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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ________)*
KLEENAIR SYSTEMS, INC.
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
498487206
(CUSIP Number)
MATTHEW C. FRAGNER, 333 S. GRAND AVENUE, SUITE 3030, LOS ANGELES, CA 90071
(213) 620-1610
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
MARCH 7, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and
is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box.[ ]
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See
ss.240.13d-7 for other parties to whom copies are to be sent.
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* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
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CUSIP No. 498487206
1. Names of Reporting Persons. I.R.S. Identification Nos. of above
persons (entities only).
EcoLogic, LLC
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X......................................................
(b) .......................................................
3. SEC Use Only................................................
4. Source of Funds (See Instructions) AF
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
.................
6. Citizenship or Place of Organization CA
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7. Sole Voting Power...........................................
8. Shared Voting Power 1,590,000
9. Sole Dispositive Power......................................
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10. Shared Dispositive Power 1,590,000
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,590,000*
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
...........
13. Percent of Class Represented by Amount in Row (11) 25.8%**
14. Type of Reporting Person (See Instructions)
00
* Beneficial ownerhisp reported in this Sechedule 13D in all cases
includes 1,000,000 shares of Common Stock that may be issued in
connecion with the exercise of certain warrants exercisable within
60 days of the date of this filing.
** Such percent of class reported in this Schedule 13D in all cases
includes the addition of 1,000,000 shares of Common Stock (that may
be issued in connection with the exercise of certain warrants
exercisable within 60 days of the date of this filing) to the number
of shares believed to be outstanding.
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CUSIP No. 498487206
1. Names of Reporting Persons. I.R.S. Identification Nos. of above
persons (entities only).
Matthew C. Fragner
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X......................................................
(b) .......................................................
3. SEC Use Only
.......................................................
4. Source of Funds (See Instructions) AF
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
.................
6. Citizenship or Place of Organization USA
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7. Sole Voting Power...........................................
8. Shared Voting Power 1,590,000
9. Sole Dispositive Power......................................
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10. Shared Dispositive Power 1,590,000
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,590,000
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
...........
13. Percent of Class Represented by Amount in Row (11) 25.8%
14. Type of Reporting Person (See Instructions)
IN
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CUSIP No. 498487206
1. Names of Reporting Persons. I.R.S. Identification Nos. of above
persons (entities only).
Phillip Roberts
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X......................................................
(b) .......................................................
3. SEC Use Only................................................
4. Source of Funds (See Instructions) AF
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
.................
6. Citizenship or Place of Organization USA
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7. Sole Voting Power...........................................
8. Shared Voting Power 1,590,000
9. Sole Dispositive Power......................................
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10. Shared Dispositive Power 1,590,000
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,590,000
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
...........
13. Percent of Class Represented by Amount in Row (11) 25.8%
14. Type of Reporting Person (See Instructions)
IN
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CUSIP No. 498487206
1. Names of Reporting Persons. I.R.S. Identification Nos. of above
persons (entities only).
Citadel Capital Management Corporation
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X......................................................
(b) .......................................................
3. SEC Use Only................................................
4. Source of Funds (See Instructions) AF
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
.................
6. Citizenship or Place of Organization NV
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7. Sole Voting Power..........................................
8. Shared Voting Power 1,590,000
9. Sole Dispositive Power.....................................
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10. Shared Dispositive Power 1,590,000
11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,590,000
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
...........
13. Percent of Class Represented by Amount in Row (11) 25.8%
14. Type of Reporting Person (See Instructions)
CO
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CUSIP NO. 498487206
ITEM 1. SECURITY AND ISSUER.
This statement relates to shares of Common Stock (the "Stock") of KleenAir
Systems, Inc. ("KAIR"). The principal executive office of KAIR is located at 36
E. Corniche Drive, Dana Point, CA 92629.
ITEM 2. IDENTITY AND BACKGROUND.
The persons filing this statement and the persons enumerated in Instruction C of
Schedule 13D and, where applicable, their respective places of organization,
members, managers, directors, executive officers and controlling persons, and
the information regarding them, are as follows:
(a) Matthew C. Fragner ("MCF"), Phillip Roberts ("PR"), EcoLogic, LLC,
a California limited liability company ("EcoLogic"), and Citadel Capital
Management Corporation, a Nevada corporation ("CCMC"). The executive officers
and directors of CCMC are:
Mary Osaki Chairman of the Board and Director
Vernon Coleman Chief Executive Officer and Director
Catherine Yup Chief Operating Officer and Director
Michele G. Vergara Chief Financial Officer and Director
William B. Wong Secretary and Director.
(b) The business address of MCF and EcoLogic is 333 South Grand Avenue,
Suite 3030, Los Angeles, California 90071; the business address of PR, CCMC and
each of the executive officers and directors of CCMC is 1128 Mission Street,
South Pasadena, California 91030.
(c) MCF and PR, and each of the executive officers and directors of
CCMC, are employees of CCMC. MCF is Director of Investments and General Counsel
of CCMC and PR is a senior business analyst of CCMC. The executive officers and
directors of CCMC hold the positions set forth in subparagraph (a), above.
(d) During the last five years, none of such persons has been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years, none of such persons was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws of finding any violation
with respect to such laws.
(f) MCF and PR, and each of the executive officers and directors of
CMCC, are citizens of the United States of America.
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The source and amount of funds used in purchasing the Stock were as follows:
<TABLE>
<CAPTION>
PURCHASER SOURCE OF FUNDS AMOUNT
- ------------- ------------------ --------
<S> <C> <C>
EcoLogic, LLC Borrowed from CCMC $250,000
</TABLE>
Such loan accrues interest at the rate of 10 percent per annum and has a
maturity of two years following the making of such loan. Interest and principal
are payable at maturity. In the event that the warrants attached hereto as
Exhibits B and C are exercised, the amount necessary to exercise such warrants
will be loaned to EcoLogic from CCMC on similar terms.
ITEM 4. PURPOSE OF TRANSACTION.
The sole purpose of the acquisition of the Stock reported herein was and is for
investment. The reporting persons may buy or sell Stock in the future.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The beneficial ownership of the Stock of the persons named in Item 2 of this
statement is as follows at the date hereof.
<TABLE>
<CAPTION>
Aggregate
Beneficially
Owned Voting Power Dispositive Power
Name Number Percent Sole Shared Sole Shared
<S> <C> <C> <C> <C> <C> <C>
EcoLogic, LLC 1,590,000 25.8% 0 1,590,000 0 1,590,000
Matthew C. Fragner 1,590,000 25.8% 0 1,590,000 0 1,590,000
Phillip Roberts 1,590,000 25.8% 0 1,590,000 0 1,590,000
CCMC 1,590,000 25.8% 0 1,590,000 0 1,590,000
</TABLE>
The persons filing this statement effected no transactions in the Stock during
the past sixty days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
In connection with the acquisition of the stock of KAIR pursuant to
Exhibit A attached hereto, KAIR issued to EcoLogic two warrants to
purchase shares of KAIR common stock (500,000 shares for each warrant),
copies of which are attached as Exhibit B and Exhibit C, respectively.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Stock and Warrant Purchase Agreement (Exhibit A).
2. Warrant for 500,000 shares of common stock of KAIR (Exhibit B).
3. Warrant for 500,000 shares of common stock of KAIR (Exhibit C).
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: March 10, 2000
EcoLogic, LLC
By: /s/ Matthew C. Fragner
---------------------------
Matthew C. Fragner, Manager
/s/ Matthew C. Fragner
- -------------------------------
Matthew C. Fragner
/s/ Phillip Roberts
- -------------------------------
Phillip Roberts
Citadel Capital Management Corporation
By: /s/ Catherine Yup
---------------------------
The original statement shall be signed by each person on whose behalf the
statement is filed or his authorized representative. If the statement is signed
on behalf of a person by his authorized representative (other than an executive
officer or general partner of the filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement: provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
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EXHIBIT A
STOCK AND WARRANT PURCHASE AGREEMENT
This Agreement is dated as of January 31, 2000 and is by and between
EcoLogic, LLC, a California limited liability company ("ECOLOGIC"), and KleenAir
Systems, Inc., a Nevada corporation ("KLEENAIR").
1. RECITALS. Concurrently with the execution of this Agreement, KleenAir
and Extengine Transport Systems, LLC, a Delaware limited liability company
("ETS"), are entering into an Agreement Regarding Engine Testing (the "ENGINE
TESTING AGREEMENT") regarding testing of certain engines which ETS has arranged
to be sent from the Peoples' Republic of China to the United States in order to
obtain funds which will allow KleenAir to develop an engine specific NOxMaster
device and to test such device to confirm its pollution reduction efficacy in a
manner which will allow ETS to obtain governmental certification. Consequently,
KleenAir has agreed to sell 500,000 shares of its stock and to issue warrants
for an additional 1,000,000 shares of common stock (the "WARRANTS") to EcoLogic,
on the price and terms set forth below.
2. PURCHASE AND SALE OF COMMON STOCK. KleenAir agrees to sell to
EcoLogic, and EcoLogic agrees to purchase from KleenAir, Five Hundred Thousand
(500,000) shares of common stock of KleenAir (the "SHARES"). The cash purchase
price shall be $.50 per share, for an aggregate purchase price of $250,000 (the
"PURCHASE PRICE"). The Purchase Price for the Shares shall be paid as follows:
2.1 At the Closing (as defined in SECTION 4 below), EcoLogic shall
pay or cause to be paid to KleenAir the sum of $125,000 by the delivery of a
cashier's check payable to KleenAir. 2.2 On each of the following dates,
EcoLogic shall transfer by wire transfer of funds into the Account (as defined
in the Engine Testing Agreement) the sum of $25,000:
March 20, 2000
April 20, 2000
May 19, 2000
June 20, 2000
July 20, 2000
3. WARRANTS. In consideration of the payment of the Purchase Price and
the execution of the Engine Testing Agreement by ETS, KleenAir shall authorize,
execute and deliver to EcoLogic a Warrant in the form of EXHIBIT A attached
hereto and made a part hereof and a Warrant in the form of EXHIBIT B attached
hereto and made a part hereof.
4. CLOSING. The closing of the transaction ("CLOSING") shall take place
by February 28, 2000. The Closing shall take place at the offices of EcoLogic at
333 South Grand Avenue, Suite 3030, Los Angeles, California 90071 or by mail. At
the Closing, KleenAir shall deliver stock certificates for the Shares, and
EcoLogic shall deliver to KleenAir a check in the amount of the payment due at
Closing as described in SECTION 2. In addition, KleenAir and EcoLogic shall
execute and deliver such further instruments as are reasonably necessary to
effectuate the transfer of the Shares.
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5. REPRESENTATIONS AND WARRANTIES OF KLEENAIR. KleenAir represents and
warrants to EcoLogic as follows:
5.1 KleenAir is the owner of the Shares, free and clear of all liens,
assessments and encumbrances, and EcoLogic has not previously assigned or
hypothecated any rights in and to such Shares.
5.2 KleenAir has full authority to execute and deliver the stock
certificates conveying the Shares and the Warrants to EcoLogic and any other
instruments or documents reasonably necessary for the consummation of the
transaction contemplated by this Agreement.
5.3 KLEENAIR ORGANIZATION. Kleen Air has been duly organized in the
State of Nevada and is in good standing in the States of California and Nevada
and in every jurisdiction in which KleenAir does business.
5.4 PATENTS AND TECHNOLOGY. KleenAir is the exclusive owner of all
international marketing, manufacturing, distribution and sales rights for the
NOxMaster and is the holder of valid U.S. and foreign patents for the technology
behind the NOxMaster, including without limitation the patents attached hereto
as EXHIBIT A.
5.5 CONSENTS. No consents, permits or permissions are required from
any third party or governmental agency for the execution and/or performance of
this Agreement by KleenAir.
6. COVENANTS OF KLEENAIR. KleenAir shall deposit the amounts paid by
EcoLogic hereunder into the Account (as defined in the Engine Testing Agreement)
and shall cause such sums to be held and disbursed in accordance with the terms
of the Engine Testing Agreement.
7. MISCELLANEOUS PROVISIONS.
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7.1 NOTICES. All notices, requests, demands or other communications
required or desired to be given hereunder, to be legally binding, shall be in
writing and may be served personally (including service by any commercial
messenger or courier service), by reputable overnight carrier, or by registered
or certified United States mail, return receipt requested, with all postage and
fees fully prepaid, addressed to the respective address set forth below, or to
such other address as the party to whom the notice is addressed has theretofore
specified in a notice served upon the other party in accordance with the
requirements hereof. All notices shall be effective upon actual delivery to the
addressee, as evidenced by the return receipt if service is by mail, except in
the case of a party that has relocated and has not served upon the other party a
notice of a new address for service of notices as specified above, or in the
case if a party to whom the notice is addressed that refuses to accept delivery
of the notice, in either of which cases the notice shall be deemed effective
upon the first date of attempted delivery, as indicated by the return receipt if
the attempted service was by mail, at the last address of which the party
attempting to make the service had notice.
The initial addresses of the parties for notices shall be:
EcoLogic, LLC
c/o Citadel Capital Management Corporation
1128 Mission St.
South Pasadena, CA 91030
Attn: Phil Roberts
With a copy to:
Citadel Capital Management Corporation
333 S. Grand Avenue, Suite 3030
Los Angeles, CA 90071
Attn: Matthew C. Fragner
KleenAir Systems, Inc.
36 E. Corniche Drive
Dana Point, CA 92629
Attn: Lionel Simons
7.2 APPLICABLE LAW AND VENUE. This Agreement is made in, and shall be
governed, enforced and construed under the laws of, the State of California.
Venue for any action brought regarding this Agreement or the transaction
contemplated herein shall be in Los Angeles County, California.
7.3 BINDING UPON SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, estates, personal representatives, successors, and assigns. No assignment
shall relieve the assignor of any liability accruing under this Agreement either
before or after the assignment.
7.4 ENTIRE AGREEMENT; INTEGRATION. Together with any other agreements
executed concurrently and in connection herewith, this Agreement constitutes the
entire understanding and agreement of the parties with respect to the subject
matter hereof, and shall
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supersede and replace all prior understandings and agreements, whether verbal or
in writing. The parties confirm and acknowledge that there are no other
promises, covenants, understandings, agreements, representations, or warranties
with respect to the subject matter of this Agreement except as expressly set
forth herein, or in any instrument executed by the parties of even date
herewith.
7.5 AMENDMENTS ONLY IN WRITING. This Agreement may not be modified,
terminated, or amended in any respect, except pursuant to an instrument in
writing duly executed by all of the parties hereto.
7.6 ATTORNEYS' FEES. In the event that any party hereto shall bring
any legal action or other proceeding with respect to the breach, interpretation,
or enforcement of this Agreement, or with respect to any dispute relating to any
transaction covered by this Agreement, or in connection with any bankruptcy
proceeding relating to a party, the losing party or parties (or the debtor party
involved in the bankruptcy) in such action or proceeding shall reimburse the
prevailing party or parties therein for all reasonable costs of litigation,
including the reasonable noncontingent fees of attorneys, paralegals and other
professionals, in such amount as may be determined by the court or other
tribunal having jurisdiction, including matters on appeal.
7.7 INTERPRETATION. The language of this Agreement shall not be
construed against any party, since all parties have participated in the
negotiation and drafting of this Agreement. The term "including" shall mean
"including but not limited to." All captions and headings herein are for
convenience and ease of reference only, and shall not be used or referred to in
any way in connection with the interpretation or enforcement of this Agreement.
As used herein, the masculine, feminine or neuter gender, and the singular and
plural numbers, shall each be deemed to include the others, whenever and
wherever the context so indicates.
7.8 TIME OF ESSENCE. Time is of the essence of this Agreement.
7.9 FURTHER ASSURANCES. The parties agree to execute any further
documents, and take any further actions, as may be reasonable and appropriate in
order to carry out the purpose and intent of this Agreement.
7.10 NO THIRD PARTY BENEFIT. Except as may otherwise be expressly
provided herein, this Agreement is made and entered into for the sole benefit
and protection of the parties hereto, and the parties do not intend to create
any rights or benefits under this Agreement for any person who is not a party to
this Agreement, except for any permitted assignees.
7.11 COUNTERPARTS. This Agreement may be executed in one or more
counterpart copies, and each of which so executed, irrespective of the date of
execution and delivery, shall be deemed to be an original, and all such
counterparts together shall constitute one and the same instrument.
7.12 SEVERABILITY. In the event that any provision of this Agreement
shall be adjudicated to be void, illegal, invalid, or unenforceable, the
remaining terms and provisions of this Agreement shall not be affected thereby,
and each of such remaining terms and provisions of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.
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7.13 WAIVER. No delay or omission by any party hereto in exercising
any right or power hereunder shall impair any such right or power or be
construed to be a waiver thereof, unless this Agreement specifies a time limit
for the exercise of such right or power or unless such waiver is set forth in a
written instrument duly executed by the party granting such waiver. A waiver by
any party hereto of any of the covenants, conditions, or agreements hereof to be
performed by any other party shall not be construed as a waiver of any
succeeding breach of the same or any other covenants, agreements, restrictions
or conditions hereof.
7.14 NO OFFER. Submission of an unsigned version of this instrument by
a party does not constitute an offer. No binding arrangement will occur until
all parties have executed and delivered this Agreement.
KleenAir Systems, Inc.
By: /s/ Lionel Simons
------------------------------
Lionel Simons, President
EcoLogic, LLC
By: /s/ Matthew C. Fragner
------------------------------
Matthew C. Fragner, Manager
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EXHIBIT B
WARRANT
KLEENAIR SYSTEMS, INC.
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE FEDERAL SECURITIES ACT OF 1933,
AS AMENDED, NOR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAW OF ANY STATE;
THIS WARRANT MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN CONTRAVENTION
OF APPLICABLE FEDERAL OR STATE LAWS.
500,000 SHARES COMMON STOCK JANUARY 31, 2000
THIS CERTIFIES THAT, for value received, EcoLogic, LLC ("Warrant Holder"), or
registered assigns, has the right to purchase from KleenAir Systems, Inc.
("Company"), prior to January 31, 2001, up to the number of shares of the Common
Stock of the Company set forth above ("Shares") at US$1.00 per share ("Warrant
Price").
The rights represented by this Warrant may be exercised at any time by
delivering to the President of the Company at the Company's principal executive
office: (1) an Election to Purchase in the form appended hereto as Exhibit "A";
(2) this Warrant; and (3) payment for the Shares.
This Warrant shall not entitle the Warrant Holder to any voting rights,
registration rights, pre-emptive rights or rights as a stockholder of the
Company. Any amendment to this Warrant shall be in writing executed by the
Company and the Warrant Holder. In the event of any stock split, stock dividend,
recapitalization or other reorganization by the Company, or issuance of any
shares of Company stock to other persons (except as provided below), this
Warrant shall apply with respect to the same number of shares of common stock of
the Company into which the number of Shares covered by this Warrant would be
converted or otherwise entitled if such shares were outstanding prior to such
event, so that Warrant Holder shall be entitled to purchase the same percentage
of the common stock of the Company as of the date hereof, and the exercise price
per Share outstanding after such event shall be such that the aggregate purchase
price for all of the shares then covered by this Warrant shall be the same as
prior to such event. Notwithstanding the foregoing, the Company shall be
permitted to (i) complete a transaction involving the exchange of up to 450,000
unrestricted shares of common stock for the same number of shares of restricted
stock and for warrants for the same number of shares of restricted stock at a
strike price of $1.25 per share, and (ii) any other sale by the Company of
shares of common stock for a price of at least $3.00 per share (adjusted for
dilution or splits) cash paid at conveyance (but not less than the reasonable
value of such shares) in a bona fide arms' length sale.
In the event the Company undertakes a registration of any shares in the Company,
the Company shall include in such registration the Shares.
This Warrant shall be governed by and construed in accordance with the laws of
the State of California. Any controversy or claim arising under, out of or in
connection with this Warrant, including without limitation claims arising under
Federal and State securities laws and applicable common law, shall be settled by
arbitration conducted in Los Angeles, California, in accordance with the
commercial rules of the American Arbitration Association then in effect.
<PAGE>
IN WITNESS WHEREOF, KleenAir Systems, Inc. has caused this Warrant to be signed
by its duly authorized officer as of the date above.
KLEENAIR SYSTEMS, INC.
By /s/ LIONEL SIMONS
-----------------------------------
Lionel Simons, President
<PAGE>
EXHIBIT "A" to WARRANT
ELECTION TO PURCHASE
KLEENAIR SYSTEMS, INC.
The undersigned ("Warrant Holder") hereby elects to purchase ___________________
shares ("Shares") of Common Stock of KleenAir Systems, Inc., a Nevada
corporation (the "Company") pursuant to the Warrant Holder's right to purchase
set forth in that certain Warrant dated January 31, 2000.
Warrant Holder makes the following representations and covenants:
1. Warrant Holder has had an opportunity to make inquiries to the Company
about investment in the Shares, and Warrant Holder has no unanswered
questions.
2. Warrant Holder is aware of the Company's business, prospects and financial
condition, and has acquired sufficient information about the Company to
reach an informed decision to acquire the Shares.
3. Warrant Holder is able to evaluate the merits and risks of the investment.
4. Warrant Holder recognizes that investment in the Shares involves special
and substantial risks of loss, and may result in the loss of all of Warrant
Holder's investment.
5. Warrant Holder has the basic means to provide for Warrant Holder's current
needs and personal contingencies, separate from the amount invested in the
Shares; and has the ability to bear the economic risks of this investment,
including the complete loss of the investment.
6. Warrant Holder has no need for liquidity in this investment.
7. Warrant Holder is acquiring the Shares for investment for Warrant Holder's
own account and not with a view to, or for resale in connection with, any
distribution, and not otherwise with any present intention of selling,
transferring or otherwise distributing the Shares.
8. Warrant Holder understands that the Shares have not been registered under
the Securities Act of 1933 ("1933 Act") by reason of their issuance in a
transaction exempt from the registration and prospectus delivery
requirements of the 1933 Act pursuant to Section 4(2) of the 1933 Act.
Warrant Holder understands that Rule 144 promulgated under the 1933 Act is
not presently available and may not in the future be available with respect
to the Shares.
(a) Warrant Holder understands that the Shares have not been qualified or
registered under any state securities law ("State Securities Law") by
reason of applicable exemptions thereunder.
A-1
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ELECTION TO PURCHASE
KLEENAIR SYSTEMS, INC.
Page 2
(b) Warrant Holder understands that the applicability of the exemptions
under the 1933 Act and State Securities Laws depends upon, among other
things, the bona fide nature of Warrant Holder's intent to acquire the
Shares for investment and not with a view to their resale or
distribution.
(c) Warrant Holder understands that Warrant Holder must hold the Shares
indefinitely, that Warrant Holder may not dispose of the Shares unless
registered under the 1933 Act and registered or qualified under
applicable State Securities Laws, or there are exemptions from
registration and qualification.
(d) Warrant Holder further understands that Warrant Holder cannot be
assured that any exemption from the registration or qualification
requirements will be available if Warrant Holder should desire to sell or
transfer the Shares, and therefore that Warrant Holder may not be able to
sell or otherwise transfer the Shares under the circumstances, in the
amount, or at the time that Warrant Holder may desire.
9. Warrant Holder understands that certificates evidencing the Shares will be
imprinted with such legend or legends as in the opinion of legal counsel
for the Company are required by state and federal law, including a legend
which prohibits the transfer of the Shares unless the Shares are registered
or such registration is not required, substantially as follows:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (1) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, OR (2)
THE TRANSFER IS MADE IN COMPLIANCE WITH SECURITIES AND EXCHANGE
COMMISSION RULE 144, OR (3) THE COMPANY RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER OF THE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY,
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
10. Warrant Holder acknowledges and agrees that the Company has not granted to
Warrant Holder any registration rights in respect to the Shares (except as
expressly provided in the Warrant), nor any pre-emptive or other rights to
subscribe to additional shares of any class of the Company's stock.
11. Warrant Holder acknowledges that Warrant Holder has been advised to
consult with Warrant Holder's own legal counsel regarding the execution
and delivery of this Election to Purchase, that Warrant Holder has
received no advice or explanation concerning the meaning or effect of this
Election to Purchase from the Company, its agents or its legal counsel,
and that Warrant Holder has consulted with Warrant Holder's own legal
counsel to the extent that Warrant holder has deemed necessary.
A-2
<PAGE>
ELECTION TO PURCHASE
KLEENAIR SYSTEMS, INC.
Page 3
12. This Election to Purchase shall be governed by and construed in accordance
with the laws of the State of California. Any controversy or claim arising
under, out of or in connection with this Election to Purchase, including
without limitation claims arising under the Federal and State securities
laws and applicable common law, shall be settled by arbitration conducted
in Los Angeles, California, in accordance with the commercial rules of the
American Arbitration Association then in effect.
Dated: _______________________________ ____________________________________
Signature of Warrant Holder
- ------------------------------------- ------------------------------------
Tax Identification Number Printed Name
- ------------------------------------- ------------------------------------
Street City State ZIP
- --------------------------------------------------------------------------------
(Print exact name in which the Shares should be issued.)
A-3
<PAGE>
EXHIBIT C
WARRANT
KLEENAIR SYSTEMS, INC.
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE FEDERAL SECURITIES ACT OF 1933,
AS AMENDED, NOR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAW OF ANY STATE;
THIS WARRANT MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN CONTRAVENTION
OF APPLICABLE FEDERAL OR STATE LAWS.
500,000 SHARES COMMON STOCK JANUARY 31, 2000
THIS CERTIFIES THAT, for value received, EcoLogic, LLC ("Warrant Holder"), or
registered assigns, has the right to purchase from KleenAir Systems, Inc.
("Company"), prior to January 31, 2002, up to the number of shares of the Common
Stock of the Company set forth above ("Shares") at a price (the "Warrant Price")
equal to the greater of (i) $2.00 per share and (ii) 50% of the average share
bid price over the thirty (30) day period preceding the date of exercise as
indicated by O.T.C. B.B. quotations.
The rights represented by this Warrant may be exercised at any time by
delivering to the President of the Company at the Company's principal executive
office: (1) an Election to Purchase in the form appended hereto as Exhibit "A";
(2) this Warrant; and (3) payment for the Shares.
This Warrant shall not entitle the Warrant Holder to any voting rights,
registration rights, pre-emptive rights or rights as a stockholder of the
Company. Any amendment to this Warrant shall be in writing executed by the
Company and the Warrant Holder. In the event of any stock split, stock dividend,
recapitalization or other reorganization by the Company, or issuance of any
shares of Company stock to other persons (except as provided below), this
Warrant shall apply with respect to the same number of shares of common stock of
the Company into which the number of Shares covered by this Warrant would be
converted or otherwise entitled if such shares were outstanding prior to such
event, so that Warrant Holder shall be entitled to purchase the same percentage
of the common stock of the Company as of the date hereof, and the exercise price
per Share outstanding after such event shall be such that the aggregate purchase
price for all of the shares then covered by this Warrant shall be the same as
prior to such event. Notwithstanding the foregoing, the Company shall be
permitted to (i) complete a transaction involving the exchange of up to 450,000
unrestricted shares of common stock for the same number of shares of restricted
stock and for warrants for the same number of shares of restricted stock at a
strike price of $1.25 per share, and (ii) any other sale by the Company of
shares of common stock for a price of at least $3.00 per share (adjusted for
dilution or splits) cash paid at conveyance (but not less than the reasonable
value of such shares) in a bona fide arms' length sale.
In the event the Company undertakes a registration of any shares in the Company,
the Company shall include in such registration the Shares.
This Warrant shall be governed by and construed in accordance with the laws of
the State of California. Any controversy or claim arising under, out of or in
connection with this Warrant, including without limitation claims arising under
Federal and State securities laws and applicable common law, shall be settled by
arbitration conducted in Los Angeles, California, in accordance with the
commercial rules of the American Arbitration Association then in effect.
<PAGE>
IN WITNESS WHEREOF, KleenAir Systems, Inc. has caused this Warrant to be signed
by its duly authorized officer as of the date above.
KLEENAIR SYSTEMS, INC.
By /s/ Lionel Simons
------------------------
Lionel Simons, President
<PAGE>
EXHIBIT "A" to WARRANT
ELECTION TO PURCHASE
KLEENAIR SYSTEMS, INC.
The undersigned ("Warrant Holder") hereby elects to purchase ___________________
shares ("Shares") of Common Stock of KleenAir Systems, Inc., a Nevada
corporation (the "Company") pursuant to the Warrant Holder's right to purchase
set forth in that certain Warrant dated January 31, 2000.
Warrant Holder makes the following representations and covenants:
1. Warrant Holder has had an opportunity to make inquiries to the Company
about investment in the Shares, and Warrant Holder has no unanswered
questions.
2. Warrant Holder is aware of the Company's business, prospects and financial
condition, and has acquired sufficient information about the Company to
reach an informed decision to acquire the Shares.
3. Warrant Holder is able to evaluate the merits and risks of the investment.
4. Warrant Holder recognizes that investment in the Shares involves special
and substantial risks of loss, and may result in the loss of all of Warrant
Holder's investment.
5. Warrant Holder has the basic means to provide for Warrant Holder's current
needs and personal contingencies, separate from the amount invested in the
Shares; and has the ability to bear the economic risks of this investment,
including the complete loss of the investment.
6. Warrant Holder has no need for liquidity in this investment.
7. Warrant Holder is acquiring the Shares for investment for Warrant Holder's
own account and not with a view to, or for resale in connection with, any
distribution, and not otherwise with any present intention of selling,
transferring or otherwise distributing the Shares.
8. Warrant Holder understands that the Shares have not been registered under
the Securities Act of 1933 ("1933 Act") by reason of their issuance in a
transaction exempt from the registration and prospectus delivery
requirements of the 1933 Act pursuant to Section 4(2) of the 1933 Act.
Warrant Holder understands that Rule 144 promulgated under the 1933 Act is
not presently available and may not in the future be available with respect
to the Shares.
(a) Warrant Holder understands that the Shares have not been qualified or
registered under any state securities law ("State Securities Law") by
reason of applicable exemptions thereunder.
A-1
<PAGE>
ELECTION TO PURCHASE
KLEENAIR SYSTEMS, INC.
Page 2
(b) Warrant Holder understands that the applicability of the exemptions
under the 1933 Act and State Securities Laws depends upon, among other
things, the bona fide nature of Warrant Holder's intent to acquire the
Shares for investment and not with a view to their resale or
distribution.
(c) Warrant Holder understands that Warrant Holder must hold the Shares
indefinitely, that Warrant Holder may not dispose of the Shares unless
registered under the 1933 Act and registered or qualified under
applicable State Securities Laws, or there are exemptions from
registration and qualification.
(d) Warrant Holder further understands that Warrant Holder cannot be
assured that any exemption from the registration or qualification
requirements will be available if Warrant Holder should desire to sell or
transfer the Shares, and therefore that Warrant Holder may not be able to
sell or otherwise transfer the Shares under the circumstances, in the
amount, or at the time that Warrant Holder may desire.
9. Warrant Holder understands that certificates evidencing the Shares will be
imprinted with such legend or legends as in the opinion of legal counsel
for the Company are required by state and federal law, including a legend
which prohibits the transfer of the Shares unless the Shares are registered
or such registration is not required, substantially as follows:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (1) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, OR (2)
THE TRANSFER IS MADE IN COMPLIANCE WITH SECURITIES AND EXCHANGE
COMMISSION RULE 144, OR (3) THE COMPANY RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER OF THE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY,
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
10. Warrant Holder acknowledges and agrees that the Company has not granted to
Warrant Holder any registration rights in respect to the Shares (except as
expressly provided in the Warrant), nor any pre-emptive or other rights to
subscribe to additional shares of any class of the Company's stock.
11. Warrant Holder acknowledges that Warrant Holder has been advised to
consult with Warrant Holder's own legal counsel regarding the execution and
delivery of this Election to Purchase, that Warrant Holder has received no
advice or explanation concerning the meaning or effect of this Election to
Purchase from the Company, its agents or its legal counsel, and that Warrant
Holder has ELECTION
A-2
<PAGE>
TO PURCHASE
KLEENAIR SYSTEMS, INC.
Page 3
consulted with Warrant Holder's own legal counsel to the extent that Warrant
holder has deemed necessary.
12. This Election to Purchase shall be governed by and construed in accordance
with the laws of the State of California. Any controversy or claim arising
under, out of or in connection with this Election to Purchase, including
without limitation claims arising under the Federal and State securities
laws and applicable common law, shall be settled by arbitration conducted
in Los Angeles, California, in accordance with the commercial rules of the
American Arbitration Association then in effect.
Dated: _______________________________ ___________________________________
Signature of Warrant Holder
- ------------------------------------- -----------------------------------
Tax Identification Number Printed Name
- ------------------------------------- -----------------------------------
Street City State ZIP
- --------------------------------------------------------------------------------
(Print exact name in which the Shares should be issued.)
A-3
