence, save as disclosed in
the Disclosure Material, any contracts of service with directors, managers
or employees nor any consultancy agreements.
A.19 INSURANCE
(1) The Company is and has at all times been insured (in the case of
insurance against loss of or damage to property for an amount not less
than the reinstatement value) against all such risks as are usually
insured against by companies carrying on similar businesses.
(2) The policies of insurance to which the Company is a party are and/or
were at all times whilst current, valid and in force and the Company
has not done or omitted to do or suffered anything to be done which
might render any of such policies void or voidable and all such
policies are or were written in the name of the Company and all
premiums due have been paid and there are no circumstances which are
known, or would on reasonable enquiry be known, to the Vendor and which
might invalidate or affect the renewal of any of the policies currently
in force or might entitle any Company to make, or oblige it to notify
the insurers of, any claim under any of the policies.
A.20 TAX AND SOCIAL SECURITY RETURNS
The Company has duly made at the due dates all returns and given or
delivered all notices, accounts and information which on or before the date
hereof ought to have been made, given or delivered for the purposes of Tax
and Social Security and all such returns, notices, accounts and information
(and all other information supplied to the appropriate fiscal or Social
Security authorities) have been made on a proper basis and none of such
returns, notices, accounts or information is disputed in any material
respects by the fiscal or Social Security authority concerned and there is
no fact known to the Vendor which might be the occasion of any such dispute
or of any claim for Tax in respect of any financial period down to and
including the Accounting Date not provided for in the Accounts.
A.21 AUTHORISED PERSONS
There are disclosed in the Disclosure Material particulars of all persons
having the power to bind the Company in any capacity whatsoever other than
Directors and employees of the Company and travel agents in the ordinary
course of the business of the Company.
25
A.22 CONFIDENTIAL INFORMATION
The Company has not (save for the purpose of carrying on its business in
the ordinary course) disclosed, or authorised the disclosure of, any of its
lists of suppliers or customers, trade secrets, technological information
or confidential information concerning its business.
A.23 THE CONCESSIONS
Intergas owns or is entitled to the free and unrestricted use (subject only
to such terms attaching to the relevant licences, consents and authorities
as have been disclosed to the Purchaser in writing prior to the execution
hereof) of the Concessions and true and complete copies of the Concessions
are contained in the Disclosure Material. Intergas has complied in all
material respects with the terms of such licences, consents and
authorities.
A.24 DISCLOSURE MATERIAL
All information contained in and disclosed by the Disclosure Letter and the
Disclosure Material is true and accurate in all material respects and all
information which has been given by the Vendor or its professional advisers
or by representatives of Intergas to the Purchaser or its professional
advisers in respect of questions raised by them was, when given, and now is
true and accurate in all material respects and there are no facts or
matters which have not been disclosed which render any such information
untrue, inaccurate or misleading at the date of and in the context of this
Agreement.
A.25 STATUS OF VENDOR
The Vendor represents and warrants to the Purchaser as at the date hereof
in the terms set out in Schedule 4 as though the same were set out herein
in full.
26
SCHEDULE 4
CERTIFICATE AND UNDERTAKING
For good and valuable consideration, Ribalta Holdings, Inc. (the "Vendor")
hereby certifies to and undertakes for the benefit of Fountain Oil
Incorporated (the "Purchaser") as follows:
a. Vendor certifies that Vendor is an "accredited investor", as that term is
defined in Rule 501 promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), and that in particular each beneficial owner of an
equity interest in Vendor is an accredited investor by reason of being a
natural person (i) whose individual net worth, or joint net worth with
spouse, exceeds US$1,000,000 or (ii) whose individual income in each of the
two most recent years exceeded US$200,000 or joint income with spouse in each
of those years exceeded US$300,000 and who has a reasonable expectation of
reaching the same income level in the current year;
b. Vendor represents, warrants and certifies to Purchaser that Vendor;
(i) has received and reviewed all reports filed by Purchaser with the
Securities and Exchange Commission pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, during the past twelve
months;
(ii) has been given the opportunity to ask questions of the Purchaser and
its management concerning the Purchaser, the Purchaser's common stock,
par value US$0.10 per share ("Common Stock"), and other matters
pertaining to Vendor's proposed acquisition of shares of Common Stock
(the "Shares"), in order for Vendor to evaluate the merits and risks of
an acquisition of Common Stock, and Vendor has received satisfactory
responses to all such questions; and
(iii) by reason of the business and financial experience of Vendor's
officers, directors and beneficial owners Vendor has the capacity to
evaluate the Purchaser and the merits and risks of an acquisition of
common Stock and to protect Vendor's interests in connection with the
acquisition of Common Stock and the transactions associated therewith.
c. Vendor agrees and undertakes that, since the offer and issuance of the Shares
by the Purchaser to Vendor have not been registered under the Securities Act
in reliance upon a statutory exemption from the registration requirements of
the Securities Act, Vendor will offer, resell or transfer the Shares or any
interest therein only in compliance with the provisions of Securities Act and
all other applicable securities laws and regulations and, in particular,
shall make such an offer, resale or transfer only if such Shares are
registered under the Securities Act or an exemption from such registration is
available. Vendor understands and agrees that (i) unless the shares that are
the subject of such
27
offer or sale are registered under the Securities Act or an exemption from
registration is available (in which latter case the Purchaser shall have
received an opinion of Vendor's counsel who shall be experienced in
securities law matters, in form and substance reasonably satisfactory to the
Purchaser, to such effect), the Purchaser shall not permit the transfer of
the Shares, and (ii) Purchaser may take such steps as it deems appropriate to
ensure compliance with the offer and resale restrictions imposed by the
Securities Act or other applicable laws and regulations or contained in this
Agreement, including instituting "stop transfer" instructions with respect to
the Shares with the transfer agent for the Common Stock and endorsing
restrictive legends, substantially in the following form, on certificates
representing the Shares to be issued to Vendor;
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR
QUALIFIED UNDER THE SECURITIES LAWS OF OTHER JURISDICTIONS IN RELIANCE
UPON EXEMPTIONS AFFORDED UNDER APPLICABLE LAWS. THE SHARES REPRESENTED
HEREBY MAY NOT BE OFFERED, SOLD, HYPOTHECATED OR OTHERWISE TRANSFERRED
UNLESS REGISTERED UNDER THE ACT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT IS APPLICABLE (IN WHICH CASE THE ISSUER SHALL
HAVE RECEIVED AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE ISSUER TO SUCH EFFECT)AND THE PROVISIONS OF ALL
OTHER APPLICABLE SECURITIES LAWS ARE OBSERVED.
d. Vendor certifies that Vendor (i) is acquiring the Shares for its own account
for investment purposes and not with a view towards the distribution thereof
and (ii) does not have any contract, understanding, or arrangement with any
person to sell, transfer, or grant participation to such person or any third
person with respect to the Shares, and no other person has a beneficial
interest in the Shares;
e. Vendor agrees to indemnify, protect, defend, and hold harmless the Purchaser,
and its affiliates, officers, directors, stockholders, agents, employees,
attorneys, accountants, successors, and assigns from and against all claims,
actions, causes of action, damages, losses, costs, liabilities, and expenses
(including costs of investigation, defence, and attorneys' fees) whatsoever
which may result from a breach or an alleged breach of the certifications,
representations, warranties, undertakings and agreements of Vendor contained
herein.
In Witness Whereof, the undersigned has executed this Certificate and
Undertaking this day of , 199 .
28
SIGNED by )
Mr. Adrian Xxxx Xxxx representing ) /s/Xxxxxx Xxxx Xxxx
FK Management Consultants Limited, )
for and on behalf of )
RIBALTA HOLDINGS, INC. )
in the presence of:- /s/Xxxxx X.X. Xxx )
XXXXX X.X. XXX
Rooms 12-14, I/F,
New Xxxxx House,
10 Ice House Street,
Hong Kong,
Manager
SIGNED by )
Xx. Xxxx Xxxxxx ) /s/Xxxx Xxxxxx
Director for and on behalf of )
FOUNTAIN OIL, INCORPORATED )
in the presence of:- /s/Xxxxx X. Xxxxxx )
Xxxxx X. Xxxxxx
Corp. Secretary
SIGNED by the said )
XXXX XXXXXXX XXXX ) /s/Xxxx Xxxxxxx Xxxx
in the presence of:- /s/X. Xxxxx )
X. Xxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxx XXX
Solicitor
29
