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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 18, 1997
(Date of Earliest Event Reported)
ADVANCED OXYGEN TECHNOLOGIES, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 000-09951 91-1143622
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
C/O Crossfield Incorporated
230 Park Avenue, Suite 1000
New York, NY 10169
(Address of Principal Executive Offices)
Registrant's Telephone Number: (212) 808-3061
C/O EdelsonTechnology Partners
300 Trice Boulevard
Woodcliff Lake, NJ 07675
(Former Address)
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ITEM 1: CHANGES IN CONTROL OF REGISTRANT
Pursuant to a Stock Acquisition Agreement dated as of December 18, 1997
(Exhibit A), Advanced Oxygen Technologies, Inc. ("AOXY") has issued 23,750,000
shares of its common stock , par value $.01, at a price of $0.01 per share for
$60,000 cash plus consulting services rendered valued at $177,500, to Crossland,
Ltd. ("Crossland"), Eastern Star, Ltd. ("Eastern"), Coastal Oil, Ltd.
("Coastal") and Crossland, Ltd. (Belize) ("CLB"). Crossland and Eastern are
Bahamas corporations. Coastal and CLB are Belize corporations.
Pursuant to a Purchase Agreement dated as of December 18, 1997 (Exhibit B),
CLB, Triton International, Ltd. ("Triton"), a Bahamas corporation, and Robert E.
Wolfe purchased an aggregate of 800,000 shares of AOXY's common stock from
Edelson Technology Partners II, L.P. ("ETPII") for $10,000 cash. AOXY will issue
450,000 shares of its capital stock to ETPII in exchange for consulting services
to be rendered. The general partner of ETPII is Harry Edelson, Chairman of the
Board and Chief Executive Officer of AOXY prior to the transactions resulting in
the change of control (the "Transactions"). Prior to the Transactions Mr.
Edelson directly or indirectly owned approximately 25% of the issued and
outstanding common stock of AOXY, and following the completion of Mr. Edelson's
consultancy he will own approximately 1.5%.
Pursuant to a Waiver Agreement dated as of December 18, 1997 (Exhibit C),
Emile Battat, Richard Jacobson, each a director of AOXY prior to the
Transactions, Sharon Castle, a former officer of AOXY, and EPTII released AOXY
from any liability for repayment of an aggregate of $275,000 of loans plus all
interest due thereon previously made by them to AOXY in consideration of an
aggregate amount of $60,000 cash paid to them pro rata in proportion to their
individual loans outstanding by CLB, Triton and Robert E. Wolfe.
The source of funds for the Transactions was working capital and personal
funds. To the knowledge of the registrant, no arrangements exist which might
subsequently result in a change in control of the registrant.
All of the directors and officers of AOXY resigned in connection with the
Transactions. Robert E. Wolfe and Joseph N. Noll were elected as directors and
Mr. Wolfe was appointed president.
Stock of AOXY purchased in the Transactions is owned as follows:
# of Shares % of Company
Robert E. Wolfe 50,000 0.17 %
Triton-International, Ltd. 375,000 1.26%
Crossland, Ltd. (Belize) 6,312,500 21.30%
Crossland, Ltd. 5,937,500 20.03%
Coastal Oil, Ltd. 5,937,500 20.03%
Eastern Star, Ltd. 5,937,500 20.03%
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Total 24,550,000 82.83%
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ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS.
On December 18, 1997, pursuant to a Trust Agreement dated as of November 7,
1997 and an Assignment and Assumption Agreement dated as of November 8, 1997,
(together, Exhibit D) certain royalty rights and liabilities related to
technology AOXY sold to a third party in 1995 were transferred to a trust for
the benefit of the AOXY shareholders. No royalties had been paid or become due
with respect to the rights transferred to the Trust, and no value was assigned
to such rights on the books of AOXY.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION & EXHIBITS.
(c) Exhibits
Exhibit A Stock Acquisition Agreement
Exhibit B Purchase Agreement
Exhibit C Waiver Agreement
Exhibit D Trust Agreement, Assignment and Assumption Agreement
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
The 23,750,000 shares of AOXY common stock sold by AOXY as of December 18,
1997 to Crossland, Eastern, Coastal and CLB pursuant to the Stock Acquisition
Agreement (the "Regulation S Shares") have not been registered under the
Securities Act of 1933, as amended, in reliance on the exemption from
registration provided by Rule 903(c)(2) of Regulation S. Consideration for the
Regulations S Shares consisted of $60,000 cash and consulting services rendered
valued at $177,500.
Each of the purchasers of the Regulation S Shares (a "Buyer") has
represented to AOXY that (i) it is not a "U.S. Person" as that term is defined
in Rule 902(o) of Regulation S; (ii) the sale of the Regulation S Shares was
taking place outside the United States; (iii) no offer was made in the United
States; (iv) it was purchasing the Regulation S Shares for its own account and
not as a nominee or for the account of any other person or entity; (v) it had no
intention to sell or distribute the shares except in accordance with Regulation
S; and (vi) it agreed that it would not transfer Regulation S Shares to a U.S.
Person before the 41st day from the date the Buyer purchased the Regulation S
Shares.
AOXY represented to the Buyers that it had not conducted any "directed
selling efforts" as defined in Regulation S, and that it had filed all reports
required to be filed under the Securities Exchange Act of 1934 during the
preceding twelve months.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: January 16, 1998. ADVANCED OXYGEN TECHNOLOGIES, INC.
BY:/s/ Robert E. Wolfe
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Robert E. Wolfe
President
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Exhibit A
Execution (iii)
STOCK ACQUISITION AGREEMENT
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THIS AGREEMENT made as of the 18 day of December, 1997, (herein,
together with the Schedules attached hereto, referred to as "Agreement") by and
among ADVANCED OXYGEN TECHNOLOGIES, INC., a Delaware corporation, (herein
referred to as "AOXY") and Crossland, Ltd. (Belize), a registered company of
Belize, Eastern Star, Ltd., a Bahamas corporation, Costal Oil, Ltd., a
registered company of Belize, and Crossland Ltd., a Bahamas corporation (each
herein referred to as a "Purchaser" and, collectively, the "Purchasers").
In reliance upon the representations and warranties made herein and in
consideration of the mutual agreements herein contained the parties hereby agree
as follows:
SECTION 1. SALE AND PURCHASE OF STOCK.
1.01 Sale of Stock to Purchasers. (a) AOXY shall at the closing of the
transactions hereinafter provided sell, transfer, assign and deliver to
Purchasers an aggregate of 6,000,000 shares (the "Sale Shares") of the capital
stock of AOXY in the amounts set forth on Schedule 1.01 hereto.
(b) AOXY shall at the closing of the transactions hereinafter
provided sell, transfer, assign and deliver to Purchasers an aggregate of
17,750,000 shares (the "Consulting Shares") of the capital stock of AOXY in the
amounts set forth on Schedule 1.01 hereto. The Sale Shares and the Consulting
Shares are hereinafter referred to collectively as the "Shares."
1.02 Consideration for Stock. (a) In consideration of the sale of the
Sale Shares, Purchasers shall pay to AOXY the aggregate amount of US $60,000.00
(the "Purchase Price") by delivery to Kieffer and Hahn, as attorneys for AOXY,
the Purchase Price in the form of an official bank check or a certified check of
the Purchasers payable to "Kieffer and Hahn, IOLA account which funds shall be
used to pay certain creditors of AOXY.
(b) In consideration of the sale of the Consulting Shares,
Purchasers have previously provided services to AOXY by identifying potential
acquisition candidates.
1.03 Transactions on the Closing Date. (a) Delivery of Shares. At the
Closing, AOXY will deliver to Purchasers irrevocable instructions to the
transfer agent of AOXY for the issuance of stock certificates representing the
Shares; and
(b) Delivery of Consideration. At the Closing, Purchasers will
deliver to AOXY an official bank check or a certified check of the Purchasers in
the amount of the Purchase Price payable to "Kieffer and Hahn, IOLA account."
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(c) Resignations. Resignations of all of the directors and officers of
AOXY other than those designated in writing by Purchasers prior to the Closing
Date to remain on the board or in office; and
(d) Documents. Each of the documents contemplated by this Agreement.
SECTION 2. CLOSING. The Closing will take place at the offices of Kieffer
and Hahn, 111 Broadway, New York, New York 10006, at 10:00 A.M. on the date of
execution and delivery hereof by all of the parties.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF AOXY. AOXY represents and
warrants the following to the Purchasers:
(a) Organization and Standing. (1) AOXY is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, the State of its incorporation, and is authorized to conduct business
in and is in good standing in each jurisdiction in which the character of the
properties owned by it or the nature of the business transacted by it makes such
license or qualification necessary.
(2) The certified copies heretofore delivered to AOXY, of the
certificate of incorporation, of all licenses to transact business and of the
by-laws of AOXY with all amendments to the date hereof are true, complete and
correct.
(3) AOXY has no subsidiaries.
(b) Capital Stock. (1) The capital stock of AOXY consists of (A) thirty
million (30,000,000) shares of common stock, par value one cent (US $0.01) per
share of which five million six hundred ninety-six thousand two hundred
fifty-two (5,696,252) shares have been validly issued and are fully paid and are
non-assessable and are fully transferable, three hundred fifty four thousand
(354,000) shares which shall be issued upon conversion of 177,000 shares of
preferred stock (172,000 shares of preferred stock shall be converted into
344,000 shares on the date of Closing) and one hundred forty five thousand
(145,000) shares of which shall be issued upon exercise of options and (B) ten
million (10,000,000) shares of preferred stock par value one cent (US $.Ol) per
share of which 177,000 (172,000 shares of preferred stock shall be converted
into 344,000 shares on the date of Closing) shares have been validly issued and
are fully paid and are non- assessable and are fully transferable.
(2) None of the issued and outstanding shares is subject to any
voting trust agreement or other agreement relating to the voting thereof.
(3) None of the authorized but unissued shares of AOXY are subject
to any warrants, obligations, subscriptions, options, convertible securities or
other commitments under
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which they are or may be required to be issued.
(4) No transfer tax will be payable with respect to the issuance
of AOXY's stock contemplated hereby.
(c) Stock Issuance. The Shares when issued shall be free and clear of
any encumbrances, liens or restrictions on sale, other than those applicable to
restricted securities as defined under the rules and regulations promulgated by
the Securities and Exchange Commission.
(d) Validity of Agreement Authority. This Agreement has been duly
executed and delivered by AOXY and (assuming valid execution and delivery by
each Purchaser) is a valid and binding obligation, enforceable in accordance
with its terms.
(e) Authority to take Action. (1) The execution and delivery of this
Agreement and delivery of the subject shares and the carrying out of the
provisions hereof will not contravene any provisions of law, any order, judgment
and/or decree of any court or other governmental agency or AOXY's certificate of
incorporation, by-laws, or any indenture, agreement or other instrument to which
a AOXY is a party or by which AOXY may be bound, or by which any property owned
by AOXY may be bound.
(2) All legal actions required to be taken in connection with this
Agreement pursuant to the laws of any State or other governmental authority have
been so taken.
(f) Accounts Receivable. AOXY has no accounts receivable.
(g) Liabilities of AOXY. AOXY has no liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities due or to become due, except for (1) approximately
$45,000 of accounts payable, (2) the fees and expenses of counsel in connection
herewith and (3) amounts due and payable to certain of its directors as
evidenced by Promissory Notes issued to such persons and the accrued interest
earned thereon which do not exceed $350,000 in the aggregate which are to be
spun-off to the liquidating trust as set forth in section .
(h) No Dividends or Distributions. Since June 30, 1995, AOXY has not
declared, set aside or paid to its stockholder any dividend or other
distribution in respect of its capital stock or redeemed or purchased or
otherwise acquired any of its capital stock or agreed to take any such action.
(i) Absence of Material Changes or Events. Except for matters publicly
disclosed on (1) AOXY's Proxy Statement in connection with the sale of its
oxygen control technology to W.R. Grace ("Grace") in February 1995; (2) AOXY's
Reports on Form 10-KSB with respect to AOXY's fiscal years ended June 30, 1993,
1994 and 1995 and (3) AOXY's Reports on form 10-Q for the quarters ending
September 30, 1995 and December 31, 1995 and AOXY's 8-K's filed prior
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hereto copies of which have been heretofore delivered to Purchasers, since June
30, 1995 there has been no event or condition of any character, materially and
adversely affecting AOXY's financial position, assets, liabilities (contingent
or otherwise), results of operation, business or business prospects, and AOXY
has not:
(1) Incurred any obligation or liability (absolute, accrued,
contingent, or otherwise) except in the ordinary course of business or except in
connection with the performance of this Agreement;
(2) Mortgaged, pledged or subjected to lien, charge or other
encumbrance, any of its assets, tangible or intangible;
(3) Sold or transferred any of its assets or canceled any debts or
claims, or waived any right of substantial value;
(4) Made or committed to make any single capital expenditure in
excess of five hundred dollars ($500.00), or capital expenditures in excess of
one thousand dollars ($ 1,000.00) in the aggregate or purchased or contracted to
purchase any land;
(5) Sustained any damage, destruction or loss of its property in
excess of five hundred dollars ($500.00) whether or not covered by insurance;
(6) Increased the compensation payable or to become payable by
AOXY to any of its officers, employees or agents, or any bonus payment or
arrangement made to or with any of them;
(7) Agreed to modify in any material respect any contract or other
instrument to which AOXY is a party except for the patent purchase agreement
with Grace;
(8) Increased or changed the medical insurance provided for the
benefit of its employees and their families.
(9) Increased or changed the amount of disability insurance
provided for the benefit of its employees;
(10) Entered into any transaction other than in the ordinary
course of business; or
(11) Made any material change in any method of accounting or any
accounting practice.
(j) Title of Property. AOXY has no material assets.
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(k) Building-Equipment and Motor Vehicles. AOXY is the owner of no
buildings, equipment or motor vehicles.
(1) Tax Status. ( 1 ) AOXY has heretofore furnished to Purchasers true
and complete copies of all federal, state, local and foreign income tax returns
of AOXY filed for the three (3) years ended June 30, 1995. Said tax returns of
AOXY have not been audited by the applicable taxing authorities. No agreements
made by AOXY for an extension of time for the assessment of any tax are now in
effect. All taxes, including interest and penalties thereon, shown on said tax
returns to be due and payable by AOXY, or required to be withheld by AOXY on or
before the date hereof, have been paid or fully reserved for and withheld and no
formal written claim for any tax, assessment or levy for which AOXY may become
liable exists which has not been settled.
(2) All other taxes, due and payable at the Closing Date, of any
kind whatsoever, including, but not limited to, estimated income tax, franchise
tax, excise tax, doing business tax, payroll tax, personal property tax, use tax
and sales tax have been paid or fully reserved for and withheld.
(m) Status of Contracts. Except as reflected on Schedule 3(m). AOXY is
not a party to any written or oral (i) contract for the employment of any
officer or individual employee, or any pension, profit sharing, bonus,
retirement, stock option or similar incentive or deferred compensation plan or
arrangement in effect with its officers, employees or others; (ii) continuing
contract for the acquisition of real estate or fixed assets; (iii) financing
arrangement involving the mortgaging, pledging or other hypothecation of assets
or involving borrowing which may not be repaid in part or in full on not more
than thirty (30) days' notice with reference to unearned or amortized discount
and without premium or penalty; (iv) contract with any labor union; (v)
continuing contract for the future purchase of materials or supplies; (vi)
contract with any agent, representative or distributor; (vii) any instrument
evidencing or related to indebtedness for borrowed money, or pursuant to which
AOXY is obligated to borrow money; (viii) any contract, arrangement or
understanding under which AOXY has assumed, guaranteed, endorsed, or otherwise
become liable in connection with the obligation of any individual, partnership,
corporation or other entity; (ix) any contract not included in any of the
foregoing which involves payment by AOXY of more than five hundred dollars
($500.00). True and complete copies of all items listed in Schedule 3( , have
been delivered to AOXY. The parties to such instruments have complied with all
the provisions thereof, and they are not in default under any of them.
(n) Status of Leases. AOXY is not a party to any leases except for the
month to month lease of document storage space at Pacific Mini Storage, 1913
Sherman Street, Alameda, California.
(o) Directors and Officers Compensation: Banks. Schedule 3l0) hereto
contains a true an complete list showing (i) the names of all directors and
officers of AOXY; (ii) the names of all persons whose compensation from AOXY for
the period beginning July 1, 1995 and ending March 31, 1996 will equal or exceed
ten thousand dollars ($ 10,000.00) together with a statement of
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the full amount paid or payable to each such person for services rendered or to
be rendered in such period and the basis therefor; (iii) the name of each bank
in which AOXY has an account, or safe deposit box, and the names of all persons
authorized to draw thereon, or to have access thereto; (iv) the names of all
persons holding powers of attorney from AOXY, and a summary statement of the
terms thereof; and (v) all credit cards and similar accounts on which AOXY may
be liable.
(p) Status of Insurance. AOXY has no insurance.
(q) Permits and Licenses. AOXY is not required to have permits,
licenses, approvals, and authorization of all federal, state, local and foreign
authorities and is presently not conducting any business.
(r) Litigation. There is no action, suit, proceeding or investigation
pending, or to the knowledge of AOXY threatened, against or affecting AOXY
before any court, arbitrator or administrative or governmental body and AOXY is
not presently subject to or in default in respect of any order, injunction or
decree of any court or government instrumentality.
(s) Compliance with Laws. Except as reflected on Schedule 3(s), AOXY is
not in violation of any law, regulation or ordinance which violation would
materially and adversely affect it or its operations.
(t) Books of Accounts and Other Records. The books of account, and the
minute books, stock certificate books and ledgers of AOXY at the Closing Date
will, in all material respects, be correct and complete and such books of
account and ledgers will fairly present the operations of AOXY in accordance
with generally accepted accounting principles.
(u) Employee Benefit Plans. AOXY is not party to any bonus, incentive
compensation, profit-sharing, pension, retirement, stock purchase, stock option,
deferred compensation, hospitalization, group insurance, death benefit,
disability, collective bargaining and other fringe benefit plans, trust
agreements, arrangements or commitments.
(v) No Directed Selling Efforts in Regard to this Transaction. Neither
AOXY nor any distributor, if any, participating in the offering of the Shares
nor any person acting for AOXY or any such distributor has conducted any
"directed selling efforts" as that term is defined in Regulation S under the
Securities Act of 1933 ("Regulation S"). Such activity includes, without
limitation, the mailing of printed material to investors residing in the United
States, the holding of promotional seminars in the United States, the placement
of advertisements with radio or television stations broadcasting in the United
States or in publications with a general circulation in the United States, which
discuss the offering of the Shares.
(w) No Market Manipulation. AOXY has not taken, and will not take,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
the its stock to facilitate the sale or resale of the Shares
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or affect the price at which the Shares are purchasable.
(x) Reporting Company. AOXY is a publicly-held company whose common
stock is (and has been for the past 90 days) registered pursuant to Section
12(g) of the Securities Exchange Act of 1934 (the "1934 Act"). Pursuant to the
provisions of the 1934 Act, AOXY has filed all reports and other materials
required to be filed thereunder with the Securities and Exchange Commission
during the preceding twelve months, except as otherwise disclosed herein and in
the Schedules annexed hereto and made a part hereof.
(y) Offer to Buy. No offer to buy the Shares was made to AOXY by any
person in the United States.
(z) Pre Arranged Transaction. The transactions contemplated by this
Agreement:
(1) have not been pre-arranged with a purchaser who is in the
United States or is a US Person; and
(2) are not part of a plan or scheme to evade the registration
provisions of the Securities Act of 1933 (the "1933 Act").
(aa) Stop Transfer. AOXY has not issued, and provided nothing comes to
AOXY's attention after the closing date that will cause it to believe in good
faith that the issuance of the Shares was in contravention with any United
States law, will not issue, any stop transfer order or other order impeding the
sale and delivery of the Shares, or any underlying shares except for a stop
order restricting the sale of the Shares into the United States or to, or for
the account or benefit of, US Persons during the Restricted Period, as
hereinafter defined.
SECTION 4. "REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Each Purchaser, as
and for itself, severally and not jointly, represents and warrants to AOXY the
following:
(a) Organizing and Standing. (I) Each Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the place of
its incorporation.
(2) The copy heretofore delivered to AOXY, of the certificate of
incorporation with all amendments to the date hereof are true, complete and
correct.
(3) Each Purchaser has no subsidiaries, except for those listed on
Schedule 4(a) hereto each of which is duly organized, validly existing, and in
good standing under the laws of the place of its incorporation or organization.
(b) Validity of Agreement Authority. This Agreement has been duly
executed and delivered by the Purchasers and (assuming valid execution and
delivery by the AOXY) is a valid and binding obligation enforceable in
accordance with its terms.
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(c) Authority to take Action. (1) The execution and delivery of this
Agreement and delivery of the subject shares and the carrying out of the
provisions hereof will not contravene any provisions of law, any order, judgment
and/or decree of any court or other governmental agency or each Purchaser's
certificate of incorporation or charter, by-laws or any indenture, agreement or
other instrument to which such Purchaser is a party or by which it may be bound,
or by which any property owned by it may be bound.
(2) All corporate and legal actions required to be taken in
connection with this Agreement pursuant to the laws of any State or other
governmental authority have been so taken.
(d) Compliance with Laws. No Purchaser has received notice of any
violation of any law, regulation or ordinance which violation would materially
and adversely affect it or its operations.
(e) Consents. No Purchaser requires consent, approval, registration,
qualification or filing with any United States federal, state or local
government authority or any foreign government authority in connection with such
Purchaser's execution of this Agreement or consummation of the transactions
contemplated hereby, other than the required filings with the United States
Securities and Exchange Commission.
(f) Information on Company. The Purchasers have been furnished with and
have read AOXY's registration statement on Form S-1 declared effective by the
Securities and Exchange Commission on July 7, 1993, and all of its Forms 10-Q
and 8-K reports filed subsequent thereto, (collectively, with exhibits thereto,
hereinafter referred to as the "Reports"). In addition, the Purchasers have
received from AOXY such other information concerning its operations, financial
condition and other matters as the Purchasers have requested, and considered all
factors the Purchasers deem material in deciding on the advisability of
investing in the Shares (such information in writing is collectively, the "Other
Written Information").
(g) Information on Purchasers. Each Purchaser is experienced in
investments and business matters, has made investments of a speculative nature
and with its representatives, has such knowledge and experience in financial,
tax and other business matters as to enable such Purchaser to utilize the
information made available by AOXY to evaluate the merits and risks of and to
make an informed investment decision with respect to the proposed purchase. Each
Purchaser has the authority and is duly and legally qualified to purchase and
own the Shares.
(h) Site and Condition of Sale. Each Purchaser is not a US Person (as
that term is defined in Exhibit A attached hereto). Each Purchaser acknowledges
that AOXY has not solicited this offer to purchase the Shares within the United
States and that the sale of the Note and conversion into the Shares will not
take place within the United States (for this purpose, the "United States" means
the Unites States of America, its territories and possessions, and any state of
the United States and the District of Columbia). Each Purchaser also
acknowledges that the Shares have not been registered under the laws of any
other country or jurisdiction and that AOXY takes no responsibility
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for complying with any such laws.
(i) Investment Intent. Each Purchaser is subscribing for the Shares for
its own account and benefit and not as a nominee or for the account of any other
person or entity. Each Purchaser has no present intention of selling or
distributing the Shares or any part thereof except for a sale in accordance with
Regulation S, if available. Each Purchaser has sufficient financial resources to
hold the Shares for an indefinite period of time.
(j) No Market Manipulation Short Sales. Each Purchaser has not taken,
and will not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in a manipulation of the price of
AOXY Shares (including making, or causing to be made, any short sales of AOXY's
common stock) in order to facilitate the sale or resale of AOXY Shares or affect
the price at which such shares are purchasable upon conversion of the Note.
(k) No Offer in United States. No offer to buy the Shares was made to
AOXY by any Purchaser in the United States.
(1) No Pre-Arranged Transaction. The transactions contemplated by this
Agreement with respect to the sale of the Shares to the Purchasers:
(1) have not been pre-arranged with a purchaser who is in the
United States or is a US Person; and
(2) are not part of a plan or scheme to evade the registration
provisions of the Securities and Exchange Act of I933 (the "Act").
(m) No Directed Selling Efforts in Regard to this Transaction. To the
best knowledge of each Purchaser with respect to the sale of the Shares to such
Purchaser, neither AOXY nor any distributor, if any, participating in the
offering of the Shares nor any person acting for AOXY or any such distributor
has conducted any "directed selling efforts" as that term is defined in
Regulation S. Such activity includes, without limitation, the mailing of printed
material to investors residing in the United States, the holding of promotional
seminars in the United States, the placement of advertisements with radio or
television stations broadcasting in the United States or in publications with a
general circulation in the United States, which discuss the offering of the
Shares.
(n) To Other Representations. Except as set forth in this Agreement, no
representations or warranties, oral or otherwise, have been made to Purchasers,
including without limitation, any representations concerning the future
prospects of AOXY, by AOXY, by any agent of AOXY, any employees or affiliates of
AOXY or by any other person whether or not associated with this transaction and
in entering into this transaction Purchasers are not relying upon any
information.
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SECTION 5. REGULATION S OFFERING. The sale of Shares hereby is being made
pursuant to Rule 903(c)(2) of the Regulation S, and is intended to comply with
the provisions of Regulation S. The Shares have not been and will not be
registered under the 1933 Act or under the securities laws of any state or
jurisdiction of the United States ("State Laws").
SECTION 6. Transfer of Securities. The Shares may not be transferred or
resold to any US Person until the 41st day from the date a Purchaser purchases
the Shares (the "Restricted Period") and then only in accordance with the 1933
Act and applicable, State Laws. Each Purchaser agrees that it is solely
responsible for compliance therewith with respect to any such transfer or
resale.
SECTION 7. CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATION TO COMPLETE THE
TRANSACTION. The obligation of each Purchaser to consummate the transactions
described in Section 1 hereof is subject to the fulfillment of each of the
following conditions prior to or at the Closing:
(a) Delivery of Shares. Purchasers shall have received delivery of the
Shares as contemplated herein.
(b) Spin-off AOXY shall have spun-off good and marketable title to its
rights to royalties from W. R. Grace (its only material asset) and certain
liabilities including only amounts due to former employees as a result of the
receipt of the royalties and notes payable to certain directors in the aggregate
principal amount of $275,000 plus the interest earned thereon.
(c) Other Creditors. AOXY shall have achieved settlement in an amount
and on terms reasonably satisfactory to Purchasers of all of the liabilities of
AOXY, including, without limitation, all accounts payable, if any, and other
accrued expenses, if any.
(d) Resignation of Directors and Officers. Upon appointment of
directors chosen by Purchasers to fill the existing vacancies on the board of
directors of AOXY, all directors and officers not so chosen by Purchasers shall
have tendered to AOXY their resignations as directors and/or officers of AOXY.
(e) Conversion of Preferred Stock. All of the issued and outstanding
preferred stock of AOXY shall have been converted to common stock of AOXY except
for 5,000 shares.
(f)Representations and Warranties of AOXY. The representations and
warranties made by AOXY herein shall be true and correct in all material
respects.
(g) No Actions or Proceeding. No action or proceeding shall be pending
or threatened on the Closing Date wherein an unfavorable judgment, decree or
order would prevent or make unlawful the carrying out of this Agreement or would
cause the transaction contemplated by this Agreement to be rescinded or would
require a Purchaser to divest itself of the shares to be acquired.
10
<PAGE>
It is understood that the certificates evidencing the Shares sold
pursuant hereto may bear legends in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN OFFERED
AND SOLD IN AN "OFFSHORE TRANSACTION" IN RELIANCE UPON
REGULATION S AS PROMULGATED BY THE SECURITIES AND EXCHANGE
COMMISSION. ACCORDINGLY, THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED
FOR SALE, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES
OR TO A "US PERSON" (AS DEFINED UNDER REGULATION S) EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
SECTION 8. CONDITIONS PRECEDENT TO AOXY'S OBLIGATIONS TO COMPLETE THE
TRANSACTION. The obligation of AOXY to consummate the transactions described m
Section 1 hereof is subject to the fulfillment of each of the following
conditions prior to or at the Closing:
(a) Purchase Price. AOXY shall have received the Purchase Price as
contemplated herein.
(b) Spin-off AOXY shall have spun-off good and marketable title to its
rights to royalties from W. R. Grace (its only material asset) and certain
liabilities including only amounts due to former employees as a result of the
receipt of the royalties and notes payable to certain directors in the aggregate
principal amount of $275,000 plus the interest earned thereon.
(c) Management Services Agreement. Within 30 days of the date hereof,
Purchasers, or their duly appointed agent, shall enter into a management
services agreement for a period of one year on terms and conditions acceptable
to AOXY.
(d) presentations and Warranties of Purchasers. The representations and
warranties made by the Purchasers herein shall be true and correct in all
material respects.
(e) No actions or proceedings. No action or proceeding shall be pending
or threatened on the Closing Date wherein an unfavorable judgment, decree or
order would prevent or make unlawful the carrying out of this Agreement or would
cause the transaction contemplated by this Agreement to be rescinded.
SECTION 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
11
<PAGE>
representations and warranties contained herein or made in writing by the
parties in connection with the transactions contemplated hereby shall survive
the execution and delivery of this Agreement and the closing of the transactions
contemplated by this Agreement, regardless of any investigation made by or on
behalf of the parties or any payment for and acceptance of stock hereunder. All
statements contained in any certificate, list, letter or other instrument
delivered by or on behalf of the parties pursuant hereto or in connection with
the transactions contemplated hereby (including statements, letters or
certificates of independent parties such as public accountants or attorneys)
shall constitute representations and warranties by the parties hereunder.
SECTION 10. Indemnification. (a) Of AOXY. Each Purchaser agrees to defend,
indemnify and hold harmless AOXY, its current officers, directors and
stockholders against and in respect of (i) any and all losses, liabilities,
damages, deficiencies, costs or expenses (including, without limitation
reasonable attorneys fees and disbursements) resulting from (A) the breach of
any covenant, warranty or agreement hereunder by such Purchaser or (B) any
representations made by such Purchaser in this Agreement, not being complete and
correct or being false and misleading or containing any material misstatement of
fact or omitting any material fact required to be stated to make the statements
therein not misleading; and (ii) any and all actions, suits, proceeding, claims,
demands, assessments, judgments, costs and expenses (including, without
limitation, reasonable attorneys fees and disbursements) incident to any of the
foregoing; provided, however, that if any such action, suit or proceeding shall
be asserted against AOXY, its current officers, directors and stockholders in
respect of which AOXY, its current officers, directors and/or stockholders
propose to demand indemnification, the Purchaser or Purchasers from whom
indemnification is demanded, shall be promptly notified to that effect and shall
have the right to assume the control of the defense, compromise or settlement
thereof, including, at its or their own expense, employment of counsel
reasonably acceptable to the person against whom such indemnification is sought.
(b) Of Purchasers. AOXY agrees to defend, indemnify and hold harmless
each Purchaser, its officers, directors and stockholders, against and in respect
of (i) any and all losses, liabilities, damages, deficiencies, costs or expenses
(including, without limitation reasonable attorneys fees and disbursements)
resulting from (A) the breach of any covenant, warranty or agreement hereunder
by AOXY or (B) any representations made by AOXY in this Agreement, not being
complete and correct or being false and misleading or containing any material
misstatement of fact or omitting any material fact required to be stated to make
the statements therein not misleading; and (ii) any and all actions, suits,
proceeding, claims, demands, assessments, judgments, costs and expenses
(including, without limitation, reasonable attorneys fees and disbursements)
incident to any of the foregoing; provided, however, that if any such action,
suit or proceeding shall be asserted against a Purchaser in respect of which
such Purchaser, its officers, directors and/or stockholders, proposes to demand
indemnification, AOXY shall be promptly notified to that effect and AOXY shall
have the right to assume the control of the defense, compromise or settlement
thereof, including, at their own expense, employment of counsel reasonably
acceptable to such Purchaser.
(c) Payment. Any indemnification payments required pursuant to Section
10(a) and
12
<PAGE>
10(b) hereof shall be paid in FULL within ten (10) days after receipt of notice
specifying (i) the amount required to be paid and (ii) the nature of the event
or events giving rise to indemnification hereunder.
(d) Liability. The liability of the parties under this Section 10 shall
be without limitation, and the failure of either of them to withhold amounts
from any payments shall not act as a waiver of or diminish the obligations of
parties under this Section 10.
(e) Interest. Any and all amounts which may become due and payable
pursuant to this Section 10 shall bear interest from the date when due to the
date of payment at a percentage rate of twelve (12%) percent per annum.
SECTION 11. COMMISSIONS FEES AND EXPENSES. Purchasers and AOXY each
represent and warrant to the other that the negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Purchasers and AOXY directly and in such manner as not to give rise to any valid
claim against either for a brokerage commission, finder's fee or other like
payment except that AOXY is negotiating with Stephen Golub to compensate him as
a finder. AOXY is responsible for and shall pay at closing the fees of Kieffer
and Hahn, its counsel, in connection with the preparation an negotiation of the
documentation in connection herewith and in connection with the closing of this
transaction.
SECTION 12. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of Delaware (other than its
law with respect to conflicts of laws), including all matters of construction,
validity and performance.
SECTION 13. NOTICES. All notices, requests, permissions, waivers, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective persons giving them (in the case of any
corporation the signature shall be by an officer thereof and delivered by hand,
sent via facsimile transmission, nationally-recognized overnight courier service
or deposited in the United States mail (registered, return receipt requested),
properly addressed and postage prepaid to the intended recipient thereof to the
address for such person on the signature page(s) hereof. All such notices,
requests, consents and other communications shall be deemed to have been
delivered (a) in the case of personal delivery or delivery by telescope, on the
date of such delivery, (b) in the case of dispatch by nationally- recognized
overnight courier, on the next business day following such dispatch and (c) in
the case of mailing, on the third business day after the posting thereof Such
names and addresses may be changed by such notice.
SECTION 14. ENTIRE AGREEMENT; AMENDMENTS; HEADINGS; COUNTERPARTS . This
Agreement, including the Schedules hereto, all of which are a part hereof,
contains the entire understanding of the parties hereto with respect to the
subject matter contained herein and therein, supersedes and cancels all prior
agreements with respect hereto or thereto and may be amended only by a written
instruments executed by the parties or their respective successors or assigns.
There are no restrictions, promises, representations, warranties, agreements or
undertakings of any party hereto
13
<PAGE>
with respect to the transactions under this Agreement other than those set forth
herein or made hereunder in the documents delivered at each Closing. The section
and paragraph headings contained in this Agreement and the description of
exhibits attached hereto are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. This Agreement may be
executed in one or more counterparts and each counterpart shall be deemed to be
an original.
SECTION 15. PARTIES IN INTEREST. Except with the express written consent of
the other parties hereto, this Agreement shall not be assignable or otherwise
transferred in whole or in part. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective successors. Nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies under or by reason of this Agreement.
SECTION 16. SEVERABILITY. The invalidity of any portion hereof shall not
affect the validity, force or effect of the remaining portions hereof.
SECTION 17. FURTHER ASSURANCES. AOXY and Purchasers shall execute and
deliver or cause to be executed and delivered such additional instruments, and
take such other actions as the other party may reasonably request in writing in
order to effectuate the purposes of this Agreement.
[Remainder of Page Intentionally Blank]
14
<PAGE>
[Counterpart Signature Page to Purchase Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
---------------------------------------------
[print name]
ATTEST: By:
------------------------------------------
Name:
- ----------------------------- Title:
Secretary
Address for Notices:
---------------------------------------------
---------------------------------------------
---------------------------------------------
ADVANCED OXYGEN TECHNOLOGIES, INC.
By: /s/ Harry Edelson
------------------------------------------
Name: Harry Edelson
Title: Chairman
Address for Notices
c/o ETP
300 Tice Boulevard, Woodcliffe Lake, NJ
Telecopier: (201) 930-8899
15
<PAGE>
[Counterpart Signature Page to Purchase Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
Crossland Ltd. (Belize)
---------------------------------------------
[print name]
ATTEST: By: /s/ L.H. Osterlolt
------------------------------------------
Bahamas Company Services Ltd. Name: L.H. Osterlolt
Title: Vice President
/s/ Annabel Howorth
- -------------------------------
Secretary
Address for Notices:
Crossland, Ltd. (Belize)
104B Saffrey Square
Bank Lane and Bay Street
Box N-1612
Nassau, Bahamas
ADVANCED OXYGEN TECHNOLOGIES, INC.
By:
------------------------------------------
Name: Harry Edelson
Title: Chairman
Address for Notices
c/o ETP
300 Tice Boulevard, Woodcliffe Lake, NJ
Telecopier: (201) 930-8899
15
<PAGE>
[Counterpart Signature Page to Purchase Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
Coastal Oil, Ltd.
---------------------------------------------
[print name]
ATTEST: By: /s/ Dr. M. Noguera
------------------------------------------
Illegible Name: M. Noguera
- ----------------------------- Title: President
Secretary
Address for Notices:
Coastal Oil, Ltd.
40 Santa Rita Road
Corozal, Belize, Central America
ADVANCED OXYGEN TECHNOLOGIES, INC.
By:
------------------------------------------
Name: Harry Edelson
Title: Chairman
Address for Notices
c/o ETP
300 Tice Boulevard, Woodcliffe Lake, NJ
Telecopier: (201) 930-8899
15
<PAGE>
[Counterpart Signature Page to Purchase Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
Easternstar Ltd.
---------------------------------------------
[print name]
ATTEST: By: /s/ Roberta Montgomery
------------------------------------------
Bahamas Company Services Ltd. Name: Roberta Montgomery
Illegible Title: Vice President
- --------------------------------
Secretary
Address for Notices:
Eastern Star, Ltd.
104B Saffrey Square
Bank Lane and Bay Street
Box N-1612
Nassau, Bahamas
ADVANCED OXYGEN TECHNOLOGIES, INC.
By:
------------------------------------------
Name: Harry Edelson
Title: Chairman
Address for Notices
c/o ETP
300 Tice Boulevard, Woodcliffe Lake, NJ
Telecopier: (201) 930-8899
15
<PAGE>
[Counterpart Signature Page to Purchase Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
Crossland Ltd. (Belize)
---------------------------------------------
[print name]
ATTEST: By: /s/ Anthony J.R. Howorth
------------------------------------------
Bahamas Company Services Ltd. Name: Anthony J.R. Howorth
Title: President
/s/ Pauline Cox
- --------------------------------
Secretary
Address for Notices:
Crossland, Ltd. (Belize)
60 Market Street
P.O. Box 364
Belize City, Belize, Central America
ADVANCED OXYGEN TECHNOLOGIES, INC.
By:
------------------------------------------
Name: Harry Edelson
Title: Chairman
Address for Notices
c/o ETP
300 Tice Boulevard, Woodcliffe Lake, NJ
Telecopier: (201) 930-8899
15
<PAGE>
[Counterpart Signature Page to Purchase Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
---------------------------------------------
[print name]
ATTEST: By:
------------------------------------------
- ------------------------------- Name:
Secretary Title:
Address for Notices:
---------------------------------------------
---------------------------------------------
---------------------------------------------
ADVANCED OXYGEN TECHNOLOGIES, INC.
By: /s/ Harry Edelson
------------------------------------------
Name: Harry Edelson
Title: Chairman
Address for Notices
c/o ETP
300 Tice Boulevard, Woodcliffe Lake, NJ
Telecopier: (201) 930-8899
15
<PAGE>
EXHIBIT A
---------
US PERSON
1. "US Person" means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or incorporated under the
laws of the United States;
(iii) Any estate of which any executor or administrator is a US person;
(iv) Any trust of which any trustee is a US person;
(v) Any agency or branch of a foreign entity located in the United
States;
(vi) Any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the benefit
or account of a US person;
(vii) Any discretionary account or similar account (other than an estate
or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States;
and
(viii) Any partnership or corporation if: (A) organized or incorporated
under the laws of any foreign jurisdiction; and (B) formed by a US
person principally for the purpose of investing in securities not
registered under the Act, unless it is organized or incorporated,
and owned, by accredited investors (as defined in Rule 501(a)) who
are not natural persons, estates or trusts.
2. Notwithstanding paragraph I of this rule, any discretionary account or
similar account (other than an estate or trust) held for the benefit or account
of a non-US person by a dealer or other professional fiduciary organized,
incorporated, or (if an individual) resident in the United States shall not be
deemed a "US person."
3. Notwithstanding paragraph 1, any estate of which any professional fiduciary
acting as executor or administrator is a US person shall not be deemed a US
person if:
(i) An executor or administrator of the estate who is not a US person
has sole or shared investment discretion with respect to the assets
of the estate; and
(ii) The estate is governed by a foreign law.
4. Notwithstanding paragraph I, any trust of which any professional fiduciary
acting as Trustee,
<PAGE>
is a US person shall not be deemed a US person if a trustee who is not a US
person has sole or shared investment discretion with respect to the trust
assets, and no beneficiary of the trust (and no settler if the trust is
revocable) is a US person.
5. Notwithstanding paragraph 1, an employee benefit plan established and
administered in accordance with the law of a country other than the United
States and customary practices and documentation of such country shall not be
deemed a US person.
6. Notwithstanding paragraph 1, any agency or branch of a US person located
outside the United States shall not be deemed a "US person" if:
(i) The agency or branch operates for valid business reasons; and
(ii) The agency or branch is engaged in the business of insurance or
banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
7. The International Monetary Fund, the International Bank for Reconstruction
and Development, the Inter-American Development Bank, the Asian Development
Bank, the African Development Bank, the United Nations, and their agencies,
affiliates and pension plans, and any other similar international organizations,
their agencies, affiliates and pension plans shall not be deemed "US persons."
<PAGE>
Schedule 4(a)
Purchasers' Subsidiaries
------------------------
NONE
<PAGE>
Schedule 3(s)
Compliance with Laws
--------------------
AOXY has not held an annual meeting since October, 1993. AOXY's qualification to
transact business in California has not been maintained.
<PAGE>
Schedule 3(o)
Directors:
Harry Edelson
Emile A. Battat
Richard O. Jacobson
Albert James
Officers:
Harry Edelson Chairman of the Board and
Chief Executive Officer, President, Chief
Financial Officer and Director
Banks:
None
<PAGE>
Schedule 3(m)
Contracts of AOXY
-----------------
In August 1995 in order to retain senior management, AOXY agreed to pay Mr.
Kopetz, Ms. Castle and David Overmyer, AOXY's controller, a bonus if AOXY
successfuly completed a sale of AOXY or its technology by May 31, 1995. The
bonus would equal 55 of the first million dollars of the gross proceeds from the
Patent Sale, 4% of the next million dollars of such gross proceeds, 3% of the
third million, 2% of the fourth million and 1% of all amounts received from the
Patent Sale over 4 million. This bonus is shared equally by Mr. Kopetz, Ms.
Castle and Mr. Overmyer. Upon the closing, they received, in the aggregate
$16,750.00 or $5,583.33 each. As no other royalties have been received to date
from W.R. Grace, no additional sums have been paid. All such bonus is payable
only from the Grace royalty. At closing, the above mentioned liabilities of AOXY
shall have been assigned to and assumed by AOXY Liquidation Inc. with the
consent of the creditors.
<PAGE>
Schedule 1.01
Purchasers
----------
Number of Number of
Name $ Amount Sale Shares Comp.Shares
- ------------------------------------ ---------- ----------- -----------
Crossland, Ltd. (Belize) $15,000.00 1,500,000 4,437,500
60 Market Square
PO Box 364
Belize City, Belize, Central America
Eastern Star, Ltd. $15,000.00 1,500,000 4,437,500
104B Saffrey Square
Bank Lane and Bay Street
Box N-1612
Nassau, Bahamas
Costal Oil, Ltd. $15,000.00 1,500,000 4,437,500
40 Santa Rita Road
Corazal, Belize, Central America
Crossland, Ltd. 104B Saffrey Square $15,000.00 1,500,000 4,437,500
Bank Lane and Bay Street
Box N-1612
Nassau, Bahamas
<PAGE>
Exhibit B
Execution (iii)
PURCHASE AGREEMENT
------------------
THIS AGREEMENT made as of the 18th day of December, 1997, (herein,
together with the Schedules attached hereto, referred to as "Agreement") by and
among the persons listed on Schedule 1 hereto (herein referred to collectively
as "Purchasers" and each a "Purchaser") and the persons listed on Schedule 2
hereto (herein referred to collectively as "Sellers" and each a "Seller").
In reliance upon the representations and warranties made herein and in
consideration of the mutual agreements herein contained the parties hereby agree
as follows:
SECTION 1. SALE AND PURCHASE OF STOCK.
1.01 Sale of Stock to Purchasers. Sellers shall at the closing of the
transactions hereinafter provided sell, transfer, assign and deliver to
Purchasers an aggregate of eight hundred thousand (800,000) shares (the
"Shares") of the capital stock of Advanced Oxygen Technologies, Inc., a Delaware
Corporation, ("AOXY") in an amount to each Purchaser as set forth on Schedule 2
hereto.
1.02 Consideration for Stock. In consideration of the sale of the
Shares, (a) Purchasers shall pay to Sellers the aggregate amount of US$10,000
(the "Purchase Price") in the form of an official bank check or a certified
check of the Purchasers payable to each Seller in the amount specified on
Schedule 1 hereto and (b) Seller shall be retained by AOXY as a consultant for
one month on an "as available" basis in consideration of 450,000 shares of
common stock of AOXY delivered by AOXY to Seller at the Closing which shares
shall be registered by AOXY on Form S-8, or such other form as available, as
soon as practicable after Closing, and shall have full "piggyback" registration
rights in any other registration of securities of AOXY.
1.03 Transactions on the Closing Date. (a) Delivery of Shares. At the
Closing, Sellers will deliver to Purchasers stock certificates, representing the
shares duly endorsed for transfer with their respective signatures guaranteed in
form acceptable to the transfer agent of AOXY; and
(b) Delivery of Consideration. At the Closing, Purchasers will
deliver to each Seller an official bank check or a certified check of the
Purchasers payable to each Seller in the amount of the Purchase Price payable to
such Seller as set forth on Schedule 1.
(c) Resignations. Resignations of all of the directors and
officers of AOXY other than those designated in writing by Purchasers prior to
the Closing Date to remain on the board or in office; and
(d) Documents. Each of the documents contemplated by this
Agreement.
<PAGE>
SECTION 2. CLOSING. The Closing will take place at the offices of Kieffer
and Hahn, 111 Broadway, New York, New York 10006, at 10:00 A.M. on the date of
execution and delivery hereof by all of the parties.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS. Each Seller, as and
for himself or itself, severally and not jointly, represents and warrants the
following to the best of his or its knowledge without independent investigation:
(a) Organization and Standing. (1) AOXY is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, the State of its incorporation, and is authorized to conduct business
in and is in good standing in each jurisdiction in which the character of the
properties owned by it or the nature of the business transacted by it makes such
license or qualification necessary.
(2) The certified copies heretofore delivered to AOXY, of the
certificate of incorporation, of all licenses to transact business and of the
by-laws of AOXY with all amendments to the date hereof are true, complete and
correct.
(3) AOXY has no subsidiaries.
(b) Capital Stock. (1) The capital stock of AOXY consists of (A) thirty
million (30,000,000) shares of common stock, par value one cent (US $0.01) per
share of which five million six hundred ninety-six thousand two hundred
fifty-two (5,696,252) shares have been validly issued and are fully paid and are
non-assessable and are fully transferable, three hundred fifty four thousand
(354,000) shares which shall be issued upon conversion of 177,000 shares of
preferred stock (172,000 shares of preferred stock shall be converted into
344,000 shares on the date of Closing) and one hundred forty five thousand
(145,000) shares of which shall be issued upon exercise of options and (B) ten
million (10,000,000) shares of preferred stock par value one cent (US $.01) per
share of which 177,000 (172,000 shares of preferred stock shall be converted
into 344,000 shares on the date of Closing) shares have been validly issued and
are fully paid and are non-assessable and are fully transferable.
(2) None of the issued and outstanding shares is subject to any
voting trust agreement or other agreement relating to the voting thereof.
(3) None of the authorized but unissued shares of AOXY are subject
to any warrants, obligations, subscriptions, options, convertible securities or
other commitments under which they are or may be required to be issued.
(4) No transfer tax will be payable with respect to the issuance
of AOXY's stock contemplated hereby.
2
<PAGE>
(c) Stock Ownership. Each Seller shall issue to Purchasers at Closing
authorized common stock of AOXY which is free and clear of any encumbrances,
liens or restrictions on sale, other than those applicable to restricted
securities as defined under the rules and regulations promulgated by the
Securities and Exchange Commission.
(d) Validity of Agreement; Authority. This Agreement has been duly
executed and delivered by each Seller and (assuming valid execution and delivery
by Purchasers) is a valid and binding obligation, enforceable in accordance with
its terms.
(e) Authority to take Action. (1) The execution and delivery of this
Agreement and delivery of the subject shares and the carrying out of the
provisions hereof will not contravene any provisions of law, any order, judgment
and/or decree of any court or other governmental agency or each Seller's
certificate of incorporation, by-laws, charter, partnership agreement, if any,
or any indenture, agreement or other instrument to which a Seller is a party or
by which a Seller may be bound, or by which any property owned by a Seller may
be bound.
(2) All legal actions required to be taken in connection with this
Agreement pursuant to the laws of any State or other governmental authority have
been so taken.
(f) Accounts Receivable. AOXY has no accounts receivable.
(g) Liabilities of AOXY. AOXY has no liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities due or to become due, except for (1) approximately
US$45,000 of accounts payable, (2) the fees and expenses of counsel in
connection herewith and (3) amounts due and payable to certain of its directors
as evidenced by Promissory Notes issued to such persons in the aggregate
principal amount of $275,000 plus the interest accrued thereon which are to be
spun-off to the liquidating trust as set forth in section.
(h) No Dividends or Distributions. Since June 30, 1995, AOXY has not
declared, set aside or paid to its stockholder any dividend or other
distribution in respect of its capital stock or redeemed or purchased or
otherwise acquired any of its capital stock or agreed to take any such action.
(i) Absence of Material Changes or Events. Except for matters publicly
disclosed on (1) AOXY's Proxy Statement in connection with the sale of its
oxygen control technology to W.R. Grace ("Grace") in February 1995; (2) AOXY's
Reports on Form 10-KSB with respect to AOXY's fiscal years ended June 30, 1993,
1994 and 1995 and (3) AOXY's Reports on Form 10-Q for the quarters ending
September 30, 1995 and December 31, 1995 and AOXY's 8-K's filed prior hereto
copies of which have been heretofore delivered to Sellers, since June 30, 1995
there has been no event or condition of any character, materially and adversely
affecting AOXY's financial position, assets, liabilities (contingent or
otherwise), results of operation, business or business prospects, and AOXY has
not:
3
<PAGE>
(1) Incurred any obligation or liability (absolute, accrued,
contingent, or otherwise) except in the ordinary course of business or except in
connection with the performance of this Agreement;
(2) Mortgaged, pledged or subjected to lien, charge or other
encumbrance, any of its assets, tangible or intangible;
(3) Sold or transferred any of its assets or canceled any debts or
claims, or waived any right of substantial value;
(4) Made or committed to make any single capital expenditure in
excess of five hundred dollars ($500.00), or capital expenditures in excess of
one thousand dollars ($1,000.00) in the aggregate or purchased or contracted to
purchase any land;
(5) Sustained any damage, destruction or loss of its property in
excess of five hundred dollars ($500.00) whether or not covered by insurance;
(6) Increased the compensation payable or to become payable by
AOXY to any of its officers, employees or agents, or any bonus payment or
arrangement made to or with any of them;
(7) Agreed to modify in any material respect any contract or other
instrument to which AOXY is a party except for the patent purchase agreement
with Grace;
(8) Increased or changed the medical insurance provided for the
benefit of its employees and their families.
(9) Increased or changed the amount of disability insurance
provided for the benefit of its employees;
(10) Entered into any transaction other than in the ordinary
course of business; or
(11) Made any material change in any method of accounting or any
accounting practice.
(j) Title to Property. AOXY has no material assets.
(k) Buildings, Equipment and Motor Vehicles. AOXY is the owner of no
buildings, equipment or motor vehicles.
(l) Tax Status. (1) AOXY has heretofore furnished to Sellers true and
complete copies of all federal, state, local and foreign income tax returns of
AOXY filed for the three (3) years
4
<PAGE>
ended June 30, 1995. Said tax returns of AOXY have not been audited by the
applicable taxing authorities. No agreements made by AOXY for an extension of
time for the assessment of any tax are now in effect. All taxes, including
interest and penalties thereon, shown on said tax returns to be due and payable
by AOXY, or required to be withheld by AOXY on or before the date hereof, have
been paid or fully reserved for and withheld and no formal written claim for any
tax, assessment or levy for which AOXY may become liable exists which has not
been settled.
(2) All other taxes, due and payable at the Closing Date, of any
kind whatsoever, including, but not limited to, estimated income tax, franchise
tax, excise tax, doing business tax, payroll tax, personal property tax, use tax
and sales tax have been paid or fully reserved for and withheld.
(m) Status of Contracts. Except as reflected on Schedule 3(m). AOXY is
not a party to any written or oral (i) contract for the employment of any
officer or individual employee, or any pension, profit sharing, bonus,
retirement, stock option or similar incentive or deferred compensation plan or
arrangement in effect with its officers, employees or others; (ii) continuing
contract for the acquisition of real estate or fixed assets; (iii) financing
arrangement involving the mortgaging, pledging or other hypothecation of assets
or involving borrowing which may not be repaid in part or in full on not more
than thirty (30) days' notice with reference to unearned or amortized discount
and without premium or penalty; (iv) contract with any labor union; (v)
continuing contract for the future purchase of materials or supplies; (vi)
contract with any agent, representative or distributor; (vii) any instrument
evidencing or related to indebtedness for borrowed money, or pursuant to which
AOXY is obligated to borrow money; (viii) any contract, arrangement or
understanding under which AOXY has assumed, guaranteed, endorsed, or otherwise
become liable in connection with the obligation of any individual, partnership,
corporation or other entity; (ix) any contract not included in any of the
foregoing which involves payment by AOXY of more than five hundred dollars
($500.00). True and complete copies of all items listed in Schedule 3(m) have
been delivered to AOXY. The parties to such instruments have complied with all
the provisions thereof, and they are not in default under any of them.
(n) Status of Leases. AOXY is not a party to any leases except for the
lease of document storage space at Pacific Mini Storage, 1913 Sherman Street,
Alameda, California.
(o) Directors and Officers; Compensation; Banks. Schedule 3(o) hereto
contains a true an complete list showing (i) the names of all directors and
officers of AOXY; (ii) the names of all persons whose compensation from AOXY for
the period beginning July 1, 1995 and ending March 31, 1996 will equal or exceed
ten thousand dollars ($10,000.00) together with a statement of the full amount
paid or payable to each such person for services rendered or to be rendered in
such period and the basis therefor; (iii) the name of each bank in which AOXY
has an account, or safe deposit box, and the names of all persons authorized to
draw thereon, or to have access thereto; (iv) the names of all persons holding
powers of attorney from AOXY, and a summary statement of the terms thereof; and
(v) all credit cards and similar accounts on which AOXY may be liable.
5
<PAGE>
(p) Status of Insurance. AOXY has no insurance.
(q) Permits and Licenses. AOXY is not required to have permits,
licenses, approvals, and authorization of all federal, state, local and foreign
authorities and is presently not conducting any business.
(r) Litigation. There is no action, suit, proceeding or investigation
pending, or to the knowledge of AOXY threatened, against or affecting AOXY
before any court, arbitrator or administrative or governmental body and AOXY is
not presently subject to or in default in respect of any order, injunction or
decree of any court or government instrumentality.
(s) Compliance with Laws. Except as reflected on Schedule 3(s), AOXY is
not in violation of any law, regulation or ordinance which violation would
materially and adversely affect it or its operations.
(t) Books of Accounts and Other Records. The books of account, and the
minute books, stock certificate books and ledgers of AOXY at the Closing Date
will, in all material respects, be correct and complete and such books of
account and ledgers will fairly present the operations of AOXY in accordance
with generally accepted accounting principles.
(u) Employee Benefit Plans. AOXY is not party to any bonus, incentive
compensation, profit-sharing, pension, retirement, stock purchase, stock option,
deferred compensation, hospitalization, group insurance, death benefit,
disability, collective bargaining and other fringe benefit plans, trust
agreements, arrangements or commitments.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Each Purchaser, as
and for itself or himself, severally and not jointly, represents and warrants
the following:
(a) Organization and Standing. (1) Each corporate Purchaser is a
corporation duly organized, validly existing, and in good standing under the
laws of the place of its incorporation.
(2) The copy heretofore delivered to Sellers, of the certificate
of incorporation or charter of each corporate Purchaser with all amendments to
the date hereof are true, complete and correct.
(3) Each corporate Purchaser has no subsidiaries, except as set
forth on Schedule 4(a).
(b) Validity of Agreement; Authority. This Agreement has been duly
executed and delivered by the Purchasers and (assuming valid execution and
delivery by the Sellers) is a valid and binding obligation of each Purchaser,
enforceable in accordance with its terms.
(c) Authority to take Action. (1) The execution and delivery of this
Agreement and
6
<PAGE>
delivery of the subject shares and the carrying out of the provisions hereof
will not contravene any provisions of law, any order, judgment and/or decree of
any court or other governmental agency or any corporate Purchaser's certificate
of incorporation or charter, by-laws or any indenture, agreement or other
instrument to which any Purchaser is a party or by which it may be bound, or by
which any property owned by it may be bound.
(2) All corporate and legal actions required to be taken in
connection with this Agreement pursuant to the laws of any State or other
governmental authority have been so taken.
(c) Compliance with Laws. No Purchaser has received notice of any
violation of any law, regulation or ordinance which violation would materially
and adversely affect it or its operations.
(d) Consents. No Purchaser is required to obtain consent, approval,
registration, qualification or filing with any United States federal, state or
local government authority or any foreign government authority in connection
with such Purchaser's execution of this Agreement or consummation of the
transactions contemplated hereby, other than the required filings with the
United States Securities and Exchange Commission.
(e) Investment Purposes. Each Purchaser is acquiring the Shares for
investment, for its own account, and not with a view to, or for resale in
connection with, any distribution of any part thereof. Each Purchaser
acknowledges that each Seller is selling the Shares hereunder in reliance upon
an exemption from the registration provisions of the Securities Act of 1933, as
amended (the "Act") which depends upon, among other things, the bona fide nature
of the investment intent and accuracy of such Purchaser's representations as
expressed herein. Each Purchaser is able to fend for itself, can bear the
economic risk of this investment and has such knowledge and experience in
financial or business matters that it can evaluate the merits and risks of the
investment. Each Purchaser, except for Robert E. Wolfe, is an "accredited
investor" within the meaning of Rule 501(a) of Regulation D promulgated under
the Securities Act.
Except as set forth in this Agreement, no representations or
warranties, oral or otherwise, have been made to Purchasers, including without
limitation, any representations concerning the future prospects of AOXY, by any
Seller, by any agent of any Seller, any employees or affiliates of any Seller or
by any other person whether or not associated with this transaction and in
entering into this transaction Purchaser is not relying upon any information.
Without in any way limiting the representations set forth above,
Purchaser further agrees not to make any disposition of all or any portion of
the Shares that constitutes "restricted securities" delivered pursuant hereto
unless (1) there is then in effect a Registration Statement under the Act
covering the proposed disposition and disposition is made according to the
Registration Statement; or (2) the transferee has agreed in writing for the
benefit of AOXY to be bound by the restrictions set forth in this section, to
the extent applicable; and each Purchaser has furnished AOXY with an opinion of
counsel, reasonably satisfactory to AOXY, that such disposition will not
7
<PAGE>
require registration of the shares under the Act.
SECTION 5. CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATION TO COMPLETE THE
TRANSACTION. The obligation of each Purchaser to consummate the transactions
described in Section 1 hereof is subject to the fulfillment of each of the
following conditions prior to or at the Closing:
(a) Delivery of Shares. Each Purchaser shall have received delivery of
the Shares as contemplated herein.
(b) Spin-off. AOXY shall have spun-off good and marketable title to its
rights to royalties from W. R. Grace (its only material asset) and certain
liabilities including only amounts due to former employees as a result of the
receipt of the royalties and notes payable to certain directors in the aggregate
principal amount of $275,000 plus the interest earned thereon.
(c) Other Creditors. AOXY shall have achieved settlement in an amount
and on terms reasonably satisfactory to each Purchaser of all of the liabilities
of AOXY, including, without limitation, all accounts payable, if any, and other
accrued expenses, if any.
(d) Resignation of Directors and Officers. Upon appointment of
directors chosen by Purchasers to fill the existing vacancies on the board of
directors of AOXY, all directors and officers not so chosen by Purchasers shall
have tendered to AOXY their resignations as directors and/or officers of AOXY.
(e) Conversion of Preferred Stock. All of the issued and outstanding
preferred stock of AOXY shall have been converted to common stock of AOXY except
for 5,000 shares.
(f) Stock Acquisition Agreement. The transaction contemplated in the
Stock Acquisition Agreement, dated the date hereof, among AOXY and the
purchasers, parties thereto, related to the sale by AOXY of 23,750,000 shares of
the common stock of AOXY shall have closed simultaneously herewith.
(g) Representations and Warranties of Sellers. The representations and
warranties made by each Seller herein shall be true and correct in all material
respects.
(h) No actions or proceedings. No action or proceeding shall be pending
or threatened on the Closing Date wherein an unfavorable judgment, decree or
order would prevent or make unlawful the carrying out of this Agreement or would
cause the transaction contemplated by this Agreement to be rescinded or would
require a Purchaser to divest itself of the shares to be acquired.
It is understood that the certificates evidencing the Shares sold
pursuant hereto may bear legends in substantially the following form:
8
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATION HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SAID ACT AND UPON OBTAINING AN OPINION OF COUNSEL (WHICH MAY BE
COUNSEL TO THE COMPANY) SATISFACTORY TO THE COMPANY THAT SUCH
DISPOSITION MAY BE MADE WITHOUT REGISTRATION UNDER SAID ACT, OR UNLESS
SOLD PURSUANT TO RULE 144.
SECTION 6. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO COMPLETE THE
TRANSACTION. The obligation of each Seller to consummate the transactions
described in Section 1 hereof is subject to the fulfillment of each of the
following conditions prior to or at the Closing:
(a) Purchase Price. Each Seller shall have received the purchase price
to which each such Seller is entitled hereunder.
(b) Spin-off. AOXY shall have spun-off good and marketable title to its
rights to royalties from W. R. Grace (its only material asset) and certain
liabilities including only amounts due to former employees as a result of the
receipt of the royalties and notes payable to certain directors in the aggregate
principal amount of $275,000 plus the interest earned thereon.
(c) Representations and Warranties of Purchasers. The representations
and warranties made by the Purchasers herein shall be true and correct in all
material respects.
(d) No actions or proceedings. No action or proceeding shall be pending
or threatened on the Closing Date wherein an unfavorable judgment, decree or
order would prevent or make unlawful the carrying out of this Agreement or would
cause the transaction contemplated by this Agreement to be rescinded.
SECTION 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained herein or made in writing by the parties in connection
with the transactions contemplated hereby shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated by
this Agreement, regardless of any investigation made by or on behalf of the
parties or any payment for and acceptance of stock hereunder. All statements
contained in any certificate, list, letter or other instrument delivered by or
on behalf of the parties pursuant hereto or in connection with the transactions
contemplated hereby (including statements, letters or certificates of
independent parties such as public accountants or attorneys) shall constitute
representations and warranties by the parties hereunder.
9
<PAGE>
SECTION 8. INDEMNIFICATION. (a) Of Sellers and AOXY. Each Purchaser agrees
to defend, indemnify and hold harmless Sellers and AOXY against and in respect
of (i) any and all losses, liabilities, damages, deficiencies, costs or expenses
(including, without limitation reasonable attorneys fees and disbursements)
resulting from (A) the breach of any covenant, warranty or agreement hereunder
by such Purchaser or (B) any representations made by such Purchaser in this
Agreement, not being complete and correct or being false and misleading or
containing any material misstatement of fact or omitting any material fact
required to be stated to make the statements therein not misleading; and (ii)
any and all actions, suits, proceeding, claims, demands, assessments, judgments,
costs and expenses (including, without limitation, reasonable attorneys fees and
disbursements) incident to any of the foregoing; provided, however, that if any
such action, suit or proceeding shall be asserted against Sellers and AOXY in
respect of which Sellers or AOXY propose to demand indemnification, such
Purchaser shall be promptly notified to that effect and shall have the right to
assume the control of the defense, compromise or settlement thereof, including,
at their own expense, employment of counsel reasonably acceptable to Sellers.
(b) Of Purchasers. Each Seller, severally and not jointly, agrees to
defend, indemnify and hold harmless Purchasers against and in respect of (i) any
and all losses, liabilities, damages, deficiencies, costs or expenses
(including, without limitation reasonable attorneys fees and disbursements)
resulting from (A) the breach of any covenant, warranty or agreement hereunder
by such Seller or (B) any representations made by such Seller in this Agreement,
not being complete and correct or being false and misleading or containing any
material misstatement of fact or omitting any material fact required to be
stated to make the statements therein not misleading; and (ii) any and all
actions, suits, proceeding, claims, demands, assessments, judgments, costs and
expenses (including, without limitation, reasonable attorneys fees and
disbursements) incident to any of the foregoing; provided, however, that if any
such action, suit or proceeding shall be asserted against a Purchaser in respect
of which such Purchaser proposes to demand indemnification, all Sellers shall be
promptly notified to that effect and the Seller or Sellers against whom
indemnification is sought shall have the right to assume the control of the
defense, compromise or settlement thereof, including, at their own expense,
employment of counsel reasonably acceptable to such Purchaser.
(c) Payment. Any indemnification payments required pursuant to Section
8(a) and 8(b) hereof shall be paid in full within ten (10) days after receipt of
notice specifying (i) the amount required to be paid and (ii) the nature of the
event or events giving rise to indemnification hereunder.
(d) Liability. The liability of the parties under this Section 8 shall
be without limitation, and the failure of either of them to withhold amounts
from any payments shall not act as a waiver of or diminish the obligations of
parties under this Section 8.
(e) Interest. Any and all amounts which may become due and payable
pursuant to this Section 8 shall bear interest from the date when due to the
date of payment at a percentage rate of twelve (12%) percent per annum.
SECTION 9. COVENANT OF PURCHASERS. Purchasers covenant and agree that in
the
10
<PAGE>
event that within 36 months of the date of the Closing 1,400,000 shares of
common stock of AOXY (being the approximate number of shares retained by all of
the Sellers as at the Closing Date) do not have an aggregate market value for
any 10 consecutive day period (being the closing price for 10 consecutive
trading days of the securities on the NASDAQ or any other National Securities
Exchange on which the common stock of AOXY, or its successor in interest, is
traded) equal to or greater than US$750,000 less the "value" of any dividends
paid per share on 1,400,000 shares of common stock of AOXY (the "value" of any
such dividends being determined on the date of distribution of any such
dividend, if in cash - at the cash value or, if in securities - at the per share
closing price of the securities on the date of distribution and, if none, then
at the per share closing bid price on the date of distribution), then AOXY, or
its successor in interest, or the Purchasers, on a pro rata basis, shall deliver
to the AOXY Management Trust, a New Jersey trust, the number of shares of common
stock of AOXY, or its successor in interest, to bring the value of 1,400,000
plus the value (as defined above) of any dividends per share paid on $1,400,000
shares of common stock of AOXY, to US$750,000, whether or not any of such shares
are then held by any Seller.
SECTION 10. COMMISSIONS, FEES AND EXPENSES. Purchasers and Sellers each
represent and warrant to the other that the negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Purchaser and Sellers directly and in such manner as not to give rise to any
valid claim against either for a brokerage commission, finder's fee or other
like payment. AOXY is responsible for and shall pay at closing the fees and
disbursements of Kieffer and Hahn, its counsel, in connection with this
Agreement and the closing of the transactions contemplated herein.
SECTION 11. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of Delaware (other than its
law with respect to conflicts of laws), including all matters of construction,
validity and performance.
SECTION 12. NOTICES. All notices, requests, permissions, waivers, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective persons giving them (in the case of any
corporation the signature shall be by an officer thereof) and delivered by hand,
sent via facsimile transmission, nationally-recognized overnight courier service
or deposited in the United States mail (registered, return receipt requested),
properly addressed and postage prepaid to the intended recipient thereof to the
address for such person on the signature page(s) hereof. All such notices,
requests, consents and other communications shall be deemed to have been
delivered (a) in the case of personal delivery or delivery by telecopy, on the
date of such delivery, (b) in the case of dispatch by nationally-recognized
overnight courier, on the next business day following such dispatch and (c) in
the case of mailing, on the third business day after the posting thereof. Such
names and addresses may be changed by such notice.
SECTION 13. ENTIRE AGREEMENT; AMENDMENT; HEADINGS; COUNTERPARTS. This
Agreement, including the Schedules hereto, all of which are a part hereof,
contains the entire understanding of the parties hereto with respect to the
subject matter contained herein and therein,
11
<PAGE>
supersedes and cancels all prior agreements with respect hereto or thereto and
may be amended only by a written instrument executed by the parties or their
respective successors or assigns. There are no restrictions, promises,
representations, warranties, agreements or undertakings of any party hereto with
respect to the transactions under this Agreement other than those set forth
herein or made hereunder in the documents delivered at each Closing. The section
and paragraph headings contained in this Agreement and the description of
exhibits attached hereto are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. This Agreement may be
executed in one or more counterparts and each counterpart shall be deemed to be
an original.
SECTION 14. PARTIES IN INTEREST. Except with the express written consent of
the other parties hereto, this Agreement shall not be assignable or otherwise
transferred in whole or in part. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective successors. Nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies under or by reason of this Agreement.
SECTION 15. SEVERABILITY. The invalidity of any portion hereof shall not
affect the validity, force or effect of the remaining portions hereof.
SECTION 16. FURTHER ASSURANCES. Sellers and Purchasers shall execute and
deliver or cause to be executed and delivered such additional instruments, and
take such other actions as the other party may reasonably request in writing in
order to effectuate the purposes of this Agreement.
[Remainder of Page Intentionally Blank]
12
<PAGE>
[Counterpart Signature Page to Purchase Agreement of dated December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
Robert E. Wolfe
-------------------------------
[print name]
ATTEST: By: /s/ Robert E. Wolfe
-------------------------------
Name: Robert E. Wolfe
Title: Individual
Angela Nevarez
- -----------------------
Witness
Address for Notices:
Robert E. Wolfe
476 Main Street
Maybrook, NY 12543
-------------------------------
SELLERS:
-------------------------------
[print name]
------------------------------
Address for Notices:
--------------------------------
--------------------------------
--------------------------------
13
<PAGE>
[Counterpart Signature Page to Purchase Agreement of dated December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
CROSSLAND LTD. (BELIZE)
-------------------------------
[print name]
ATTEST: By: /s/ Anthony J.R. Howorth
-------------------------------
Bahamas Company Services Ltd. Name: Anthony J.R. Howorth
Title: President
Pauline Cox
- -----------------------
Secretary
Address for Notices:
Crossland, Ltd. (Belize)
60 Market Square
P.O. Box 364
Belize City, Belize, Central America
-------------------------------
SELLERS:
-------------------------------
[print name]
------------------------------
Address for Notices:
--------------------------------
--------------------------------
--------------------------------
13
<PAGE>
[Counterpart Signature Page to Purchase Agreement of dated December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
Triton International Ltd.
-------------------------------
[print name]
ATTEST: By: /s/ Jens S. Olsen
-------------------------------
Name: Jens S. Olsen
Title:
Illegible
- -----------------------
Secretary
Address for Notices:
Triton International, Ltd.
Euro-Canadian House
Marlboro Street
Nassau, Bahamas
-------------------------------
SELLERS:
-------------------------------
[print name]
------------------------------
Address for Notices:
--------------------------------
--------------------------------
--------------------------------
13
<PAGE>
[Counterpart Signature Page to Purchase Agreement of dated December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
-------------------------------
[print name]
ATTEST: By:
-------------------------------
Name:
Title:
- -----------------------
Witness
Address for Notices:
-------------------------------
-------------------------------
-------------------------------
SELLERS:
Edelson Technology Partners II, L.P.
------------------------------------
[print name]
/s/ Harry Edelson
-----------------------------------
Harry Edelson, General Partner
Address for Notices:
300 Tice Boulevard
Woodcliff Lake, NJ 07675
13
<PAGE>
Schedule 1
Purchasers
Name $ Amount # of Shares
- ---- -------- -----------
Robert E. Wolfe $ 625.00 50,000
476 Main Street
Maybrook, NY 12543
Trion International, Ltd. $4,687.50 375,000
Euro-Canadian House
Marlboro Street
Nassau, Bahamas
Crossland, Ltd. (Belize) $4,687.50 375,000
60 Market Square
P.O. Box 364
Belize City, Belize, Central America
<PAGE>
Schedule 2
Sellers
Name $ Amount # of Shares
- ---- -------- -----------
Edelson Technology Partners II, L.P. $10,000 800,000
300 Tice Boulevard
Woodcliff Lake, NJ
Telecopier: (201) 930-8899
<PAGE>
Schedule 3(s)
Compliance with Laws (Purchaser)
Purchaser has not held an annual meeting since October, 1993. Purchaser's
qualification to transact business in California has not been maintained.
<PAGE>
Schedule 4(a)
Subsidiaries of Purchasers
NONE
<PAGE>
Schedule 3(o)
Directors:
Harry Edelson
Emile A. Battat
Richard O. Jacobson
Albert James
Officers:
Harry Edelson Chairman of the Board and
Chief Executive Officer, President, Chief
Financial Officer and Director
Banks:
None
<PAGE>
Schedule 3(m)
Contracts of AOXY
In August 1995 in order to retain senior management, AOXY agreed to pay Mr.
Kopetz, Ms. Castle and David Overmyer, AOXY's controller, a bonus if AOXY
successfully completed a sale of AOXY or its technology by May 31, 1995. The
bonus would equal 5% of the first million dollars of the gross proceeds from the
Patent Sale, 4% of the next million dollars of such gross proceeds, 3% of the
third million, 2% of the fourth million and 1% of all amounts received from the
Patent Sale over 4 million. This bonus is shared equally by Mr. Kopetz, Ms.
Castle and Mr. Overmyer. Upon the closing, they received, in the aggregate
$16,750.00 or $5,583.33 each. As no other royalties have been received to date
from W.R. Grace, no additional sums have been paid. All such bonus is payable
only from the Grace Royalty. At closing, the above mentioned liabilities of AOXY
shall have been assigned to and assumed by AOXY Liquidation Inc. with the
consent of the creditors.
<PAGE>
Exhibit C
Execution (ii)
WAIVER AGREEMENT
----------------
THIS AGREEMENT made as of the day of November, 1997, (herein, together
with the Schedules attached hereto, referred to as "Agreement") by and among the
persons listed on Schedule 1 hereto (herein referred to collectively as
"Purchasers" and each a "Purchaser"), Advanced Oxygen Technologies, Inc., a
Delaware corporation ("AOXY"), and the persons listed on Schedule ~ hereto
(herein referred to collectively as "Debt Holders" and each a "Debt Holder").
In reliance upon the representations and warranties made herein and in
consideration of the mutual agreements herein contained the parties hereby agree
as follows:
SECTION 1. RELEASE OF DEBT - CONSIDERATION.
1.01 Release of Debt. Debt Holders shall at the closing of the
transactions hereinafter provided waive and relinquish all right, to collect
from AOXY the debt owed to each of the Debt Holders by AOXY in an amount to each
Debt Holder as set forth on Schedule 2 hereto (the Debt") plus the interest
earned thereon; provided, however, the Debt Holders expressly have not waived
and do not waive their respective rights to collect the Debt in excess of the
Consideration (as hereinafter defmed) from the trust established for the
collection of royalties, if any, from W. R. Grace (AOXY's only material asset on
the date hereo~ and for the payment of certain liabilities including amounts due
to former employees as a result of the receipt of the royalties, if any, the
Debt and the principal balance of the Preferred Stock of AOXY with the remainder
of the royalties, if any, to be paid to the trust benificiaries (holders of the
common stock of AOXY on the date of the establishment of the trust) after
payment of the expenses of administration.
1.02 Consideration for Release. In consideration of the release of
AOXY, (a) Purchasers shall pay to Debt Holders the aggregate amount of US$60,000
(the "Consideration") in the form of an official bank check or a certified check
of the Purchasers payable to each Debt Holder in the amount specified on
Schedule 2 hereto.
1.03 Transactions on each Closing Date. (a) Delivery of Agreement. At
the Closing, each Debt Holder will deliver to AOXY a duly executed counterpart
signahne page to this Agreement; and
(b) Delivery of Consideration. At the Closing, (a) Purchasers will
deliver to each Debt Holder an official bank check or a certified check of the
Purchasers payable to each Debt Holder in the amount ofthe Purchase Price
payable to such Debt Holder as set forth on Schedule 2 hereto; and
<PAGE>
(c) Documents. Each of the documents contemplated by this
Agreement.
SECTION 2. CLOSING. The Closing will take place at the offices of Kieffer
and Hahn, 111 Broadway, New York, New York 10006, at 10~00 A.M. on the date of
execution and delivery hereof by all of the parties.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF DEBT HOLDERS. Each Debt Holder,
as and for himself or itself, severally and not jointly, represents and warrants
the following to the best of his or its knowledge without independent
investigation:
(a) Debt Ownership. Each Debt Holder owns his portion of the Debt, as
set forth on Schedule 2 hereto, free and clear of any encumbrances, liens or
restrictions.
(b) Validity of Agreement: Authority. This Agreement has been duly
executed and delivered by each Debt Holder and (assuming valid execution and
delivery by Purchasers and AOXY) is a valid and binding obligation of each Debt
Holder, enforceable in accordance with its terms.
SECTION 4. RERESENTATIONS AND WARRANTIES OF AOXY and PURCHASERS. AOXY and
each Purchaser, as and for itself or himself, severally and not jointly,
represents and warrants the following:
(a) Organization and Standing. (1) AOXY is and each corporate Purchaser
is a corporation duly organized, validly existing, and in good standing under
the laws of the place of its incorporation.
(2) The copy heretofore delivered to Debt Holders, of the
certificate of incorporation or charter of AOXY and each corporate Purchaser
with all amendments to the date hereof are true, complete and correct.
(3) AOXY and each corporate Purchaser have no subsidiaries, except
as set forth on Schedule 4(a)
(b) Validity of Agreement; Authority. This Agreement has been duly
executed and delivered by AOXY and the Purchasers and (assuming valid execution
and delivery by the Debt Holders) is a valid and binding obligation of AOXY and
each Purchaser, enforceable in accordance with its terms.
(c) Authority to take Action. (1) The execution and delivery of this
Agreement and the carrying out of the provisions hereof will not contravene any
provisions of law, any order, judgment and/or decree of any court or other
governmental agency or AOXY's or any corporate Purchaser's certificate of
incorporation or charter, by-laws or any indenture, agreement or other
instrument to which AOXY or any Purchaser is a party or by which it may be
bound, or by which any property owned by it may be bound.
2
<PAGE>
(2) All corporate and legal actions required to be taken in
connection with this Agreement pursuant to the laws of any State or other
govemmental authority have been so taken.
(c) Compliance with Laws. Neither AOXY nor any Purchaser has received
notice of any violation of any law, regulation or ordinance which violation
would materially and adversely affect it or its operations.
(d) Consents. Neither AOXY nor any Purchaser is required to obtain
consent, approval, registration, qualification or filing with any United States
federal, state or local government authority or any foreign government authority
in connection with such Purchaser s execution of this Agreement or consummation
of the transactions contemplated hereby, other than the required filings with
the United States Securities and Exchange Commission.
SECTION 5. CONDITIONS PRECEDENT TO DEBT HOLDERS' OBLIGATION TO COMPI.FTE THE
TRANSACTION. The obligation of each Debt Holder to consummate the transactions
described in Section 1 hereof is subject to the fulfillment of each of the
following conditions prior to or at the Closing:
(a) Delivery of Consideration. Each Debt Holder shall have received
delivery of the Consideration as contemplated herein.
(b) Spin-off. AOXY shall have spun-off good and marketable title to its
rights to royalties from W. R. Grace (its only material asset) and certain
liabilities including only amounts due to former employees as a result of the
receipt of the toyalties and notes payable to certain directors and others in
the principal amount of $275,000 plus the interest eamed thereon.
(c) No actions or proceedings. No action or proceeding shall be pending
or threatened on the Closing Date wherein an unfavorable judgment, decree or
order would prevent or make unlawful the carrying out of this Agreement or would
cause the transaction contemplated by this Agreement to be rescinded.
SECTION 6. CONDITIONS PRECEDENT TO PURCHASERS' and AOXY'S OBL I GATION TO
COMPLETE THE TRANSACTION. The obligation of each Purchaser and of AOXY to
consummate the transactions described in Section 1 hereof is subject to the
fulfillment of each of the following conditions prior to or at the Closing:
(a) Waiver. Each Debt Holder shall have executed and delivered to AOXY
a counterpart signature page to this Agreement.
(b) Spin-off. AOXY shall have spun-off good and marketable title to its
rights to royalties from W. R. Grace (its only material asset) and certain
liabilities including only amounts due to former employees as a result of the
receipt of the royalties and notes payable to certain directors and the interest
thereon in the approximate aggregate principal amount of $275,000.
3
<PAGE>
(c) Representations and Warranties of Debt Holders. The representations
and warranties made by the Debt Holders herein shall be true and correct in all
material respects.
(d) No actions or proceedings. No action or proceeding shall be pending
or threatened on the Closing Date wherein an unfavorable judgment, decree or
order would prevent or make unlawful the carrying out of this Agreement or would
cause the transaction contemplated by this Agreement to be rescinded.
SECTION 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained herein or made in writing by the parties in connection
with the transactions contemplated hereby shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated by
this Ag~eement, regardless of any investigation made by or on behalf of the
parties or any payment for and acceptance of stock hereunder. All statements
contained in any certificate, list, letter or other instmment delivered by or on
behalf of the parties pursuant hereto or in connection with the transactions
contemplated hereby (including statements, letters or certificates of
independent parties such as public accountants or attorneys) shall constitute
representations and warranties by the parties hereunder.
SECTION 8. INDEMNIFICATION. (a) Of Purchasers and AOXY. Each Debt Holder
agrees to defend, indemnify and hold harmless Purchasers and AOXY against and in
respect of (i) any and all losses, liabilities, damages, deficiencies, costs or
expenses (including, without limitation reasonable attomeys fees and
disbursements) resulting from (A) the breach of any covenant, warranty or
agreement hereunder by such Debt Holder or (B) any representations made by such
Debt Holder in this Agreement, not being complete and correct or being false and
misleading or containing any material misstatement of fact or omitting any
material fact required to be stated to make the statements therein not
misleading; and (ii) any and all actions, suits, proceeding, claims, demands,
assessments, judgments, costs and expenses (including, without limitation,
reasonable attorneys fees and disbursements) incident to any of the foregoing;
provided, however, that if any such action, suit or proceeding shall be asserted
against Purchasers and AOXY in respect of which Purchasers or AOXY propose to
demand indemnification, Debt Holders shall be promptly notified to that effect
and shall have the right to assume the control of the defense, compromise or
settlement thereof, including, at their own expense, employment of counsel
reasonably acceptable to Purchasers.
(b) Of Debt Holders. Each Purchaser, severally and notjointly, and
AOXY,jointly, agree to defend, indemnify and hold harmless Debt Holders against
and in respect of (i) any and all losses, liabilities, damages, deficiencies,
costs or expenses (including, without limitation reasonable attorneys fees and
disbursements) resulting from (A) the breach of any covenant, warranty or
agteement hereunder by such Purchaser or AOXY or (B) any representations made by
such Purchaser or AOXY in this Agreement, not being complete and correct or
being false and misleading or containing any material misstatement of fact or
omitting any material fact required to be stated to make the statements therein
not misleading; and (ii) any and all actions, suits, proceeding, claims,
demands, assessments, judgments, costs and expenses (including, without
limitation, reasonable attorneys fees and disbursements) incident to any of the
foregoing; provided, however, that if any such action, suit or proceeding shall
be asserted against a Debt Holder in respect of which such Debt
4
<PAGE>
Holder proposes to demand indemnification, Purchasers and AOXY shall be promptly
notified to that effect and Purchasers shall have the right to assume the
control of the defense, compromise or settlement thereof, including, at their
own expense, employment of counsel reasonably acceptable to Debt Holders.
(c) Payment. Any indemnification payments required pursuant to Section
8(a) and 8(b) hereof shall be paid in full within ten (10) days after receipt of
notice specifying (i) the amount required to be paid and (ii) the nature of the
event or events giving rise to indemnification hereunder.
(d) Liability. The liability of the parties under this Section 8 shall
be without limitation, and the failure of either of them to withhold amounts
from any payments shall not act as a waiver of or diminish the obligations of
parties under this Section 8.
(e) Interest. Any and all amounts which may become due and payable
pursuant to this Section 8 shall bear interest from the date when due to the
date of payment at a percentage rate of twelve (12%) percent per annum.
SECTION 9. COMMISSIONS, FEES AND EXPENSES. Debt Holders, Purchasers and AOXY
each represent and warrant to the other that the negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by Debt
Holders, Purchasers and AOXY directly and in such manner as not to give rise to
any valid claim against either for a brokerage commission, finder's fee or other
like payment. AOXY is responsible for and shall pay at closing the fees and
disbursements of Kieffer and Hahn, its counsel, in connection with this
Agreement and the closing of the transactions contemplated herein.
SECTION 10. APPLlCABLE LAW. This Agreement shall be govemed by, and
construed in accordance with, the law of the State of Delaware (other than its
law with respect to conflicts of laws), including all matters of construction,
validity and performance.
SECTION 11. NOTICES. All notices, requests, permissions, waivers, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective persons giving them (in the case of any
corporation the signature shall be by an officer thereo~ and delivered by hand,
sent via facsimile transmission, nationally-recognized ovemight courier service
or deposited in the United States mail (registered, retum receipt requested),
properly addressed and postage prepaid to the intended recipient thereof to the
address for such person on the signature page(s) hereof. All such notices,
requests, consents and other communications shall be deemed to have been
delivered (a) in the case of personal delivery or delivery by telecopy, on the
date of such delivery, (b) in the case of dispatch by nationally-recognized
overnight courier, on the next business day following such dispatch and (c) in
the case of mailing, on the third business day after the posting thereof. Such
names and addresses may be changed by such notice.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT; HEADINGS; COUNTERPARTS. This
Agreement, including the Schedules hereto, all of which are a part hereof,
contains the entire
5
<PAGE>
understanding of the parties hereto with respect to the subject matter contained
herein and therein, supersedes and cancels all prior agreements with respect
hereto or thereto and may be amended only by a written instruxnent executed by
the parties or their respective successors or assigns. There are no
restrictions, promises, representations, warranties, agreements or undertakings
of any party hereto with respect to the transactions under this Agreement other
than those set forth herein or made hereunder in the documents delivered at each
Closing. The section and paragraph headings contained in this Agreement and the
description of exhibits attached hereto are for reference puxposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
This Agreement may be executed in one or more counterparts and each counterpart
shall be deemed to be an original.
SECTION 13. PARTIES IN INTEREST. Except with the express written consent of
the other parties hereto, this Agreement shall not be assignable or otherwise
transferred in whole or in part. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective successors. Nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies under or by reason of this Agreement.
SECTION 14. SEVERABILITY. The invalidity of any portion hereof shall not
affect the validity, force or effect of the remaining portions hereo(pound)
SECTION I5. FURTHER ASSURANCES. Debt Holders, AOXY and Purchasers shall
execute and deliver or cause to be executed and delivered such additional
instruments, and take such other actions as the other party may reasonably
request in writing in order to effectuate the purposes ofthis Agreement.
{Remainder of Page Intentionally Blank]
<PAGE>
[Counterpart Signature Page to Waiver Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
Robert E. Wolfe
---------------------------------------------
[print name]
ATTEST: By: /s/ Robert E. Wolfe
------------------------------------------
/s/ Angela Nevarez Name: Robert E. Wolfe
- ----------------------------- Title: Individual
Witness
Address for Notices:
Robert E. Wolfe
476 Main Street
Maybrook, NY 12543
DEBT HOLDERS:
---------------------------------------------
[print name]
---------------------------------------------
Address for Notices
---------------------------------------------
---------------------------------------------
---------------------------------------------
7
<PAGE>
[Counterpart Signature Page to Waiver Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
Crossland Ltd. (Belize)
---------------------------------------------
[print name]
ATTEST: By: /s/ Anthony J.R. Howorth
------------------------------------------
Bahamas Company Services Ltd. Name: Anthony J.R. Howorth
Title: President
/s/ Pauline Cox
- -------------------------------
Secretary
Address for Notices:
Crossland, Ltd. (Belize)
60 Market Street
P.O. Box 364
Belize City, Belize, Central America
DEBT HOLDERS:
---------------------------------------------
[print name]
---------------------------------------------
Address for Notices
---------------------------------------------
---------------------------------------------
---------------------------------------------
7
<PAGE>
[Counterpart Signature Page to Waiver Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
Triton International Ltd.
---------------------------------------------
[print name]
ATTEST: By: /s/ Jens S. Olsen
------------------------------------------
Illegible Name: Jens S. Olsen
- ----------------------------- Title:
Secretary
Address for Notices:
Triton International Ltd.
Euro-Canadian House
Marlboro Street
Nassau, Bahamas
DEBT HOLDERS:
---------------------------------------------
[print name]
---------------------------------------------
Address for Notices
---------------------------------------------
---------------------------------------------
---------------------------------------------
7
<PAGE>
[Counterpart Signature Page to Waiver Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
---------------------------------------------
[print name]
ATTEST: By:
------------------------------------------
Name:
- ----------------------------- Title:
Witness
Address for Notices:
---------------------------------------------
---------------------------------------------
---------------------------------------------
DEBT HOLDERS:
Edelson Technology Partners II, L.P.
---------------------------------------------
[print name]
/s/ Harry Edelson
---------------------------------------------
Harry Edelson, General Prtner
Address for Notices
300 Tice Boulevard
Woodcliffe Lake, NJ 07675
7
<PAGE>
[Counterpart Signature Page to Waiver Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
---------------------------------------------
[print name]
ATTEST: By:
------------------------------------------
Name:
- ----------------------------- Title:
Witness
Address for Notices:
---------------------------------------------
---------------------------------------------
---------------------------------------------
DEBT HOLDERS:
Sharon C. Castle
---------------------------------------------
[print name]
/s/ Sharon C. Castle
---------------------------------------------
[Signature]
Address for Notices
P.O. Box 6680
Ketchum, ID 83340
7
<PAGE>
[Counterpart Signature Page to Waiver Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
---------------------------------------------
[print name]
ATTEST: By:
------------------------------------------
Name:
- ----------------------------- Title:
Witness
Address for Notices:
---------------------------------------------
---------------------------------------------
---------------------------------------------
DEBT HOLDERS:
Richard O. Jacobson
---------------------------------------------
[print name]
/s/ Richard O. Jacobson
---------------------------------------------
Address for Notices
Box 224
Des Moines, Iowa 50301
7
<PAGE>
[Counterpart Signature Page to Waiver Agreement of December 18, 1997]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASERS:
---------------------------------------------
[print name]
ATTEST: By:
------------------------------------------
Name:
- ----------------------------- Title:
Witness
Address for Notices:
---------------------------------------------
---------------------------------------------
---------------------------------------------
DEBT HOLDERS:
Emile Battat
---------------------------------------------
[print name]
/s/ Emile Battat
---------------------------------------------
[Signature]
Address for Notices
---------------------------------------------
---------------------------------------------
---------------------------------------------
7
<PAGE>
[Counterpart Signature Page to Waiver Agreement of December 18, 1997]
Advanced Oxygen Technologies, Inc.
By: /s/ Harry Edelson
------------------------------------------
Harry Edelson, Chairman
Address for Notices:
c/o ETP
300 Tice Boulevard
Woodcliff Lake, NJ 07675
Telecopier: (201) 930-8899
8
<PAGE>
Schedule 1
Purchasers
Name Amount
- --------------------------------- -------
Robert E. Wolfe $ 3,000
476 Main Street
Maybrook, NY 12543
Trion International, Ltd. $30,000
Euro-Canadian House
Marlboro Street
Nassau, Bahamas
Crossland, Ltd. (Belize) $27,000
60 Market Square
P.o. Box 364
Belize City, Belize, Central America
<PAGE>
Schedule 2
Debt Holders
Principal
Name Debt Amount Consideration
- ------------------------------------ ----------- -------------
Edelson Technology Partners II, L.P. $100,000 $21,818
300 Tice Boulevard
Woodcliff Lake, NJ
Telecopier: (201) 930-8899
Emile A. Battat $ 12,500 $ 2,727
10 Highgate Road
Riverside, Connecticut 06878
Richard O. Jacobson $150,000 $32,727
P.O. Box 224
Des Moines, IA 50301
Sharon Castle $ 12,500 $ 2,727
(address)
<PAGE>
Schedule 4(a)
Subsidiaries of Purchasers
--------------------------
NONE
<PAGE>
Exhibit D
Execution (i)
TRUST AGREEMENT
TRUST AGREEMENT dated as of November 7, 1997, between ADVANCED OXYGEN
TECHNOLOGIES, INC., a Delaware corporation, having an office at c/o ETP, 300
Tice Boulevard Woodcliff Lake, New Jersey (the "Company") and HARRY EDELSON,
having his office at 300 Tice Boulevard, Woodcliff Lake, New Jersey (the
"Trustee").
WHEREAS, the Company has sold all of its patents, and all related
technology and intellectual property rights to W. R Grace & Co. - Conn., a
Connecticut corporation, under a Patent Rights Purchase Agreement dated February
8, 1995 (the `Patent Rights Purchase Agreement"), under which the Company is to
receive royalties until April 30, 2007, and has no active business to conduct
other than the collection of royalties and the distribution of such royalties to
shareholders after the payment of the Company's liabilities and expenses.
WHEREAS, because the transfer of an undivided interest in royalty
receivables of the Company would be impractical, the shareholders and the Board
of Directors of the Company have voted to have the royalty receivables
distributed by the Company to a trustee to be held in trust for the benefit of
the shareholders in order to preserve the property and collect the income
therefrom for the shareholders; and
WHEREAS, the Company is willing to transfer its royalty receivables to a
trust in consideration of the assumption by the trust of the obligations of the
Company under certain Loan Agreements and Promissory Notes as described in an
Assignment and Assumption Agreement (the "Assignment Agreement"), a copy of
which is annexed hereto as Exhibit A.
NOW, THEREFORE, it is agreed as follows:
Article I
Transfer to the Trustee
1.1 Transfer to the Trustee. The Company grants, releases, assigns,
transfers, conveys, and delivers to the Trustee all of the Company's right,
title, and interest in and to the property described in Exhibit A attached,
together with the appurtenances and all the estate and rights of the Company in
and to the property, in trust nevertheless for the uses and purposes hereinafter
stated, and the Trustee accepts such property and the trust (the "Trust"), and
assumes the obligations and liabilities of the Company described in Exhibit A.
1.2 Instruments of further assurance. The Company will, upon reasonable
request of the Trustees, execute, acknowledge, and deliver such further
instruments and do such further acts as may
<PAGE>
be necessary or proper to carry out more effectively the purposes of this
Agreement, to transfer any property intended to be covered hereby, and to vest
in the Trustee, its successors and assigns, the estate, powers, instruments, or
funds in Trust hereunder.
1.3 Payment of transferee liabilities. Should any liability be asserted
against the Trustee as the transferee of the Trust Estate, on account of any
claimed liability of or through the Company, the Trustee may use such pan of the
Trust Estate as may be necessary in contesting the liability and in payment
thereof.
Article II
Definitions
2.1 Certain terms defined. For all purposes of this instrument, unless the
context otherwise requires:
(a) "Agreement" or "Agreement of Trust" shall mean this instrument as
originally executed or as it may from time to time be amended.
(b) "Company" shall mean Advance Oxygen Technologies, Inc., a corporation
organized under the laws of the State of Delaware.
(c) "Shareholders" and "Trust Beneficiaries" shall mean the holders of
record of the shares of the outstanding capital stock of the Company at the
close of business on the date hereof as listed in Exhibit B:
(d) "Trust Estate" shall mean all the property held from time to time by
the Trustee under this Trust Agreement.
(e) "Trust Moneys" shall mean all rents royalties, income, proceeds, and
other receipts of or from the Trust Estate, including but not limited to (i)
royalties or payments made under the Patent Rights Purchase Agreement, (ii)
proceeds of sale of any part of the Trust Estate, and (iii) interest earned on
any moneys or securities held by the Trustee under this Trust Agreement.
(f) "Trustee" shall mean the original Trustee and his successors.
2.2 Meaning of other terms. Except where the context otherwise requires,
words importing the masculine gender shall include the feminine and the neuter,
if appropriate, words importing the singular number shall include the plural
number and vice versa, and words importing persons shall include firms,
associations, and corporations. All references to Articles, Sections and other
subdivisions refer to the corresponding Articles, Sections, and other
subdivisions of this instrument.
2
<PAGE>
Article III
Trust Beneficiaries
3.1 Trust Beneficiaries. The beneficial interests in the Trust Estate shall
be divided into 4,796,252 equal undivided portions ("Units"), equal to the
4,796.52 shares of the outstanding capital stock of the Company at the close of
business on the date thereof One Unit shall be allocated to each share of the
outstanding capital stock of the Company.
3.2 Rights of Trust Beneficiaries. Each Shareholder shall be entitled to
participation as a Trust Beneficiary according to the number of his Units in the
rights and benefits due to Trust Beneficiaries. The interests of the Trust
Beneficiaries and all rights and benefits due to them hereunder shall be in all
respects personal property and upon the death of an individual Trust Beneficiary
his interest shall pass to his legal representative and such death shall in no
wise terminate or affect the validity of this Agreement. A Trust Beneficiary
shall have no title to, right to possession of, management of, or control of,
the Trust Estate except as hereunder otherwise expressly provided. No widower,
widow, heir, or devisee of any person who may be a Trust Beneficiary shall have
any right of dower, homestead, or inheritance, or of partition, or of any other
right, statutory or otherwise, in any property whatever forming a part of the
Trust Estate but the whole title, both legal and equitable, to all the Trust
Estate shall be vested in the Trustee and, the sole interest of the Trust
Beneficiary shall be the rights and benefits provided for under the Trust
Agreement.
3.3 Records. The Trustee shall cause to be kept books for the registration
and transfer of Units (the "Register of the Trustees"); and, the Trustee shall,
under reasonable regulations which he may prescribe, cause to be registered or
transferred therein, any of the Units. The Trustee may appoint one or more
registrars for this purpose, and may pay the registrar or registrars reasonable
compensation for services.
3.4 Transfer of Units. The Units and the interest represented thereby (but
no fractional part of a single Unit) may not be transferred by a Trust
Beneficiary except upon the death of a Trust Beneficiary by the properly
appointed legal representatives of his estate upon the delivery of such
documents as the Trustee may reasonably require and upon the payment of the
reasonable transfer charges, if any, established by the Trustee for the purpose
of reimbursing the Trustee for his incidental expenses. Until any transfer is
recorded in the Register of the Trustee, the Trustee may treat each Trust
Beneficiary as the owner for all purposes and shall not be charged with notice
of any claim or demand or the interest of any other person. The ownership and
registration of the Units may be in any form which the applicable law permits,
subject to the reasonable regulation thereof by the Trustee.
3.5 Effect of transfer. The recordation in the Register of the Trustee of a
transfer of a Unit shall, for the purpose of this Trust, transfer to the
transferee as of the date of recordation all right, title and interest of the
transferor in and to the Unit to which the transferor might then be or
thereafter become entitled.
3.6 Ownership of Units by Trustee. The Trustee, either individually or in a
representative or fiduciary capacity (other than as a Trustee of this Trust),
may acquire, own, and dispose of Units to the same extent as if he were not a
Trustee hereunder.
3
<PAGE>
Article IV
Duration and Termination of Trust
4.1 Name. This Trust shall be known as the AOXY Management Trust.
4.2 Duration. Unless sooner terminated as hereinafter provided, this Trust
shall continue until 21 years after the death of the survivor of the members of
the Board of Directors of the Company living on the date hereof In the event the
duration of this Trust is limited by the applicable laws of any state to a term
which is shorter than the term hereinabove set forth and a court of competent
jurisdiction has finally determined that the shorter term must be used and the
laws of such state must be applied in determining the duration of this Trust,
this Trust shall continue for the maximum period permitted under the laws of
such state for the duration of this Trust, in lieu of the period set forth in
the preceding sentence.
4.3 Termination of Trust. Should the Trustee sell any part of the Trust
Estate as permitted by Article VII (other than investments of Trust Moneys by
the Trustee pursuant to Section 6.2), the Trust shall be deemed terminated with
respect to the property sold.
4.4 Termination by Trust Beneficiaries or by the Trustee. The Trust may be
terminated at any time by the action of more than 5O% in interest of the Unit
holders as evidenced in the manner provided in Section 12.1 or by the action of
the Trustee after the expiration of the Royalty Period (as defined in the Patent
Rights Purchase Agreement).
4.5 Distributions on termination by sale by Trustee. Upon a termination of
the Trust, in part, as a result of a sale by the Trustee of any part of the
Trust Estate, the Trustee shall distribute to the Trust Beneficiaries, pro rata
according to the number of Units outstanding at the date fixed by the Trustee
for distribution, the net proceeds of the sale. The "net proceeds" means the
proceeds of the sale, whether in cash or other property, less (i) expenses of
the sale, (ii) expenses of the Trust, (iii) liabilities of the Company assumed
by the Trust which are due and payable and (iv) such reserve as the Trustee
deems necessary to establish out of the proceeds to meet liabilities. Each
distribution shall be made by mailing checks to the Trust Beneficiaries of
record at the close of business on the date fixed by the Trustee for such
distribution at their addresses as shown by the Register of Trustees.
4.6 Distribution on termination by passage of time or determination of
Trust Beneficiaries or the Trustee. Upon the termination of the Trust by passage
of time or by action of the Trust Beneficiaries or the Trustee in accordance
with the provisions of Section 4.4, the Trustee shall proceed as rapidly as
possible to convert the Trust Estate into cash or other property and the Trustee
shall distribute to the Trust Beneficiaries, pro rata according to the number of
Units outstanding at the date fixed by the Trustee for distribution, the net
proceeds. The "net proceeds" means the total cash or other property received as
a result of the conversion of the Trust Estate to cash or other property less
(i) expenses of conversion, (ii) liabilities hereunder, and (iii) such reserve
as the Trustee deems necessary to establish to meet liabilities hereunder.
However, if the Trustee determine that it wilt be in the best interests of the
Trust Beneficiaries not to convert part or all of the Trust Estate into cash or
other property, the Trust Estate not converted shall be distributed in kind to
the Trust Beneficiaries, pro rata according to the number of Units outstanding
at the date of distribution. Each distribution shall be made to the Trust
4
<PAGE>
Beneficiaries of record at the close of business on the date fixed by the
Trustee for the distribution at their addresses as shown by the Register of the
Trustees.
4.7 Continuance of Trust for winding up. After the termination of the Trust
and for the purpose of liquidating and winding up the affairs of this Trust, the
Trustee shall continue to act as such until his duties have been fully
performed. Upon the distribution of all of the Trust Estate to the Trust
Beneficiaries and the payment and discharge of all debts, liabilities, and
obligations of the Trust, the Trustee shall have no further duties or
obligations hereunder except to account as provided in Section 5.4.
Article V
Collection and Application of Trust Moneys
5.1 Collection of Trust Moneys. All Trust Moneys shall be collected by the
Trustee and held as a part of the Trust Estate.
5.2 Payment of expenses and other liabilities. The Trustee shall pay from
Trust Moneys all expenses, charges, liabilities, and obligations of the Trust
Estate and all liabilities and obligations which the Trustee specifically
assumed and agreed to pay pursuant to this Trust Agreement and the Assignment
Agreement and any transferee liabilities which the Trustee may be obliged to pay
as transferee including, but without limiting the generality of the foregoing,
interest, taxes, assessments, and pubic charges of every kind and nature and the
costs, charges, and expenses connected with or growing out of the execution or
administration of this Trust and such other payments and disbursements as are
provided in this Agreement or which may be determined to be a proper charge
against the Trust Estate by the Trustee. The Trustee may, in their discretion,
make provision by reserve or otherwise out of the Trust Moneys, for such amount
as the Trustee in good faith may determine to be necessary to meet present or
future liabilities of the Trust, whether fixed or contingent.
5.3 Distribution of Trust Moneys. The Trustee shall, as soon as practicable
distribute and pay, or cause to be distributed and paid, to the Trust
Beneficiaries, in proportion to their respective interests, pro rata according
to the number of Units owned by each Trust Beneficiaries, remaining after
payment of, or provision for, the expenses, liabilities, and obligations of the
Trust Estate as set forth in this Article (including any reserve referred to in
Section 5.2) and after the withholding of the taxes or charges, if any, as
provided in Section 5.2. In determining the amount of any distribution the
Trustee may rely upon the advice and opinion of independent certified public
accountants and of counsel.
5.4 Reports to holders of Trust Beneficiaries. As soon as practicable after
termination of the Trust, the Trustee shall submit a written report and account
to the Trust Beneficiaries showing (i) the assets and liabilities of the Trust
at the end of such fiscal year or upon termination and the receipts and
disbursements of the Trustee and (ii) any action taken by the Trustee in the
performance of their duties under this Trust Agreement which materially affects
the Trust Estate. The Trustee may submit similar reports for such interim
periods as they deem advisable. The approval by 51 percent
5
<PAGE>
in interest of the Trust Beneficiaries of any report or account shall, as to all
matters and transactions disclosed therein, be final and binding upon all
persons, whether in being or not, who may then or thereafter become interested
in or entitled to share in the Trust as a Trust Beneficiary. The fiscal year of
the Trust shall end on such date as the Trustee deems advisable.
Article VI
Purpose of Trust and Limitations on Trustee
6.1 Purpose of Trust. The sole purpose of this Trust is to conserve and
protect the Trust Estate and collect and distribute the income and proceeds to
the Trust Beneficiaries after the payment of, or provision for, expenses and
liabilities.
6.2 Limitations on Trustee. The Trustee shall not at any time, on behalf of
the Trust or Trust Beneficiaries, enter into or engage in any business. This
limitation shall apply irrespective of whether the conduct of any such business
activities is deemed by the Trustee to be necessary or proper for the
conservation and protection of the Trust Estate. The Trustee shall not invest
any of the funds held in the Trust Estate, except that the Trustee may deposit
money under this Agreement in an interest-bearing bank account or accounts or in
a checking account or accounts and the Trustee may purchase obligations of the
United States. The Trustee shall be restricted to the holding and collection of
the Trust Moneys and its payment and distribution for the purposes set forth in
this Agreement and to the conservation and protection of the Trust Estate and
the administration thereof in accordance with the provisions of this Agreement.
Article VII
Powers of the Trustee
7.1 Generally. The Trustee shall hold the legal and equitable title to all
property at any time constituting a part of the Trust Estate and shall hold the
property in Trust to be administered and disposed of by them pursuant to the
terms of this Agreement for the benefit of the Trust Beneficiaries.
7.2 Specific powers exercisable without consent of Trust Beneficiaries.
Subject to the provisions of Article VI, the Trustee shall have the following
specific powers in addition to the powers conferred upon him by law, exercisable
without the consent of the Trust Beneficiaries, but their enumeration shall not
be considered in any way to limit or control the power of the Trustee to act as
specifically authorized by any other Section or provision of this Agreement and
to act in such manner as the Trustee may deem necessary or appropriate to
conserve and protect the Trust Estate or to confer on the Trust Beneficiaries
the benefits intended to be conferred upon them by this Agreement:
(a) To cause any investments of Trust Moneys pursuant to Section 6.2 to be
registered and held in the name of a nominee or nominees without increase or
decrease of liability with respect thereto;
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(b) To collect and receive any and all money and other property of
whatsoever kind or nature due to or owing or belonging to the Trust and to give
full discharge and acquittance therefor;
(c) To institute or defend actions for declaratory judgments or other
actions and to take such other action as the Trustee may deem necessary or
desirable to prevent a default or to enforce the default provisions or other
provisions of the Patent Rights Purchase Agreement and any other instruments
relating to or forming a part of the Trust Estate;
(d) To perform any act authorized, permitted, or required under the Patent
Rights Purchase Agreement or any other instruments relating to or forming a part
of the Trust Estate whether in the nature of an approval, consent, demand, or
notice thereunder or otherwise, unless such act would require the consent of the
Trust Beneficiaries in accordance with the express provisions of this Agreement;
(e) To sell, transfer, assign, or otherwise dispose of all or any pact of
the Trust Estate for cash or other consideration.
(f) To cancel, terminate or amend the Patent Rights Purchase Agreement or
any other instruments relating to or forming a part of the Trust Estate, and to
execute a new agreement with respect to any property in the Trust Estate,
notwithstanding that the term of the agreement may extend beyond the term of
this Trust, provided that no new agreement or other instrument shall permit the
Trustee to engage in any activity prohibited by Article VI.
(g) To amend this Agreement in any manner whatever, provided that no
amendment shall permit the Trustee to engage in any activity prohibited by
Article V I.
(h) To borrow money and to pledge or mortgage as security for the loan all
or any part of the Trust Estate when in the opinion of the Trustee it is
necessary to borrow money in order to carry out properly the purpose of this
Trust, and so long as such borrowing does not violate the provisions of Article
VI.
(i) To do and perform any acts or things and only those acts or things
necessary or appropriate for the conservation and protection of the Trust
Estate, and in this connection to employ such agents and to confer upon them
such authority as the Trustee may deem appropriate, and to pay reasonable
compensation therefor.
Article VIII
Concerning the Trustee
8.1 Generally. The Trustee accepts and undertakes to discharge the Trust
created by this Agreement, upon the terms and conditions hereof. The Trustee
shall exercise such of the rights and powers vested in him by this Agreement,
and use the same degree of care and skill in his exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Agreement shall be construed to relieve the Trustee from
liability for negligent
7
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action, negligent failure to act, or willful misconduct, except that:
(a) the Trustee shall not be responsible for the acts or omissions of any
other Trustee if done or omitted without his knowledge or consent unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent
facts, and no successor Trustee shall be in any way responsible for the acts or
omissions of any Trustee in office prior to the date on which he becomes a
Trustee.
(b) The Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement against the
Trustee.
(c) In the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement; but in the case of
any certificates or opinions which are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine them to determine
whether or not they conform to the requirements of this Agreement.
(d) The Trustee shall not be liable for any error of judgment made in good
faith, unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts.
(e) The Trustee shall not be liable with respect to any action taken or
omitted to be taken by him in good faith in accordance with the direction of a
majority in interest of the Trust Beneficiaries relating to the time, method,
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee under this
Agreement.
8.2 Reliance by Trustee. Except as otherwise provided in Section 8.1:
(a) The Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, or other paper or document believed by him to be
genuine and to have been signed or presented by the proper party or parties.
(b) The Trustee may consult with legal counsel to be selected by him, and
the Trustee shall not be liable for any action taken or suffered by it in
accordance with the advice of counsel.
8
<PAGE>
(c) Persons dealing with the Trustee shall look only to the Trust Estate to
satisfy any liability incurred by the Trustee to such person in carrying out the
terms of this Trust, and the Trustee shall have no personal individual
obligation to satisfy any such liability.
8.3 Indemnification of Trustee. The Trustee shall be indemnified by and
receive reimbursement from the Trust Estate against and from any and all loss,
liability, expense, or damage which such Trustee may incur or sustain, in good
faith and without negligence, in the exercise and performance of any of the
powers and duties of such Trustee under this Agreement.
Article IX
Protection of Persons Dealing with the Trustee
9.1 Reliance on statement by Trustee. Any person dealing with the Trustee
shall be fully protected in relying upon the Trustee's certificate that he has
authority to take any action under this Trust. Any person dealing with the
Trustee shall be fully protected in relying upon the Trustee's certificate
setting forth the facts concerning the calling of any meeting of the Trust
Beneficiaries the giving of notice thereof, and the action taken at such
meeting, including the number of Units represented by Trust Beneficiaries taking
such action.
9.2 Application of money paid or transferred to Trustee. No person dealing
with the Trustee shall be required to follow the application by the Trustee of
any money or property which may be paid or transferred to the Trustee.
Article X
Compensation of Trustee
10.1 Amount of compensation. In lieu of commissions fixed by law for
Trustee, the Trustee shall receive as compensation for services as Trustee
hereunder the sum of $ I5,000 per annum plus, in any year in which there is a
distribution of all or any portion of the Trust Estate to the Trust
Beneficiaries, an amount equal to 3% of the aggregate amount of any such
distribution and such additional compensation from the cash proceeds of the sale
of any part of the Trust Estate as may be approved by a majority in interest of
the Trust Beneficiaries. In the event of any substitution of or change in the
Trustee, each Trustee shall receive compensation based only upon such royalties,
and other income and proceeds of sale received and distributed while the Trustee
was in office.
10.2 Dates of payment. The compensation payable to the Trustee pursuant to
the provisions of Section 10.1 shall be paid annually or at such other times as
the Trustee may determine.
10.3 Expenses. The Trustee shall be reimbursed from the Trust Estate for
all expenses reasonably incurred by them in the performance of their duties in
accordance with this Agreement.
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Article XI
Trustee and Successor Trustee
11.1 Resignation and removal. Any Trustee may resign and be discharged by
giving written notice to the other Trustee. Such resignation shall become
effective upon the appointment of the Trustee's successor and the successor's
acceptance of the appointment. Any Trustee may be removed at any time, with or
without cause, by two-thirds in interest of the Trust Beneficiaries.
11.2 Appointment of successor. Should at any time a Trustee resign or be
removed, die or become incapable of acting, or be adjudged a bankrupt or
insolvent, a vacancy shall be deemed to exist in the office of such Trustee, and
a successor shall be appointed by the other Trustee or by a majority in interest
of the Trust Beneficiaries.
11.3 Acceptance of appointment by successor Trustee. Any successor Trustee
shall execute an instrument accepting the appointment and shall deliver one
counterpart each to the other Trustee and to the retiring Trustee. Thereupon the
successor Trustee shall without any further act, become vested with all the
estates, properties, rights, powers, trusts, and duties of his or its
predecessor in the Trust with like effect as if originally named; but the
retiring Trustee shall nevertheless, when requested in writing by the successor
Trustee and upon payment of lawful charges and disbursements then unpaid, if
any, execute and deliver an instrument or instruments conveying and transferring
to the successor Trustee upon the Trust herein expressed, all the estates,
properties, rights, powers, and trusts of the retiring Trustee, and shall duty
assign, transfer, and deliver to the successor Trustee all property and money
held by him hereunder.
11.4 Appointment of successor Trustee by court. In the event a vacancy in
the office of Trustee shall continue for a period of at least 90 days, a
temporary Trustee may be appointed by the Superior Court of the State of New
Jersey, on the application of any Trust Beneficiary upon such notice, if any, as
the Court may deem proper and prescribe. The temporary Trustee shall act only
until one or more successor Trustee are appointed in the manner prescribed in
Section 11.2.
11.5 Bonds. No bond shall be required of any original Trustee, or, if a
bond is required by law, no surety or security with respect to such bond shall
be required unless required by law. No bond shall be required of any successor
Trustee, or, if a bond is required by law, no surety or security with respect to
such bond shall be required unless required by law.
Article XII
Concerning the Trust Beneficiaries
12.1 Evidence of action by Trust Beneficiaries. Whenever in this Agreement
it is provided that the Trust Beneficiaries may take any action (including the
making of any demand or request, the giving of any notice, consent, or waiver,
the removal of a Trustee, the appointment of a successor Trustee, or the taking
of any other action); the fact of taking any such action may be evidenced (i) by
any instrument or any number of instruments of similar tenor executed by the
Trust Beneficiaries in person or by agent or attorney appointed in writing, or
(ii) by the record of the Trust Beneficiaries voting in favor of the action at
any meeting of Trust Beneficiaries duly called and held in accordance
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with the provisions of Article XIII.
12.2 Limitation on snits by Trust Beneficiaries. No Trust Beneficiary shall
have any right by virtue of any provision of this Agreement to institute any
action or proceeding at law or in equity against any party other than the
Trustee upon or under or with respect to the Trust Estate or the agreements
relating to or forming part of the Trust Estate, and, unless not less than 51
percent in interest of the Trust Beneficiaries shall have made written request
upon the Trustee to institute such action or proceeding as Trustee and shall
have offered to the Trustee reasonable indemnity against the costs and expenses
to be incurred, and the Trustee for 30 days after its receipt of such notice,
request, and offer of indemnity shall have failed to institute any such action
or proceeding.
12.3 Requirement of undertaking. The Trustee may request any court to
require, and any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Agreement, or in any suit against
the Trustee for any action taken or omitted by them as Trustee , the filing by
any party litigant in the suit of any undertaking to pay the costs of such suit,
and the court may in its discretion assess reasonable costs, including
reasonable attorney's fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant.
Article XIII
Meetings of Trust Beneficiaries
13.1 Purpose of meetings. A meeting of the Trust Beneficiaries may be
called at any time and from time to time pursuant to the provisions of this
Article for the purpose of taking any action which the terms of this Agreement
permit a percentage in interest of the Trust Beneficiaries to take either acting
alone or with the Trustee.
13.2 Meeting called by Trustee. The Trustee may at any time call a meeting
of the Trust Beneficiaries to be held at such time and at such place within the
State of New Jersey (or elsewhere if so determined by the Trustee) as the
Trustee shall determine. Written notice of every meeting of the Trust
Beneficiaries shall be given by the Trustee (except as provided in Section
13.3), which will set forth the time and place of the meeting and in general
terms the action proposed to be taken at the meeting, and shall be mailed not
more than 40 nor less than 20 days before the meeting is to be held to all of
the Trust Beneficiaries. The notice shall be directed to the Trust Beneficiaries
at their respective addresses as they appear in the Register of the Trustee.
13.3 Meeting called on request of Trust Beneficiaries. Within 30 days after
written request to the Trustee by at least 25 percent in interest of the Trust
Beneficiaries to call a meeting of Trust Beneficiaries, which written request
shall specify in reasonable detail( the action proposed to be taken, the Trustee
shall proceed under the provisions of Section 13.2 to call a meeting of the
Trust Beneficiaries, and if the Trustee fails to call the meeting within the
30-day period then the meeting may be called by such 25 percent in interest of
the Trust Beneficiaries or their designated representatives.
13.4 Persons entitled to vote at meeting of Trust Beneficiaries. Each Trust
Beneficiary of
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one or more Units shall be entitled to vote at a meeting of the Trust
Beneficiaries either in person or by his proxy duly authorized in writing. The
signature of the Trust Beneficiary on such written authorization need not be
witnesses or notarized. Each person entitled to vote shall have one vote for
each Unit he holds or represents.
13.5 Quorum. At any meeting of Trust Beneficiaries, the presence in person
or by proxy of persons holding Units sufficient to take action on any matter for
the transaction of which the meeting was called shall be necessary to constitute
a quorum; but if less than a quorum be present, the persons holding or
representing a majority in interest of the Units represented at the meeting may
adjourn the meeting with the same effect and for all intents and purposes as
though a quorum had been present.
13.6 Adjournment of meeting. Any meeting of Trust Beneficiaries may be
adjourned 8 a.m. time to time and a meeting may be held at such adjourned time
and place without further notice.
13.7 Conduct of meetings. The Trustee shall appoint the Chairman and the
Secretary of the meeting. The vote upon any resolution submitted to any meeting
of Trust Beneficiaries shall be by written ballot. Two Inspectors of Vote,
appointed by the Chairman of the meeting shall count all votes cast at the
meeting for or against any resolution and shall make and file with the Secretary
of the meeting their verified written report.
13.8 Record of meeting. A record of the proceedings of each meeting of
Trust Beneficiaries shall be prepared by the Secretary of the meeting. The
record shall be signed and verified by the affidavits of the Chairman and the
Secretary of the meeting and shall be delivered to the Trustee to be preserved
by them. Any record so signed and verified shall be conclusive evidence of all
the matters therein stated.
Article XIV
Amendments
14.1 Consent of Trust Beneficiaries. At the direction or with the consent
(evidenced in the manner provided in Section 12.1) of the holders of not less
than 66.6 percent (unless a higher percentage is expressly required for an
amendment under the provisions of this Agreement) in interest of the Trust
Beneficiaries, the Trustee shall promptly make and execute a declaration
amending this Agreement for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or
amendments, provided, however, that no amendment shall permit the Trustee to
engage in any activity prohibited by Article VI.
14.2 Effect of amendment. Upon the execution of any declaration of
amendment by the Trustee, this Agreement shall be deemed to be modified and
amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Agreement of the Trustee
and the Trust Beneficiaries shall thereafter be determined, exercised, and
enforced subject in all respects to the modification and amendment, and all the
terms and conditions of any amendment shall be deemed to be part of the terms
and conditions of this Agreement for any and all purposes.
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Article XV
Miscellaneous
15.1 Filing Documents. This agreement shall be filed or recorded in such
office or offices as the Trustee may determine to be necessary or desirable. A
copy of this agreement and all amendemnts shall be filed in the office of each
Trustee and shall be available at all times for inspection by any Trust
Beneficiary or his duly authorized representative. The Trustee shall file or
record any amendment of this Agreement in the same place where the original
Agreement is filed or recorded. The Trustee shall file or record any instrument
which relates to any changes in the office of Trustee in the same places where
the original Agreement is filed or recorded.
15.2 Laws as to construction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
15.3 Separability. In the event any provision of this Agreement or its
application to any person or circumstances shall be finally determined by a
court of proper jurisdiction to be invalid or unenforceable to any extent, the
remaider of this Agreement, or the appliocation of such provision to persons or
circumstances other than thiose as to which it is held invalid ore
unenforceable, shall not be affected thereby, and each provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
15.4 Notices. Any notice or other communication by the Trustee to any Trust
Beneficiary shall be deemed to have been sufficiently given, for all purposes,
if given by being deposited, postage prepaid, in a post office or kletter box
addressed to the holder at his address as shown on the Register of the Trustee.
15.5 Counterparts. This Agreemenrt may be executed in any number of
counterparts, each of which shall be an original, but the counterparts shall
together constitute but one and the same instrument.
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IN WITNESS WHEREOF this Agreement has been duly executed as of the date
first above mentioned.
Advanced Oxygen Technologies, Inc.
By: /s/ Harry Edelson
------------------------------
Chalrman
/s/ Harry Edelson
-----------------------------------
Harry Edelson, Trustee
STATE OF NEW JERSEY; COUNTY OF BERGEN
On the 7th day of November, 1997, before me personally came Harry
Edelson to me known, who being by me duly sworn, did depose and say that he is
the Chairman of Advanced Oxygen Technologies, Inc., a Delaware corporation, and
that he executed the foregoing instrument at the direction of the board of
directors as the act and deed of said corporation.
--------------------------------
Notary Public
STATE OF NEW JERSEY; COUNTY OF BERGEN
On the 7th day of November, 1997, before me personally came Harry Edelson
to me known, who being by me duly sworn, did depose and say that he is the
Trustee named in the foregoing instrument, and that he executed the foregoing
instrument as his own act and deed.
--------------------------------
Notary Public
14
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Exhibit A
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Agreement made this 8th day of November, 1997, by and among ADVANCED
OXYGEN TECHNOLOGIES, INC., a Delaware corporation (the "Company"), AOXY
MANAGEMENT TRUST, a New Jersey Trust (the "Trust"), and certain lenders to the
Company (the "Lenders" and each a "Lender").
PRELIMINARY STATEMENT
The Company has borrowed the aggregate amount of $275 000 from the Lenders
pursuant to various Loan Agreements and various Promissory Notes, (the "Loan
Agreements" and the "Promissory Notes" respectively). The Company has also
entered into a patent assignment agreement dated February 8, 1995 (the "Patent
Assignment Agreement") with W. R. Grace & Co. - Conn., a Connecticut corporation
("Grace"), pursuant to which the Company assigned all of its technology to Grace
(the "Patent Sale") in return for the right to receive royalties from Grace.
The Company desires to assign all of its rights to receive royalties under
the Patent Assignment Agreement to the Trust, for the benefit of the Lenders the
holders of the preferred stock of the Company and the holders of the common
stock of the Company on the date hereof, respectively, in consideration of the
assumption by the Trust of the obligations of the Company to the Lenders under
the Loan Agreements and the Promissory Notes (the "Loans").
SECTION 1. Assignment. The Company, irrevocably and unconditionally, hereby
assigns to the Trust all of its right, title and interest in and to the
royalties to be received from Grace under the Patent Assignment Agreement (the
"Royalties").
SECTION 2. Assumption. In consideration of the assignment of the Royalties
as provided in Section 1 hereof, the Trust assumes all of the following
obligations associated with the Royalties, in order of priority:
2.01 Commission to Certain Employees. First, from each royalty payment
received, if any, to Mr. Arnold Copts, Ms. Sharon Castle and Mr. David Overmyer,
in equal shares, 5% of the first million dollars of Royalties, 4% of the second
million dollars, 3% of the third million dollars, 2% of the fourth million
dollars and 1% of all Royalties received in excess four million dollars as more
fully set forth on Schedule 2.01 hereto.
2.02 Repayment of the Loans the Preferred Stock and the Balance.
Second, from each royalty payment received, if any, to the following persons in
the following order of priority:
(1) Lenders. To the Lenders the aggregate amount of $275,000,
plus interest earned thereon, in proportion to the amount of each Lender's
outstanding Loan to the total amount of all of the Loans, as set forth on
Schedule 2.02(1) hereto, until all Lenders are repaid in full.
<PAGE>
(2) Preferred Stockholders. To the holders of the Company's
issued and outstanding preferred stock on the date of the establishment of the
Trust until the principal amount invested in the preferred stock by them, as set
forth on Schedule 2.02121 hereto, until repaid in full.
(3) Common Stockholders. With the remainder of the Royalties
received, if any, to the holders of the Company's issued and outstanding common
stock on the date of the establishment of the Trust.
SECTION 3. Consent of Lenders. The Lenders hereby consent to the assignment
of the Royalties to the Trust and the priority of the payment of the Royalties
from the Trust as set forth in Section 2 hereof
SECTION 4. Miscellaneous
4.01. Except as otherwise expressly stated herein, all computations
required hereunder shall be made by the application of generally accepted
accounting principles and practices consistently applied.
4.02. Neither failure nor delay on the pact of the Lender to exercise
any right, power, or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power, or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
4.03. This Agreement and the Note shall be deemed to be a contract
made under the laws of the State of New Jersey and for all purposes shall be
governed by the laws of that state without regard to its conflict of laws
provisions.
[Remainder of Page Intentionally Blank]
2
<PAGE>
(counterpart signature page to Assignment and Assumption Agreement]
IN WITNESS WHEREOF the parties hereto have executed and delivered this
Agreement on and as of the date first above written.
ADVANCED OXYGEN TECHNOLOGIES, INC.
By:
------------------------------
Harry Edelson, Chairman
Address for Notices:
c/o ETP
300 Tice Boulevard
Woodcliff Lake, New Jersey 07675
Telecopier: (201) 930-8899
AOXY MANAGEMENT TRUST
By:
------------------------------
Harry Edelson, Chairman
Address for Notices:
c/o ETP
300 Tice Boulevard
Woodcliff Lake, New Jersey 07675
Telecopier: (201) 930-8899
LENDERS:
----------------------------------
{print name}
BY:
------------------------------
Name:
Title:
Address for Notices:
----------------------------------
----------------------------------
3
<PAGE>
Schedule 2.01
Commission to Certain Employees
In August 1995 in order to retain senior management, the Company agreed to pay
Mr. Arnold Kopetz, Ms. Sharon Castle and Mr. David Overmyer, officers of the
Company, a bonus if the Company successfully completed a sale of ihe Company or
its technology by May 31, 1995. The bonus would equal 5% of the first million
dollars of the gross proceeds from the Patent Sale, 4% of the next million
dollars of such gross proceeds, 3% of the third million, 2% of the fourth
million and 1% of all amounts received from the Patent Sale in excess 4 million.
This bonus is shared equally by Mr. Kopetz, Ms. Castle and Mr. Overmyer. Upon
the closing, they received, in the aggregate $16,750.00 or $5,583.33 each. As no
other royalties have been received to date from Grace, no additional sums have
been paid. All such bonus is payable only from the Grace royalty.
<PAGE>
Schedule 2.02(1)
LENDERS
Principal
Name Debt Amount
Edelson Technology Partners II, L.P. $100,000
300 Tice Boulevard
Wocdcliff Lake, NJ
Telecopier: (201) 930-8899
Emile A. Battat $ 12,500
10 Highgate Road
Riverside, Connecticut 06878
Richard O.Jacobson $150,000
P.O. Box 224
Des Moines, IA 50301
Sharon Castle $ 12,500
(address]
--------
Total $275.000
========
<PAGE>
Schedule 2.02(2)
PREFERRED STOCKHOLDERS
Name # of Shares $ Amount
Edelson Technology Partners II, L.P. 40,000 $200,000
300 Tice Boulevard
Woodcliff Lake, NJ
Telecopier: (201) 930-8899
Richard O. Jacobson 83,000 $415,000
P.O.Box 224
Des Moines, IA 50301
Emile A. Batatt 35,000 $175,000
10 Highgate Road
Riverside, Connecticut 06878
Albert James 15,000 $ 75,000
2783 Hidden Oak Drive
Seabrook Island, SC 29455
Amold Kopetz 500 $ 5,000
14 West Penny Road
South Barrington IL 60010
Wealth Monitors, Inc. 5,000 $ 25,000
11230 College Boulevard, Suite 110
Overland Park, KS 66210
(913)345-2822
Abarta, Inc. Master Trust 10,000 $ 50,000
1000 RIDC Plaza, Suite 404
Pittsburgh, PA 15238
(412)963-3165
