ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

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FUEL SYSTEMS SOLUTIONS, INC. | FuelMaker Corporation | MCINTOSH & MORAWETZ INC

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Title: ASSET PURCHASE AGREEMENT
Governing Law: Ontario Date: 5/6/2009
Industry: Auto and Truck Parts Sector: Consumer Cyclical

ASSET PURCHASE AGREEMENT

Made as of the date of acceptance set out below

Between

MCINTOSH & MORAWETZ INC., in its capacity as Interim Receiver and Receiver and Manager of FuelMaker Corporation and not in its personal capacity and without personal or corporate liability (the “ Receiver ” or “ Vendor ”)

and

MTM S.r.l.
(the “ Purchaser ”)

TABLE OF CONTENTS

RECITALS			1
ARTICLE 1 – INTERPRETATION			1
Section	1.1	Definitions	1
Section	1.2	Interpretation Not Affected by Headings, etc	4
Section	1.3	Extended Meanings	5
Section	1.4	Schedules	5
ARTICLE 2 – OFFER			5
Section	2.1	Irrevocable Offer	5
Section	2.2	Acceptance and Binding Effect	5
ARTICLE 3 – SALE AND PURCHASE			6
Section	3.1	Sale and Purchase of Assets	6
Section	3.2	“As is, Where is”	6
Section	3.3	Assumed Obligations	6
Section	3.4	Excluded Obligations	6
Section	3.5	Payment of the Purchase Price	6
Section	3.6	Adjustment to Purchase Price	7
Section	3.7	Exchange	8
Section	3.8	Allocation of Purchase Price	8
Section	3.9	Taxes	8
ARTICLE 4 – REPRESENTATIONS AND WARRANTIES			9
Section	4.1	Purchaser’s Representations	9
Section	4.2	Vendor’s Representations	10
ARTICLE 5 – CONDITIONS			10
Section	5.1	Conditions - Purchaser	10
Section	5.2	Conditions – Vendor	11
Section	5.3	Appointment, Approval and Vesting Orders	11
Section	5.4	Non-Satisfaction of Conditions	12
ARTICLE 6 – EMPLOYEE MATTERS			12
Section	6.1	Offers	12
ARTICLE 7 – CLOSING			12
Section	7.1	Closing	12
Section	7.2	Purchaser’s Deliveries on Closing	12
Section	7.3	Vendor’s Deliveries on Closing	13
Section	7.4	Purchaser’s Acknowledgement	13
Section	7.5	Possession of Assets	13
Section	7.6	Access to Assets and Operations Prior to Closing	14
Section	7.7	Access to Debtor’s Premises	14
Section	7.8	Risk	15
Section	7.9	Arbitration	15
Section	7.10 Termination		15
Section	7.11 Books and Records		16
Section	7.12 Breach by Purchaser		16
Section	7.13 Change Debtor’s Name		16
Section	7.14 Termination of Contractor Agreements		16

ARTICLE 8 – GENERAL				16
Section		8.1	Further Assurances	16
Section		8.2	Notice	17
Section		8.3	Time	18
Section		8.4	Currency	18
Section		8.5	Survival	18
Section		8.6	Benefit of Agreement	18
Section		8.7	Entire Agreement	18
Section		8.8	Paramountcy	19
Section		8.9	Severability	19
Section		8.10 Vendor’s Capacity		19
Section		8.11 Governing Law		19
Section		8.12 Commission		19
Section		8.13 Counterparts		19
ARTICLE 9 – TIME FOR ACCEPTANCE				19
Schedule	1.1(3) – Appointment Order
Schedule	1.1(5) – Assets
Exhibit A to Schedule 1.1(5)
Schedule	1.1(11) – Certifications
Schedule	1.1(14) – Contracts
Schedule	1.1(20)– Excluded Assets
Schedule	3.3(1) - Standard Warranty Forms
Schedule	3.8 – Allocation of Purchase Price
Schedule	5.3(1)(a) – Approval and Vesting Order
Schedule	7.2(b) – Bill of Sale and Assignment

ASSET PURCHASE AGREEMENT

This Agreement is made as of the date of acceptance set out below, between

MCINTOSH & MORAWETZ INC. , in its capacity as Interim Receiver and Receiver and Manager of FuelMaker Corporation and not in its personal capacity and without personal or corporate liability (the “ Vendor ”)

and

MTM S.r.l.
(the “ Purchaser ”)

RECITALS

A. By executing and delivering this Agreement to McIntosh & Morawetz Inc., the Purchaser hereby makes an irrevocable offer to purchase the Assets and to complete the Transaction contemplated hereby, subject to the terms and conditions hereof (the “ Offer ”).

B. Upon the Offer being accepted by the Vendor in accordance with Section 2.2 of this Agreement, the Vendor agrees to sell and the Purchaser agrees to purchase the Assets and complete the Transaction contemplated hereby subject to the terms and conditions hereof.

FOR VALUE RECEIVED, the parties agree as follows:

ARTICLE 1 – INTERPRETATION

Section 1.1 Definitions

In this Agreement:

(1) “ Acceptance Date ” means the date that the Vendor accepts the Offer by executing and delivering this Agreement.

(2)	“ Agreement ” means this asset purchase agreement.

(3)	“ Appointment Order ” means the Order of the Court appointing McIntosh & Morawetz

Inc. as Receiver, a copy of which is attached hereto as Schedule 1.1(3).

(4)	“ Approval and Vesting Order ” has the meaning set out in Section 5.3(1)(a).

(5)	“ Assets ” means the right, title and interest of the Debtor in and to all of (i) the personal

property of the Debtor as described in Schedule 1.1(5), (ii) the Contracts, (iii) subject to Section 7.11, the Books and Records, and (iv) the proprietary information agreements in favour of the Debtor entered into by former employees, agents and independent contractors of the Debtor but, notwithstanding the generality of the foregoing, excluding the Excluded Assets.

(6) “ Assumed Obligations ” has the meaning set out in Section 3.3.

(7) “ Books and Records ” means all of the books and records relating to the Assets, including sales and production documents, manufacturing, purchase, repair and warranty records, manuals, production and inventory records, bills of material, cost records, engineering information, customer invoices and purchase orders, supplier lists and customer and supplier information, advertising and promotional materials, software programs (to the extent of the Debtor’s interest therein), manuals and data, research and development records, documentation for product certifications and approvals, and other similar books, records, files and documents related to the Assets (whether in written, printed or electronic form) in the possession or control of the Vendor at Closing.

(8) “ Building Assets ” means any boilers, chillers, HVAC equipment, air handlers, filtration equipment, lighting, piping, ductwork, or power distribution equipment or wiring that is affixed to the building infrastructure of the Debtor’s Premises and any other fixtures, but excluding custom gas fittings located in the clean rooms and burn-in rooms, which fittings shall be Assets.

(9) “ Business ” means the business carried on currently and prior to the date of this Agreement by the Debtor primarily consisting of designing, manufacturing, selling, distributing, installing and servicing natural gas refueling systems for motor vehicles in residential and commercial markets.

(10) “ Business Day ” means a day on which banks are open for business in the City of Toronto but does not include a Saturday, Sunday or statutory holiday in the Province of Ontario.

(11)	“ Certifications ” means the certifications listed in Schedule 1.1(11).

(12)	“ Closing ” means the successful completion of the Transaction.

(13)	“ Closing Date ” means the date on which the Approval and Vesting Order is granted or

such later date as agreed to in writing by the parties, but not later than May 15, 2009.

(14)	“ Contracts ” means the customer purchase orders described in Schedule 1.1(14).

(15)	“ Court ” means the Ontario Superior Court of Justice (Commercial List).

(16)	“ Debtor ” means FuelMaker Corporation.

(17)	“ Debtor’s Premises ” means the leasehold premises occupied by the Debtor and having

the municipal address of 70 Worchester Road, Toronto, Ontario.

(18)	“ Deposit ” has the meaning set out in Section 3.5(1)(a).

(19)	“ Employees ” has the meaning set out in Section 6.1(1).

(20)	“ Excluded Assets ” means the assets described in Schedule 1.1(20).

(21)	“ ETA ” means the Excise Tax Act (Canada).

(22)	“ GAAP ” means generally accepted accounting principles in effect from time to time in

Canada, including those principles set forth in the Handbook of the Canadian Institute of Chartered Accountants or any successor institute, consistently applied.

(23)	“ Greenfield ” means Greenfield AG, a Swiss corporation.

(24)	“ Greenfield License Agreement ” means collectively that license agreement with an

effective date of August 5, 1989, entered into by the Debtor and Sulzer Brothers Limited, as amended by the amendment entered into by the Debtor and Sulzer Brothers Limited with an effective date of March 19, 1990; the amendment, styled as “Amendment #1”, entered into by the Debtor and Sulzer Burckhardt Engineering Works Limited with an effective date of April 7, 1994; the amendment, styled as “Amendment #2”, entered into by the Debtor and Sulzer Burckhardt Engineering Works Limited with an effective date of September 25, 1995; the Assignment of License Agreement entered into by the Debtor, Sulzer AG and Burckhardt Compression AG on December 23, 2002; the Assignment of License Agreement entered into by the Debtor and Greenfield dated February 13, 2003; the Assignment of License Agreement as Amended between the Debtor, HondaSub (as defined below) and Honda dated May 6, 2004; and the amendment, styled as “Amendment #3”, entered into by Greenfield, HondaSub and Honda dated March 18, 2008.

(25) “ Greenfield Sublicense Agreement ” means the Sublicense Agreement between HondaSub and the Debtor dated May 6, 2004 in respect of certain rights under the Greenfield License Agreement.

(26)	“ GST ” means all goods and services and harmonized sales taxes payable under the ETA.

(27)	“ HRA ” means the home refueling appliance developed or manufactured by the Debtor.

(28)	“ Honda ” means American Honda Motor Co., Inc., a corporation formed under the laws

of the State of California.

(29)	“ HondaSub ” means 2045951 Ontario Inc.

(30)	“ HondaSub APA ” means the asset purchase agreement dated as of April 30, 2009

between HondaSub, as vendor, Honda and the Purchaser for the sale of certain assets of HondaSub to the Purchaser.

(31) “ Intellectual Property ” means (i) Patents; and (ii) inventions, trade-marks, trade-mark applications and registrations, trade names, trade name registrations, brand names, business names, domain names, service marks, service mark registrations, designs, copyrights, copyright applications and registrations, industrial designs, industrial design applications and registrations, trade secrets, know-how, show-how, computer systems and software, including the content of all documentation relating thereto, related object and source codes therefore, and any other proprietary, intellectual property and other rights relating to any or all of the foregoing anywhere in the world.

(32) “ IP and Support Agreement ” means the IP and Support Agreement between HondaSub, Honda and the Debtor dated July 23, 2004 under which the Debtor transferred certain Intellectual Property to HondaSub in exchange for support.

(33) “ IP License Agreement ” means the license agreement between HondaSub, Honda and the Debtor dated July 23, 2004 under which HondaSub granted a non-exclusive license to the Debtor in respect of Intellectual Property acquired by HondaSub pursuant to the IP and Support Agreement.

(34)	“ Inventory ” has the meaning set out in Schedule 1.1(5).

(35)	“ Inventory Amount ” means CAD$3,488,088.96.

(36)	“ Notice ” has the meaning set out in Section 8.2.

(37)	“ Offer ” has the meaning set out in Recital A.

(38)	“ Patents ” means all patents (including design patents), patent applications (including

design patent applications), invention disclosures, certificates or models of utility, and other rights of invention, worldwide necessary to or used in the Intellectual Property, including any reissues, divisions, continuations and continuations-in-part, provisionals, reexamined patents or other applications or patents claiming the benefit of the filing date of any such application or patent.

(39) “ Purchase Price ” means the sum of $3,271,868.50 payable as set out in Section 3.5 and adjusted as set out in 0.

(40) “ Refueling Technology ” means natural gas compression and refueling equipment and appliances and related research and technology and know-how related to the design and manufacture of natural gas compression and refueling equipment and appliances, including the HRA and VRA.

(41)	“ Tax Act ” means the Income Tax Act (Canada).

(42)	“ Tax Refunds ” means any amounts owed to the Debtor in respect of taxes (at present or

in the future), including amounts arising as a result of the deemed overpayment of taxes and interest in respect thereof, and any claim or right of the Debtor to any present or future refund, rebate or credit in respect of taxes or other amounts payable pursuant to the Tax Act, the Canada Pension Plan, the Employment Insurance Act (Canada) or any other taxation statute.

(43) “ Time of Closing ” means 2:00 p.m. (Toronto time) on the Closing Date or such other time on the Closing Date as the parties may mutually agree.

(44) “ Transaction ” means the transaction of purchase and sale contemplated by this Agreement.

(45)	“ Transfer Taxes ” has the meaning specified in Section 3.9.

(46)	“ VRA ” means the vehicle refueling appliance developed or manufactured by the Debtor.

Section 1.2 Interpretation Not Affected by Headings, etc.

The division of this Agreement into sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. Unless otherwise indicated, all references to a “Section” followed by a number and/or a letter refer to the specified section of this Agreement. The terms “this Agreement”, “hereof”, “herein” and “hereunder” and similar expressions refer to this Agreement and not to any particular section hereof.

Section 1.3 Extended Meanings

Words importing the singular include the plural and vice versa, words importing gender include all genders and words importing persons include individuals, partnerships, associations, trusts, unincorporated organizations, corporations, limited liability companies and governmental authorities. The term “including” means “including, without limitation,” and such terms as “includes” have similar meanings.

Section 1.4 Schedules

The following Schedules are incorporated in and form part of this Agreement:

Schedule	1.1(3)	Appointment Order
Schedule	1.1(5)	Assets
Exhibit A to Schedule 1.1(5)		Inventory
Schedule	1.1(11)	Certifications
Schedule	1.1(14)	Contracts
Schedule	1.1(20)	Excluded Assets
Schedule	3.3(1)	Standard Warranty Forms
Schedule	3.8	Allocation of Purchase Price
Schedule	5.3(1)(a)	Approval and Vesting Order
Schedule	7.2(b)	Bill of Sale and Assignment
		ARTICLE 2 – OFFER

Section 2.1 Irrevocable Offer

The Purchaser hereby makes an irrevocable offer to McIntosh & Morawetz Inc., in its capacity as Receiver of the property and undertaking of the Debtor, with no personal or corporate liability, to purchase the Assets and to complete the Transaction contemplated hereby, subject to the terms and conditions hereof.

Section 2.2 Acceptance and Binding Effect

The Offer may be accepted by the Vendor at any time prior to May 6, 2009 by executing and delivering this Agreement to the Purchaser. The Purchaser acknowledges and agrees that McIntosh & Morawetz Inc. has no obligation to accept the Offer or any other offer made by the Purchaser, either before or after its appointment as Receiver, and neither the Vendor nor HondaSub will have any personal or corporate liability to the Purchaser in connection with the Offer made hereby.

ARTICLE 3– SALE AND PURCHASE

Section 3.1 Sale and Purchase of Assets

Subject to the terms and conditions hereof, the Vendor, exercising the powers of sale granted pursuant to the Appointment Order, shall sell to the Purchaser and the Purchaser shall purchase the Assets on the Closing Date.

Section 3.2 “As is, Where is”

The Purchaser acknowledges that the Vendor is selling the Assets on an “as is, where is” basis as they shall exist on the Closing Date. The Purchaser further acknowledges that it has entered into this Agreement on the basis that the Vendor does not guarantee title to the Assets and that the Purchaser has conducted such inspections of the condition of and title to the Assets as it deemed appropriate and has satisfied itself with regard to these matters. No representation, warranty or condition is expressed or can be implied as to title, encumbrances, description, fitness for purpose, merchantability, condition, quantity or quality or in respect of any other matter or thing whatsoever concerning the Assets or the right of the Vendor to sell same save and except as expressly represented or warranted herein. Without limiting the generality of the foregoing, any and all conditions, warranties or representations expressed or implied pursuant to the Sale of Goods Act (Ontario) or similar legislation (including the implied conditions and warranties of fitness for purpose and merchantability) do not apply hereto and have been waived by the Purchaser. The description of the Assets contained in the Schedules hereto is for the purpose of identification only. No representation, warranty or condition has or will be given by the Vendor concerning completeness or the accuracy of such descriptions.

Section 3.3 Assumed Obligations

(1) In connection with its acquisition of the Assets, the Purchaser shall assume the liabilities and obligations of the Debtor under (i) the Contracts (collectively, the “ Assumed Obligations ”), provided however, that if consent to assignment of any particular Contract is required and not obtained by the Purchaser, the Purchaser shall not be responsible for arrears under such Contract and (ii) product warranties related to products of the Debtor manufactured or sold on or before the Closing Date that remain under warranty, which warranties have terms and conditions no more onerous than those set out in the standard warranty forms attached hereto as Schedule 3.3(1).

(2) On Closing, the Purchaser shall enter into an assumption agreement with respect to the Assumed Obligations, in form and substance satisfactory to the Purchaser and the Vendor.

Section 3.4 Excluded Obligations

Other than the Assumed Obligations, the Purchaser shall not assume and shall not be liable for any other liabilities or obligations of the Debtor.

Section 3.5 Payment of the Purchase Price

(1) The Purchaser shall pay the Purchase Price as follows:

(a)	the sum of $300,000, the receipt of which the Vendor acknowledges, shall be paid by the Purchaser upon execution of this Agreement as a deposit (the “ Deposit ”) to be held by the Vendor in trust until the Time of Closing and credited toward the Purchase Price upon Closing; and

(b)	the balance of the Purchase Price after crediting the Deposit shall be satisfied by the payment of $2,296,960 in cash at the Time of Closing and the assumption of the Assumed Obligations.

(2) The Vendor agrees to cause the Deposit to be placed into an interest bearing account or certificate of deposit, with all interest earned or accrued thereon to be paid or credited to the Purchaser at the Time of Closing or on any valid termination of this Agreement or returned to the Purchaser if the Offer is not accepted on or before May 6, 2009, unless the Purchaser forfeits the Deposit as provided below in which event the interest shall be paid to the Vendor. Unless otherwise agreed, all amounts payable to the Vendor either by way of Deposit or at the Time of Closing shall be paid to the Vendor by wire transfer in immediately available funds to:

FIELD NAME		FORMAT FOR USD PAYMENT

DESTINATION BANK		JP MORGAN CHASE BK, NEW YORK
OR		SWIFT BIC CHASUS33
INTERMEDIARY BANK		FED ABA 021000021

BENEFICIARY’S BANK		ROYAL BANK OF CANADA, TORONTO
		200 BAY STREET, TORONTO
		ON M5J 2J5
		SWIFT BIC ROYCCAT2

BENEFICIARY		McIntosh & Morawetz Inc., Interim Receiver
		and Manager of FuelMaker Corporation – A/C
		# 00002 4085098

Section 3.6 Adjustment to Purchase Price

(1) The Purchase Price shall be increased or decreased, in the event that the gross book value of Inventory based on the results of a physical count of Inventory conducted immediately prior to Closing is: (a) greater than 110% of the Inventory Amount, or (b) less than 90% of the Inventory Amount. In the case of clause (a), the Purchase Price shall be increased dollar-for-dollar by the difference between the gross book value of Inventory based on the results of such count and the Inventory Amount. In the case of clause (b), the Purchase Price shall be decreased dollar-for-dollar by the difference between the Inventory Amount and the

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