ACQUISITION AGREEMENT
BETWEEN
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The
Four Rivers BioEnergy Company Inc.
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VARIOUS
SHAREHOLDERS (Shareholders)
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MED-TECH SOLUTIONS, INC.
(Purchaser)
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THIS AGREEMENT
IS NOT A PROSPECTUS PURSUANT TO SECTIONS 5 OR 10 OF THE SECURITIES
ACT OF 1933, AS AMENDED (THE “1933 ACT”). NONE OF THE
SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE BEEN REGISTERED
UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS
SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY,
IN THE UNITED STATES EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION D PROMULGATED UNDER THE 1933 ACT, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY
IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS.
AN AGREEMENT
dated 26 March of 2007
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THE FOUR RIVERS
BIOENERGY COMPANY INC., a Kentucky corporation with the Kentucky
organization number of 0659433, with its principal office located
at c/o Jack Dunigan, 9 Lamb Road, Benton, Kentucky 42025 (the
“Company”); and
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THE PERSONS
WHOSE NAMES AND ADDRESSES are set out in the first column of
Schedule 2 being all of the shareholders of the Company (the
“Shareholders”).
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MED-TECH
SOLUTIONS, INC., a corporation incorporated and registered in
accordance with the laws of the State of Nevada, USA and having its
principal office located at Suite 2200-1177 West Hastings Street,
Vancouver, British Columbia, Canada, V6E 2K3, USA (the
“Purchaser”);
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The Company has
developed plans for the construction, ownership and management of
seed processing facilities and refineries for the production of
ethanol and bio-diesel products and for the sale and distribution
of such products.
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The Purchaser
is a United States developmental stage reporting company which
wishes to diversify its business interests and has agreed to
collaborate in developing the Company’s activities. The
Purchaser intends to assist the Company by raising finance in
support of the Company’s planned activities.
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The Parties
consider that their mutual interests will be best served if the
Purchaser acquires ownership of all of the issued and outstanding
shares of the Company’s common stock.
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Accordingly the
Parties have agreed to enter into this Agreement to provide for the
financing of the Company’s planned activities and the
acquisition by the Purchaser of all of the Company’s issued
and outstanding shares of common stock.
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NOW,
THEREFORE, IT IS AGREED AS FOLLOWS:
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Definitions and
Interpretations
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means the 850
Shares to be acquired, on Completion, by the Purchaser from the
Shareholders.
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means this
agreement, dated March 26, 2007.
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means the 150
Shares to be allotted and issued to the Purchaser and which shall
on allotment and issue on Completion constitute 15% of all of the
issued and outstanding Shares of the Company (including Shares
beneficially owned by the Shareholders).
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means the
business activities which the Company plans to undertake and which
the Purchaser will acquire, including building and commissioning an
ethanol and a biodiesel production plant and associated facilities
in the State of Kentucky, U.S.A. and engagement in the sale and
distribution of such ethanol and biodiesel products together with
other associated and complementary activities, and consisting of
the business activities described in the Business Plan.
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means any day
other than Saturday, Sunday or other day on which commercial banks
in The City of New York are authorized or required by law to remain
closed.
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means the
business plan prepared on behalf of the Company as set out in
Schedule 8.
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“Business
Transfer Agreement”
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means the
agreement relating to the transfer of the Pre Completion Business
from the Purchaser to a subsidiary company established for the
purpose of receiving the Pre Completion Business.
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means a claim
or claims pursuant to the Warranties.
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“Company
Financial Statements”
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means the
consolidated financial statements of the Company for the period
from inception to March 31, 2007 (or such other period as may be
permitted in writing by the Purchaser), reviewed and audited by an
independent registered certified public accounting firm which is
registered with, and has audited the consolidated financial
statements in accordance with the standards of, the Public Company
Accounting Oversight Board (United States of America)
(“PCAOB”).
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means the
agreements set out in Schedule 7.
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means the law
firm appointed by the Company.
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means date upon
which Completion is to take place as identified in Clause
8.2.
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means
completion of the sale and purchase of the Acquisition
Shares.
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means
40,665,000 Securities of the Purchaser to be issued and allotted to
the Shareholders pursuant to Clause 8.7 in the proportions and
numbers identified in Schedule 2.
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means any
disclosure letter to be delivered to the Purchaser by the Company
containing disclosures made by the Company and the Shareholders
pursuant to this Agreement in accordance with clause 8.
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means any
interest or equity of any person (including any right to acquire,
option or right of pre-emption) or any mortgage, deed of trust,
claim, charge, pledge, lien, assignment, hypothecation, security
interest, covenant, restriction, easement, preemptive right, title
retention, security agreement or any other encumbrance or charge of
any kind.
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means
statements relating to the Company for the period from inception to
June 30, 2007, which have been reviewed by an independent
registered certified public accounting firm in accordance with
PCAOB standards.
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means an amount
equal to US$2,000,000 which the Purchaser intends to raise for the
purposes of this Agreement through the Private Placement to be used
for the purposes set out and contemplated in this
Agreement.
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“Initial
Funding Agreements”
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means the
agreements and the list of expenditures set out in Schedule 6
(Parts I and II).
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“Initial
Funding Completion”
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means the
transfer of the Initial Funding to the Company and issue of the
Allotment Shares in accordance with Clause 5 hereof.
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means a period
of time starting on the date of the Initial Funding Completion and
ending on Completion Date.
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means the
accounts to be periodically supplied to the Purchaser during the
Interim Period, and to be used for the purposes of supplementary
due diligence, including at the end of the Interim Period a balance
sheet setting out the Company’s assets and
liabilities.
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means the
raising through Private Placement of a minimum of US$35,000,000 or
such larger amount as may be agreed to by the Parties.
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means the law
firm appointed by the Purchaser.
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“Purchaser
Representative”
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means a
director of the Company or his alternate appointed from time to
time by the majority of the board of directors of the Purchaser
then in place.
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means the
Purchaser, the Company and the Shareholders being collectively
referred to as the “Parties”.
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“Pre-Completion Business”
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means the
business conducted by the Purchaser immediately prior to execution
of the Business Transfer Agreement.
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means the
Over-The-Counter Bulletin Board quotation service, or if the
Securities are then traded on another quotation service or on a
national securities exchange, such quotation service or national
securities exchange.
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means the
private placement of Securities of the Purchaser in order to
achieve the Initial Funding and Main Funding in aggregate of not
less than US$40,800,000, to accredited investors pursuant to
Regulation S promulgated under the Securities Act of 1933, or as
may be agreed to otherwise by the Parties.
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means the
Project Overview section contained in Part 1 of the Business
Plan.
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means the
warranties extended by the Purchaser to the Shareholders as set out
in Schedule 5.
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means in the
case of the Shareholders, the restriction provisions on the sale
and transfer of the Consideration Shares set out in Clause 9 and in
the case of the Purchaser the restriction provisions on the sale
and transfer of the Allotment Shares and the Acquisition Shares set
out in Clause 9.
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means the
shares of common stock, $0.001 par value per share, of the
Company.
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means the
persons whose names and addresses are set out in the first column
of Schedule 2 and being all of the registered owners of the Shares
and all of the shareholders of the Company as set out opposite
their names in Schedule 2.
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means the
shares of common stock, $0.001 par value per share, of the
Purchaser.
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means The Four
Rivers BioEthanol Company Limited, a company formed and registered
under the laws of England and Wales, the entire share capital of
which is owned by the Company.
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means the
warranties extended by the Shareholders to the Purchaser and by the
Purchaser to the Shareholders as the context requires as such
warranties are set out in Schedule 4 and Schedule 5 as
applicable.
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Any reference,
express or implied, to an enactment includes references
to:
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that enactment
as amended, extended or applied by or under any other enactment
before or after this Agreement; and;
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any enactment
which that enactment re-enacts (with or without modification);
and
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any subordinate
legislation made (before or after this Agreement) under any
enactment, including one within (a) or (b) above.
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Words denoting
persons shall include corporate bodies and unincorporated
associations of persons.
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The headings
and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not
intended to interpret, define or limit the scope, extent or intent
of this Agreement or any provision thereof.
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Reference to a
document being in the agreed form is to a document initialed by or
on behalf of the Parties for the purposes of
identification.
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Save where
specifically provided otherwise all obligations undertaken by more
than one individual being a Party to this Agreement are undertaken
jointly and severally.
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Upon
termination for any reason, the Parties shall be relieved of any
further obligations or commitments pursuant to this Agreement
including, but without limitation, save and except for the
obligations of either of the Parties to compensate the other
pursuant to Clause 16.5 and 16.6 and to the continuation of the
confidentiality obligations contained in Clause 20.6.
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Allotment Shares and Acquisition
Shares
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Subject to the
terms of this Agreement the Purchaser shall:
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simultaneously
with Initial Funding Completion subscribe for and be issued and
allotted the Allotment Shares credited as fully paid at par value
of $0.001 each.
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on Completion
Date simultaneously with Completion acquire the Acquisition Shares
from the Shareholders.
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On Completion
Date simultaneously with Completion, the Shareholders shall
transfer to the Purchaser the number of Acquisition Shares set out
opposite their respective names in Schedule 2.
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The Purchaser
shall not be obliged to accept the transfer of any of the
Acquisition Shares or release the Main Funding to the Company
unless the transfer of all of the Acquisition Shares takes place
simultaneously with Completion, unless agreed to otherwise in
writing by the parties.
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The Acquisition
Shares shall be transferred by the Shareholders free from any
Encumbrances and each of the Shareholders hereby waives any right
of pre-emption or other restriction on transfer in respect of the
Acquisition Shares or any of them conferred on each of the
Shareholders pursuant to the corporate laws of the State of
Kentucky or otherwise.
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The
Shareholders individually and collectively hereby acknowledge
that:
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the authorized
amount of capital stock of the Company shall not be increased or
altered in any way between the date of Initial Funding Completion
and the earlier of (i) the Completion Date and (ii) the last day of
the Interim Period;
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the issued and
outstanding amount of capital stock of the Company shall not be
increased or altered in any way between the date of Initial Funding
Completion and the earlier of (i) the Completion Date and (ii) the
last day of the Interim Period;
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none of the
Shareholders shall transfer or otherwise dispose of his or its
interest in the Acquisition Shares between the date of this
Agreement and the earlier of (i) the Completion Date and (ii) the
last day of the Interim Period.
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It is
acknowledged that the agreement of the Shareholders to transfer the
Acquisition Shares and of the Purchaser to acquire them represent
irrevocable commitments subject only to the conditions precedent to
Completion set out in Clause 8.1 and to termination of this
Agreement before Completion pursuant to clauses 16.2, 16.3 or
16.5.
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Consideration for the Acquisition
Shares
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The
consideration for the transfer of the Acquisition Shares to the
Purchaser shall be the issue and allotment by the Purchaser to the
Shareholders or their nominees on Completion of the number of
Consideration Shares set out opposite to their respective names in
Schedule 2.
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The
Consideration Shares shall be issued by the Purchaser as fully paid
and non-assessable and shall rank pari passu in all respects with
the issued and outstanding Securities of the Purchaser at
Completion.
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The
Consideration Shares shall, at the Completion Date represent 31.75%
percent of all of the issued and outstanding Securities of the
Purchaser.
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The Initial
Funding to the extent not already raised prior to the date hereof
shall be raised by Private Placement as soon as practicable
following the date of this Agreement. The Initial Funding shall be
used during the Interim Period to meet expenditure connected with
setting up and establishing the Business. The Business Plan
contains details of expenditure to be incurred during the Interim
Period and Schedule 6 Part II contains a list of expenditure for
which the Initial Funding may be used. Certain items of expenditure
identified as certain pre contract expenses incurred by the
Subsidiary prior to December 31, 2006 shall only be settled and
paid on Completion, and certain pre contract expenses incurred by
the Subsidiary after January 1, 2007 as more fully identified in
this list in Schedule 6 Part II shall only be settled and paid on
Initial Funding Completion. If there is any discrepancy between the
Business Plan and the list of items in Schedule 6 Part II, for the
purposes of interpretation, this list shall prevail.
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It is intended
that the Initial Funding shall be transferred and made available to
the Company in exchange for the Allotment Shares. The Initial
Funding of US$2,000,000 shall be applied on Initial Funding
Completion in payment for the Allotment Shares pursuant to Clause
5.
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As and with
effect from Initial Funding Completion, the Purchaser shall be
entitled to be represented, at its option, on the board of
directors of the Company, by the Purchaser Representative, whose
appointment shall be secured by having each of the Shareholders
enter into a voting agreement for the sole purpose contemplated in
this Clause 4.3, a form of which is annexed hereto as Exhibit 1.
The Purchaser shall be entitled to remove the Purchaser
Representative and appoint a replacement at any time by having all
of the Shareholders vote to remove the Purchaser Representative and
appoint a replacement upon notification of such by the Purchaser.
Any subsequent appointment to the initial appointment and any
removal shall be made by notice in writing served on the Company
and shall take effect upon service of the notice. The Company, all
if its directors and all of the Shareholders shall take any and all
actions necessary to approve such subsequent appointment. The
Purchaser Representative, or his duly appointed alternate, shall
have the same right to attend Company board meetings and to call
upon the board of the Company to convene meetings as the other
directors and shall have the same rights of access to the
Company’s accounts, records and papers as other directors.
The board of directors shall meet regularly (as necessary by
telephone conference call) during the Interim Period, and
not
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less often than once a month. During the Interim
Period the Purchaser Representative (or his alternate) shall be a
necessary attendee for a quorum and for the purposes of this
Agreement the Company’s By-laws shall be deemed to have been
adopted and amended accordingly.
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The Purchaser
intends to raise the Main Funding during the Interim Period and
undertakes with the Company with respect to such arrangements as
follows:
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to endeavor to
raise the Main Funding through a Private Placement of its
Securities;
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that such
Private Placement shall be solicited based on the offering
documents (prepared by the Purchaser’s designated attorneys)
and shall be managed and administered in conformity with US
securities laws and rules and regulations applicable to the
issuance of stock in corporations quoted on the Principal Market
and their state of incorporation;
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that in
collaboration with its agents and representatives it will proceed
diligently with actions required to achieve the Main Funding within
the Interim Period;
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that it will
advise the Company as to the progress of the Main Funding
initiatives in response to requests for information;
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that it will
provide the Company with a draft copy of the Private Placement
Memorandum to be used in the Main Funding at least 2 Business Days
before it is released to potential investors;
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that it will
incorporate reasonable amendments to the Private Placement
Memorandum requested by the Company’s directors before
issuance to potential investors, unless such amendments would cause
or could lead to a violation of any law or regulation in the
opinion of, or are otherwise reasonably deemed unnecessary by, the
Purchaser’s Lawyers; and
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that as soon as
practicable after obtaining confirmation that the Private Placement
funds for the full amount of the Main Funding together with the
copies of the appropriate offering documents executed by all of the
potential investors have been received by the Purchaser’s
Lawyers and the escrow agent for the Main Funding, it will advise
the Company that such funds have been received.
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Availability of
the Main Funding will depend upon the Purchaser through the
placement agents attracting investors willing to invest, in total,
an amount equal to such Main Funding. Success may be affected by,
amongst other factors, volatility in the markets. As the Company
and the Shareholders hereby acknowledge, that the Purchaser does
not undertake or guarantee that it will necessarily be successful
in its endeavors to raise the Main Funding and they further
acknowledge that the Purchaser does not accept any liability
towards them if it fails in its endeavors.
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Initial
Funding Completion
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Initial Funding
Completion shall be conditional upon execution of the Initial
Funding Agreements. The Shareholders shall take appropriate action
to ensure that the Company and the Subsidiary enter into the
Initial Funding Agreements as soon as practicable following the
date of this Agreement. Following execution of all of the Initial
Funding Agreements, the Company shall notify the Purchaser in
writing that they have been executed and shall provide certified
copies of them with such notification.
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Initial Funding
Completion shall take place at the offices of Purchaser’s
Lawyers on a date to be agreed between the Parties which shall be
within 7 days of the date of notification pursuant to
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Clause 5.1 above. In the absence of agreement as
to a date, Initial Funding Completion shall take place on the date
which is 7 days after the date of notification pursuant to clause
5.1 or the first Business Date to occur thereafter. If Initial
Funding Completion has not taken place within 28 days of the date
of this Agreement, each of the Parties shall be entitled to
terminate this Agreement by service of a notice in writing on the
others pursuant to clause 16.2.
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The
subscription price for the Allotment Shares shall be the amount of
the Initial Funding and shall be paid to the Company on the date of
Initial Funding Completion.
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On Initial
Funding Completion in consideration for and subject to the payment
of the subscription price in accordance with Clause 5.3 above, the
Company shall:
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allot and issue
to the Purchaser the Allotment Shares credited as fully paid and
non assessable;
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deliver to the
Purchaser a duly executed share certificate in respect of the
Allotment Shares; and
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deliver to the
Purchaser a certified copy of the minutes of the meeting of its
board of directors as referred to in Clause 5.5 below.
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On or before
the Initial Funding Completion the directors of the Company shall
hold a meeting at the offices of the Company’s Lawyers or a
mutually agreed location to:
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approve the
allotment and issue to the Purchaser of the Allotment
Shares;
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instruct the
secretary of the Company to enter the Purchaser into the corporate
book of the Company as the owner of the Allotment
Shares;
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approve the
appointment of the Purchaser Representative to the Company’s
board of directors (if the Purchaser shall elect to exercise his
right to do so pursuant to Clause 5.6 below); and
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and file
appropriate filings with the Secretary of State of the State of
Kentucky.
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The Purchaser
shall, on Initial Funding Completion, subscribe in cash
US$2,000,000 as consideration for the Allotment Shares.
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On or before
the Initial Funding Completion, the Purchaser shall be entitled to
appoint at its option the Purchaser Representative to the board of
directors of the Company and the Shareholders shall take any and
all actions necessary to approve such appointment.
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The
Shareholders undertake with the Purchaser to procure that the
Company complies with its obligations as set out in this Clause
5.
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Interim
Period Management
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The Parties
recognize the importance to the success of the Business
of:
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ensuring that
the provisions of the Interim Funding Agreements are implemented in
accordance with their terms and within the periods of time for the
implementation of such provisions as identified in the Business
Plan; and
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signing the
Completion Agreements during the Interim Period and implementing
the provisions of such Completion Agreements to the extent such
provisions are capable of being implemented within the Interim
Period.
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During the
Interim Period the Company and its Business shall be actively and
diligently managed with a view to achieving the objectives set out
in the Business Plan. In particular the Company:
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shall use its
best efforts to execute an agreement or agreements for the
acquisition of an interest freehold/leasehold in a site for the
construction of the Plant.
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shall use its
best efforts to execute agreements with the suppliers of
feedstock/raw materials and with customers for ethanol and
bio-diesel products on terms which are consistent with the
financial projections and financial model contained in the Business
Plan; and
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shall not
establish and/or form any subsidiary affiliate or associate
companies and shall not enter into any joint ventures or other
forms of partnership with any third parties unless approved by the
Purchaser in writing.
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shall only
enter into any other arrangement or agreement with the intention of
meeting the objectives set out in the Business Plan.
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shall not
create any Encumbrances over any of the Company’s or the
Subsidiary’s assets without the consent of the
Purchaser;
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shall introduce
and enforce proper and effective generally accepted accounting
systems and procedures, and shall ensure that all expenses,
payments and outgoings made and incurred are consistent with the
provisions of the Business Plan and are restricted to payments of
the type identified in Schedule 6;
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shall introduce
and implement policies and procedures for the proper and effective
management of the Business by the Company's officers and employees,
and by third parties instructed on behalf of the Company and
such policies and procedures shall provide for the management of
the Business during the Interim Period and following Completion in
compliance with all relevant laws and regulations and in accordance
with best practice corporate governance and relevant social
obligations, including but not limited to, US Securities Exchange
Commission’s rules and regulations;
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shall cause
monthly Management Accounts to be prepared containing full details
of the Company’s expenditure and shall submit the same to its
board of directors and the Management Accounts shall fairly and
with reasonable accuracy set out the liabilities of the Company
incurred as of the date to which they relate and not less than 7
Business Days prior to Completion, shall present the Purchaser with
a final set of Management Accounts and prior to or on Completion,
shall deliver the Company Financial Statements and if Completion
Date is on or after August 13, 2007 in addition to the Company
Financial Statements shall deliver true copies of the Financial
Statements for the Company for the period from inception to June
30, 2007;
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shall comply in
all material respects with applicable laws, including, without
limitation, environmental laws;
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shall keep the
Purchaser fully and promptly informed with respect to all changes
and revisions to the Business Plan introduced during the Interim
Period and not less than
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seven Business Days prior to Completion Date
provide the Purchaser with the then current version of the Business
Plan, and;
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shall respond
to all enquiries and questions raised by the Purchaser concerning
issues relating to progress made towards establishment of the
Business.
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The Company,
the directors and managers of the Company and in particular the
directors and managers of the Subsidiary pursuant to the terms of
their employment agreements shall during the Interim Period
dedicate sufficient working time to the management of the Company
and its Business as may be required to deliver the objectives set
out in the Business Plan in accordance with the provisions of
Clause 6.2 and during the Interim Period shall use their best
endeavors to achieve the objectives set for the Business in the
Business Plan.
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Neither the
Company nor the Shareholders shall during the Interim Period enter
into any agreements or arrangements with third parties which would
be prejudicial or likely to be prejudicial to the best interests of
the Company, the Subsidiary or the future of the Business. The
Completion Agreements and any other material contracts and
undertakings between the Company and/or its Subsidiaries shall be
signed on a basis which ensures that the commitments and
obligations of the Company and/or its Subsidiaries are made
conditional upon Completion pursuant to this Agreement.
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The Company and
the Shareholders expressly undertake and covenant with the
Purchaser to procure that the Company and its directors and
managers comply with and perform its, and /or their, obligations as
set out in this Clause 6. The Shareholders acknowledge and accept
that the provisions set out in this Clause 6 as they relate to the
management of the Company and the Business shall apply equally to
the activities of the Subsidiary.
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Purchaser’s Termination
Right
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If during the Interim Period the Purchaser, in
its absolute sole discretion, decides that the prospects for
success of the Business do not justify release of the Main Funding
and/or proceeding to Completion, the Purchaser shall so advise the
Company and the Shareholders in writing, and following such advice
shall be entitled at any time to terminate this Agreement in
accordance with Clause 16.3.
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Completion
shall be conditional upon:
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the Purchaser
being satisfied with the prospects for the Business in accordance
with Clause 7 and its not having served a notice terminating this
Agreement pursuant to Clause 16.3;
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the (i)
Purchaser raising the Main Funding through the private placement of
Securities equal to or more than the amount of the Main Funding,
closing of which shall be a condition of, and simultaneously closed
on, Completion, (ii) the Main Funding having been deposited at
Completion into a restricted bank account of the Company agreeable
to the Purchaser, (iii) the Company presenting evidence
satisfactory to the Purchaser that the requirements of the
Purchaser’s designated representative’s (or his dully
appointed replacement) signature is an irrevocable and absolute
requirement for purposes of said restricted bank account of the
Company, in order to properly govern the manner and terms upon
which the funds to be raised in the Main Funding may be drawn down
and disbursed from said restricted bank account (i.e., require the
approval of a designated representative of the Purchaser); and (iv)
the Company presenting evidence satisfactory to the Purchaser that
the disposition of any or all of the Main Funding from the
said
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restricted bank account of the Company shall be
conditional on the bank operating said restricted bank account
receiving Release Notice instructions part of the Release Notice
Agreement and substantially in the form of Exhibit 2, unless prior
to Completion agreed to otherwise in writing solely by the
Purchaser;
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the Company and
the Purchaser, having fulfilled their respective obligations with
respect to the Completion Agreements and other documents as set out
in Schedule 7;
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all documents
or copies of documents required to be executed and delivered to the
Purchaser hereunder having been so executed and
delivered;
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all of the
terms, covenants and conditions of this Agreement required to be
complied with or performed by the Company and the Shareholders at
or prior to the Completion having been complied with or
performed;
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there not
having occurred:
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any material
adverse change in the financial position or condition of the
Company or the Purchaser, its liabilities or its assets or any
damage, loss or other change in circumstances materially and
adversely affecting the Company or the Purchaser, the Business or
the assets of the Company or the Company’s right to carry on
the Business, other than changes in the ordinary course of
business, none of which have been materially adverse to the Company
or the Purchaser; or
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any damage,
destruction, loss or other event, including changes to any laws or
statutes applicable to the Purchaser, the Company or the Business
(whether or not covered by insurance) materially and adversely
affecting the Purchaser, the Company, the Business or the assets of
the Company;
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the
transactions contemplated hereby having been approved by any
regulatory authorities having jurisdiction over the transactions
contemplated in this Agreement, if applicable;
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there being no
disclosures in any draft Disclosure Letter delivered to the
Purchaser on or before the Completion Date which will have, or may
be likely to have in the sole discretion of the Purchaser, a
material adverse effect upon the value of the Company and/ or the
Business or which in the sole discretion of the Purchaser, may
adversely effect the Company’s ability to deliver the
Business Plan or which in the sole discretion of the Purchaser, may
have the effect of altering or amending any of the Company’s
and the Shareholders’ obligations or commitments pursuant to
this Agreement; and
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the delivery of
the Company Financial Statements;
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Subject to the
Purchaser having fulfilled Condition 8.1.2 above, it shall be
entitled to waive fulfillment of any of the conditions precedent to
Completion including waiver of any of the requirements set out in
Schedule 7 with the exception of the obligation imposed on the
Purchaser in Schedule 7 para 13. Any such waiver shall be exercised
by service of a notice in writing by the Purchaser on the Company
in accordance with Clause 19 and following service of such notice
the condition precedent referred to in the notice shall be deemed
to have been fulfilled with immediate effect.
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Completion
shall take place on a date to be agreed between the Parties being a
date which shall be not earlier than 2 Business Days and not later
than 10 Business Days after the date when all of the conditions
precedent set forth in Section 8.1 have been fulfilled. If the
Parties fail to agree upon a
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date which is within the aforementioned 10
Business Day period, Completion shall take place on a date which
shall be 15 Business Days after fulfillment of all of the
conditions precedent to Completion set forth in Section 8.1 or if
such date is not a Business Day the first Business Day
thereafter.
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If Completion
has not occurred within a period of five months from the date
hereof due to non fulfillment of any one or more of the conditions
precedent to Completion set out in Clause 8.1 above and the
Purchaser has not served a notice pursuant to 16.2,
then:
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the Purchaser
shall be entitled to serve notice on the Company and the
Shareholders calling upon them to meet and discuss actions which
can be taken to fulfill the outstanding condition or conditions
precedent which is or are preventing Completion from taking place;
and
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the Company
shall be entitled to serve an equivalent notice, to the notice
described in 8.4.1, on the Purchaser.
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Following
service of a notice pursuant to Clause 8.4 the Parties and or their
representatives shall meet to discuss, in good faith, actions which
can be taken to resolve the difficulties which are preventing
Completion from taking place. If the Parties either have not met or
have not resolved such difficulties within a period of 28 Business
Days from the date of service of a Clause 8.4 notice they shall be
entitled to serve notice terminating this Agreement in accordance
with Clause16.3.
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On Completion,
which shall take place at the offices of the Purchaser’s
Lawyers
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the
Shareholders shall transfer their Acquisition Shares with full
title guarantee, free from any Encumbrances and together with all
rights that attach, or may in future attach, to them including the
right to receive all dividends and distributions declared, made or
paid on them on or after the date of this Agreement;
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the
Shareholders and the Company shall produce a copy of a certificate
of good standing with respect to the Company issued by the
Secretary of the State of the Kentucky;
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the Company,
and the Shareholders shall deliver the final Disclosure Letter in
the form of the draft accepted by the Purchaser to the
Purchaser;
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produce to the
Purchaser a certified copy of the resolution of the board of the
Company authorizing the allotment and issue of the Allocation
Shares to the Purchaser and approving this Agreement and all of the
transactions contemplated hereunder;
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the Company and
the Purchasers shall deliver to the Purchaser a stock certificate
duly executed by the appropriate officers of the Company in respect
of the Allocation Shares to which the Purchaser is
entitled;
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the Company and
the Shareholders shall produce such other documents as the
Purchaser may reasonably request.
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On Completion,
the Purchaser shall:
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deliver to each
of the Shareholders a stock certificate in respect of the
Consideration Shares to which each Shareholder is
entitled;
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produce to the
Shareholders a certified copy of the resolution of the board of the
Purchaser authorizing the allotment and issue of the Consideration
Shares to the
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Shareholders and appointing Gary Hudson, Stephen
Padgett, Gordon Weightman, Kevin Alexander, Alastair Mack and Jack
Dunigan as directors of the Purchaser; and
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produce a copy
of the duly executed Business Transfer Agreement.
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Restriction Provisions on Transfer/Sale of the
Securities
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Each
Shareholder agrees not to dispose of any of the Consideration
Shares within a period of 2 years from Completion Date, save
pursuant to an offer made to all the holders of Securities in the
Purchaser and thereafter only to dispose of Consideration Shares in
accordance with the provisions of this Clause 9.
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After the 2
year period referred to in clause 9.1 has elapsed, each Shareholder
will be able to dispose of his Consideration Shares free of any
restrictions imposed by this Agreement, but subject to such
restrictions as shall apply under US Securities laws or
regulations.
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Notwithstanding
the restrictions set out in Clauses 9.1 and 9.2, each Shareholder
agrees not to dispose of any of the Consideration Shares in a
manner which is inconsistent with the provisions set forth in
Clause 14.
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Each director
and officer of the Purchaser as of the date of this Agreement,
agrees not to dispose of any of the Securities beneficially owned
by such director or officer within a period of twenty four months
from the Completion Date, save pursuant to an offer made to all the
holders of Securities in the Purchaser and thereafter only to
dispose of any of the Securities beneficially owned in accordance
with the provisions of this Clause 9 or Clause 14.3.
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Notwithstanding
the restrictions set out in this Section 9, the Purchaser agrees
not to dispose of any Allotment Shares or Acquisition Shares so as
to contradict the provisions of Clause 14.3.
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On Completion
and for a twenty four month period thereafter shareholders of the
Purchaser (excluding the Shareholders) holding in the aggregate not
less than 25% of the total issued share capital of the Purchaser
shall have the right to call a special meeting of the
Purchaser’s shareholders for the purpose of electing said
shareholders nominated directors to the board of directors of the
Purchaser, in accordance with the Purchaser’s statutes of
incorporation and SEC laws and regulations. During the twelve-month
period each of the Shareholders agrees to exercise all votes
exercisable by each of them as a director and/or shareholder of the
Purchaser in favor of the appointment as directors of the Purchaser
as shall be nominated pursuant to this provision.
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Warranties and Purchaser
Warranties
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The
Shareholders jointly and severally warrant to the Purchaser that
each of the statements set out in Part I of Schedule 4 is true and
accurate in all respects as of the date of this
Agreement.
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Immediately
prior to Completion, and the Shareholders shall be deemed to have
jointly and severally warranted to the Purchaser, subject to those
matters fully and fairly disclosed in the Disclosure Letter, based
on the facts in existence at that time, that each of the Warranties
in the form set out in Part 2 of Schedule 4 is true and accurate as
at the Completion Date.
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Immediately
prior to Completion, the Purchaser shall be deemed to have
warranted to the Shareholders that, subject to those matters fully
and fairly disclosed and based on the facts in existence at the
time, each of the statements set out in Schedule 5 is true and
accurate in all respects as at the Completion Date.
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Each of the
Shareholder’s liability for the Warranties shall be limited
as set out in Clause 12.
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The
Purchaser’s liability for the Purchaser’s Warranties
shall be limited as set out in Clause 13.
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The
Shareholders shall not be liable in respect of any Claim unless and
until they shall have received from the Purchaser written notice
containing details of the relevant Claim including the amount of
the Claim and full details of the matter or default which gives
rise to the Claim on or before the first anniversary of this
Agreement.
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Any Claim shall
(if not previously satisfied, withdrawn or settled) be deemed to
have been withdrawn and waived by the Purchaser unless legal
proceedings in respect of such Claim have been commenced (by being
both issued and served on the Company) within twelve months of the
notification of such Claim to the Company.
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The
Shareholders shall not be liable in respect of any Claim unless the
amount of their individual liability in respect of an individual
Claim exceeds $50,000 (in which event, they shall be liable for the
whole amount of such Claim and not only the excess over such
amount; such that a joint and several claim filed against the
Shareholders shall be considered an individual Claim against each
of the shareholders).
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Notwithstanding
any other provision of this Agreement the individual liability of
each of the Shareholders shall not in any circumstances exceed
$114,000. Individually and collectively their liability in the
aggregate shall not in any circumstances exceed
$550,000.
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The Purchaser
shall not be entitled to recover damages in respect of any Claim
for breach of a Warranty or otherwise obtain reimbursement or
restitution more than once in respect of any one breach of that
Warranty arising out of or in connection with the same
circumstances.
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The
Shareholders shall not be liable in respect of any
Claim:
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to the extent
that recovery is made by the Purchaser or the Company under any
policy of insurance; or
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to the extent
that the Purchaser or the Company have already obtained
reimbursement or restitution in respect of such claim from any
third party.
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Limitations on Purchaser Warranty
Claims
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The Purchaser
shall not be liable in respect of any Claim unless and until it
shall have received from the Shareholders written notice containing
details of the relevant Claim including the amount of the claim and
full details of the matter or default which gives rise to the claim
on or before the first anniversary of the Completion
Date.
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Any Claim shall
(if not previously satisfied, withdrawn or settled) be deemed to
have been withdrawn and waived by the Shareholders unless legal
proceedings in respect of such Claim have been commenced (by being
both issued and served on the Purchaser) within twelve months of
the notification of such Claim to the Purchaser pursuant to Clause
13.1.
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The Purchaser
shall not be liable in respect of any Claim unless the amount of
the liability of the Purchaser for such Claim exceeds $50,000 (in
which event, the Purchaser shall be liable for the whole amount of
such claim and not only the excess over such amount).
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Notwithstanding
any other provision of this Agreement the aggregate liability of
the Purchaser under this Agreement shall not in any circumstances
exceed $550,000.
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Neither the
Shareholders nor the Company shall be entitled to recover damages
in respect of any Claim for breach of a Warranty or otherwise
obtain reimbursement or restitution more than once in respect of
any one breach of that Warranty arising out of or in connection
with the same circumstances.
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The Purchaser
shall not be liable under this Agreement in respect of any
Claim:
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to the extent
that recovery is made by the Purchaser, the Company, the
Shareholders under any policy of insurance; or
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to the extent
that the Company, the Shareholders have already obtained
reimbursement or restitution in respect of such claim from any
third party.
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US
Securities Act Provisions,
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Each of the
Shareholders agrees, and undertakes to procure that any nominee
appointed by him pursuant to Clause 3.1 shall agree, that they are
acquiring the Consideration Shares for investment purposes and will
not offer, sell or otherwise transfer, pledge or hypothecate any of
the Consideration Shares issued to it (other than pursuant to an
effective Registration Statement under the Securities Act of 1933,
as amended) directly or indirectly subject to any other
restrictions and limitations set forth in this Agreement
unless:
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the sale is to
the Purchaser;
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the sale is
made pursuant to the exemption from registration under the
Securities Act of 1933, as amended, provided by Rule 144
thereunder;
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the sale is
made pursuant to the exemption from registration under the
Securities Act of 1933, as amended, provided by Regulation S
promulgated thereunder; or
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the
Consideration Shares are sold in a transaction that does not
require registration under the Securities Act of 1933, as amended,
or any applicable United States state laws and regulations
governing the offer and sale of securities, and the vendor has
furnished to the Purchaser an opinion of counsel to that effect or
such other written opinion as may be reasonably required by the
Purchaser.
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Each of the
Shareholders acknowledges that the certificates representing the
Consideration Shares shall bear the following legend:
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NO SALE, OFFER
TO SELL, OR TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER THE FEDERAL
SECURITIES ACT OF 1933, AS AMENDED, IN RESPECT OF SUCH SHARES IS
THEN IN EFFECT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SAID ACT IS THEN IN FACT APPLICABLE TO SAID SHARES.
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The Purchaser
agrees that it is subscribing for acquisition of the Allotment
Shares and the Acquisition Shares for investment purposes and will
not offer, sell or otherwise transfer, pledge or hypothecate any of
the Allotments Shares or Acquisition Shares issued or transferred
to them (other than pursuant to an effective Registration Statement
under the Securities Act of 1933, as amended) directly or
indirectly unless:
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the sale is
made pursuant to the exemption from registration under the
Securities Act of 1933 , as amended, provided by Rule 144
thereunder;
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the sale is
made pursuant to the exemption from registration under the
Securities Act of 1933, as amended , provided by
Regulation S promulgated thereunder; or
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the Allotment
Shares or Acquisition Shares are sold in a transaction that does
not require registration under the Securities Act of 1933, as
amended , or any applicable United States state laws and
regulations governing the offer and sale of securities, and the
vendor has furnished to the Company an opinion of counsel to that
effect or such other written opinion as may be reasonably required
by the Purchaser.
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The Purchaser
acknowledges that the certificates representing the Allotment
Shares and the Acquisition Shares shall bear the following
legend:
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NO SALE, OFFER
TO SELL, OR TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER THE FEDERAL
SECURITIES ACT OF 1933, AS AMENDED, IN RESPECT OF SUCH SHARES IS
THEN IN EFFECT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SAID ACT IS THEN IN FACT APPLICABLE TO SAID SHARES.
The Parties
intend that the acquisition of the Acquisition Shares in exchange
for the Consideration Shares shall be a “tax free”
exchange transaction within the meaning of Section 368 of the
Internal Revenue Code of 1986 of the United States of
America.
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This Agreement
shall come into effect on the date hereof and subject to
termination pursuant to Clauses 16.2, 16.3, 16.4 or 16.5 below
shall continue in effect until all of the respective obligations of
the Parties have been fully discharged.
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If Initial
Funding Completion has not occurred within 28 days of the date of
this Agreement, each of the Parties shall be entitled to terminate
the Agreement by service of a notice in writing on the others,
unless agreed to otherwise in writing by the Parties.
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If pursuant to
Clause 7, the Purchaser in its sole discretion decides for any
reason that it is unable or unwilling to proceed to Completion and
has so advised the Company and the Shareholders in writing in
accordance with Clause 7, it shall be entitled to terminate this
Agreement forthwith by service of a notice in writing on the
Company and the Shareholders, which termination shall be effective
immediately upon the service of such notice.
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If Completion
has not taken place within five months of the date hereof and the
Parties have not resolved the difficulties preventing Completion
from taking place pursuant to Clause 8.3 and 8.4, the Parties shall
each be entitled to terminate this Agreement forthwith by service
of a notice in writing on the other Party.
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If prior to
Completion the Shareholders or the Company are in breach of any of
the terms or conditions of this Agreement, or fail to comply in any
material respect with any of its or their covenants or undertakings
as set out in this Agreement, the Purchaser shall be entitled to
serve notice on the Company requiring it and the Shareholders to
comply with such covenants and undertakings within a period of
twenty eight calendar days from the date of service of the
notice
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and if the Shareholders or the Company fails to
rectify such breach or failure within the period of twenty eight
calendar days specified in the notice by the Purchaser, the
Purchaser shall be entitled to terminate this Agreement forthwith
by service of a further notice in writing on the Company or the
Shareholders, which termination shall be effective immediately
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