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EXECUTION COPY
STOCK PURCHASE AGREEMENT
BY AND AMONG
STRUCTURAL POLYMER GROUP LIMITED,
ZOLTEK COMPANIES, INC.,
AND
CERTAIN SHAREHOLDERS OF THE
COMMON STOCK OF ZOLTEK COMPANIES, INC.
NOVEMBER 6, 2000
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TABLE OF CONTENTS
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ARTICLE I
PURCHASE AND SALE OF SHARES; MANNER OF PAYMENT
Section 1.1 Method of Effecting the Purchase and Sale of Shares; Closing.................1
Section 1.2 Payments at Closing..........................................................2
Section 1.3 Payment of the Purchase Price and Transfer of the Stock Consideration........2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Section 2.1 Title to Shares; Investments of SP Systems and Subsidiaries..................3
Section 2.2 Consents and Approvals; No Violations........................................3
Section 2.3 Capital Stock................................................................3
Section 2.4 Outstanding Options and Warrants.............................................3
Section 2.5 Absence of Certain Changes...................................................4
Section 2.6 Power to Purchase its Own Shares.............................................4
Section 2.7 Taxes........................................................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 3.1 Organization.................................................................5
Section 3.2 Corporate Authorization; Validity of Agreement; Necessary Action.............5
Section 3.3 Consents and Approvals; No Violations........................................5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Section 4.1 Title to Common Stock........................................................6
Section 4.2 Authorization; Validity of Agreement; Necessary Action.......................6
Section 4.3 Consents and Approvals; No Violations........................................6
ARTICLE V
[RESERVED].....................................................................................6
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ARTICLE VI
COVENANTS OF THE SELLER
Section 6.1 Conduct of Business..........................................................7
Section 6.2 Affirmative Covenants Relating to the Companies and the Seller...............8
Section 6.3 Consents and Closing Conditions..............................................8
Section 6.4 Cooperation; Communication...................................................8
Section 6.5 Non-Solicitation.............................................................8
Section 6.6 Confidentiality of Information; Access to Information........................8
Section 6.7 Release of Liens on the Shares...............................................9
ARTICLE VII
COVENANTS OF THE PURCHASER
Section 7.1 Confidentiality of Information; Access to Information........................9
Section 7.2 Receipt of Consents and Satisfaction of Closing Conditions..................10
Section 7.3 Communication...............................................................10
Section 7.4 Reserved....................................................................10
Section 7.5 Non-Solicitation............................................................10
ARTICLE VIII
COVENANTS OF THE SHAREHOLDERS
Section 8.1 Receipt of Consents and Satisfaction of Closing Conditions..................10
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1 Supply Agreement............................................................11
Section 9.2 Patent and Technology License Agreement.....................................11
Section 9.3 Unsecured Loan Note Instrument..............................................11
ARTICLE X
PURCHASER'S CONDITIONS TO CLOSING
Section 10.1 Continued Truth of Warranties...............................................11
Section 10.2 Performance of Covenants....................................................11
Section 10.3 No Material Adverse Change..................................................11
Section 10.4 Permits and Consents........................................................11
Section 10.5 Closing Documents...........................................................12
Section 10.6 Power of Attorney...........................................................12
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ARTICLE XI
THE SELLER'S CONDITIONS TO CLOSING
Section 11.1 Continued Truth of Warranties...............................................13
Section 11.2 Performance of Covenants....................................................13
Section 11.3 Permits and Consents........................................................13
Section 11.4 Loan Payment................................................................13
Section 11.5 Shareholders' Closing Documents.............................................13
Section 11.6 Purchaser's Closing Documents...............................................14
ARTICLE XII
SHAREHOLDERS' CONDITIONS TO CLOSING
Section 12.1 Continued Truth of Warranties...............................................14
Section 12.2 Performance of Covenants....................................................14
Section 12.3 No Material Adverse Change..................................................14
Section 12.4 Permits and Consents........................................................15
Section 12.5 Closing Documents...........................................................15
ARTICLE XIII
INDEMNIFICATION
Section 13.1 Indemnification of Each of the Purchaser and the Shareholders...............15
Section 13.2 Indemnification of the Seller...............................................15
Section 13.3 Notice of and Procedures for Collecting Indemnification.....................16
Section 13.4 Payment of Claims for Indemnification.......................................17
Section 13.5 Survival of Indemnification.................................................18
Section 13.6 Exclusive Remedy............................................................18
ARTICLE XIV
FEDERAL AND OTHER SECURITIES LAWS
Section 14.1 Investment Representations..................................................18
Section 14.2 Legends; Stop Transfer......................................................19
ARTICLE XV
MISCELLANEOUS
Section 15.1 Appointment of Representative...............................................20
Section 15.2 Termination.................................................................22
Section 15.3 Counterparts................................................................22
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Section 15.4 Right of Inspection.........................................................22
Section 15.5 Entire Agreement............................................................23
Section 15.6 Governing Law...............................................................23
Section 15.7 Press Releases..............................................................23
Section 15.8 Currency....................................................................23
Section 15.9 Assignment, Third Parties, Binding Effect...................................23
Section 15.10 Expenses....................................................................23
Section 15.11 Waivers.....................................................................24
Section 15.12 Captions and Section Headings...............................................24
Section 15.13 Notices.....................................................................24
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the
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6th day of November, 2000, by and among Structural Polymer Group Limited, a
corporation organized under the laws of England and Wales (the "Purchaser"),
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Zoltek Companies, Inc., a corporation organized under the laws of the State
of Missouri (the "Seller") and each of the holders of the issued and
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outstanding shares of common stock of the Seller (each a "Shareholder" and
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collectively, the "Shareholders") as set forth on Exhibit B hereto.
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R E C I T A L S :
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WHEREAS, on the terms and subject to the conditions of this
Agreement, and subject to the performance by the parties of their respective
obligations under this Agreement, the Seller desires to sell, and the
Purchaser desires to purchase, all of the issued and outstanding share
capital of Structural Polymer (Holdings) Limited, a corporation organized
under the laws of England and Wales ("SP Systems"), owned by the Seller (the
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"Shares") at the Closing (as defined in Section 1.1(b) of this Agreement)
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for the Purchase Price described in Article I of this Agreement.
WHEREAS, on the terms and subject to the conditions of this
Agreement, and subject to the performance by the parties of their respective
obligations under this Agreement, the Shareholders desire to sell, and the
Seller desires to purchase, the Common Stock (as herein defined) of the
Seller.
NOW, THEREFORE, the Purchaser, the Seller and each of the
Shareholders intending to be legally bound, agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES; MANNER OF PAYMENT
Section 1.1 Method of Effecting the Purchase and Sale of Shares;
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Closing. The purchase and sale of the Shares shall be effected as follows:
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(a) At the Closing (as defined in Section 1.1(b) hereof),
the Seller shall sell to the Purchaser, and the Purchaser shall purchase
from the Seller, the Shares, being all of the share capital of SP Systems
which is issued and outstanding, in consideration of the Purchase Price (as
defined in Section 1.2 hereof) paid by the Purchaser, and the Stock
Consideration (as defined herein) delivered by the Shareholders. In
addition, the Purchaser shall procure that the Shareholders shall sell to
the Seller, and the Seller shall purchase from the Shareholders an aggregate
of Two Million Four Hundred Ninety-Nine Thousand Nine Hundred Ninety-Three
(2,499,993) shares of common stock, $.01 par value (the "Common Stock"), of
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the Seller (the "Stock Consideration") in consideration for the issuance to
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each of the Shareholders of the same number of ordinary shares of
(pound)1.00 each of the issued and outstanding share capital of the
Purchaser (the "SP Group Shares") as the number of shares of Common Stock
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owned by such
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Shareholder as set forth beside each Shareholder's name on
Exhibit B hereto and the purchase by the Purchaser and the sale by the
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Seller of the Shares as provided herein.
(b) The closing (the "Closing") of the transactions
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contemplated hereby shall take place at the offices of Bond Pearce,
Southampton, England, commencing at 10:00 a.m. on November 6, 2000 (the
"Closing Date"), or such other date or time as may be mutually agreed upon
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by the parties.
Section 1.2 Payments at Closing. (a) The aggregate consideration to
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be paid by the Purchaser to the Seller in connection with the sale of the
Shares (the "Purchase Price") shall consist of an amount equal to
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Thirty-Five Million United States Dollars (U.S. $35,000,000) of which amount
Thirty Million United States Dollars (U.S. $30,000,000) (the "Cash
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Consideration") shall be paid to the Seller on the Closing Date and the
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balance shall be left outstanding subject to the terms of an Unsecured Loan
Note Instrument of the Purchaser in the form attached as Exhibit E hereto
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(the "Note Consideration"), which shall be delivered to the Seller on the
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Closing Date and (b) the aggregate consideration that the Purchaser shall
procure is to be paid by the Shareholders to the Seller in connection with
the sale of the Shares to the Purchaser shall consist of the Stock
Consideration.
Section 1.3 Payment of the Purchase Price and Transfer of the Stock
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Consideration.
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(a) At the Closing, the Purchaser shall deliver to the
Seller the Purchase Price as follows:
(i) The Purchaser shall cause to be delivered to the
Seller the Cash Consideration, by wire transfer of immediately
available funds to such account or accounts as shall be designated
by the Seller; and
(ii) The Purchaser shall cause to be delivered to the
Seller the Note Consideration.
(b) At the Closing, except as set forth on Schedule 1.3(b),
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the Shareholders shall cause to be delivered to the Seller certificates
evidencing the Stock Consideration. The certificates evidencing the Stock
Consideration shall bear the restrictive legend set forth in Section 14.2
hereof.
(c) At the Closing, the Seller shall deliver the Shares to
the Purchaser free and clear of all liens, charges, security interests,
adverse claims, pledges, encumbrances and demands whatsoever (other than any
exceptions therefrom attributable to any actions of any officer or director
of the Companies).
(d) At the Closing, the Seller, the Purchaser and the
Shareholders shall also deliver all documents as provided from Article X,
Article XI and Article XII, respectively.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
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The Seller represents and warrants to the Purchaser and each of the
Shareholders as of the date hereof and as of the Closing Date as follows:
Section 2.1 Title to Shares; Investments of SP Systems and
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Subsidiaries. (a) The Seller owns all of the Shares, beneficially and of
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record and, as of the Closing, free and clear of all liens, charges,
security interests, adverse claims, pledges, encumbrances and demands
whatsoever. The Shares are sold pursuant to this Agreement with full title
guarantee within the meaning given to that phrase by Section 3 of the Law of
Property (Miscellaneous Provisions) Act of 1994 and so that the provisions
of Sections 6(2) and 6(3) of that Act will not apply to the Purchaser.
Notwithstanding Section 15.6 hereof, the Law of Property (Miscellaneous
Provisions) Act of 1994 means such act as applicable under the laws of
England and Wales.
(b) SP Systems owns all the share capital of each
subsidiary of SP Systems (each a "Subsidiary" and collectively with SP
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Systems, the "Companies") beneficially and of record as set forth on Exhibit A,
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free and clear of all liens, charges, security interests, adverse claims,
pledges, encumbrances and demands whatsoever (other than any exceptions
therefrom attributable to any actions of any officer or director of the
Companies).
Section 2.2 Consents and Approvals; No Violations. Neither the
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execution, delivery or performance of this Agreement by the Seller nor the
consummation by the Seller of the transactions contemplated hereby nor
compliance by the Seller with any of the provisions hereof will (a) conflict
with or result in any breach of any provision of the Articles of
Incorporation (as amended) or By-laws (as amended) of the Seller, (b) other
than the filing by the Seller of a Current Report on Form 8-K with respect
to the transactions contemplated hereby, require any filing with, or permit,
authorization, consent or approval of, any governmental entity, (c) result
in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, guarantee, other
evidence of indebtedness, lease, license, contract, agreement or other
instrument or obligation to which the Seller or any of its subsidiaries is a
party or by which any of them or any of their properties or assets may be
bound, or (d) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Seller, any of its subsidiaries or any of their
properties or assets.
Section 2.3 Capital Stock. The authorized, issued and outstanding
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share capital of SP Systems and each Subsidiary is set forth on Exhibit A
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(other than any variations therefrom attributable to any actions of any
officer or director of the Companies).
Section 2.4 Outstanding Options and Warrants. There are no
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subscription rights, options, warrants, rights, puts, calls, commitments or
agreements (respecting issuance, redemption, repurchase, voting or
otherwise) relating to, nor any outstanding securities convertible into, any
shares of capital stock or other equity interest in SP Systems or any of the
Subsidiaries, or into any such convertible securities (other than any
exceptions therefrom
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attributable to any actions of any officer or director of the Companies),
and neither the Seller nor any of the Companies have agreed to issue,
purchase, sell or transfer any of same, except as provided in this
Agreement.
Section 2.5 Absence of Certain Changes. Since November 19, 1999,
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there has not been, by reason of any action by any officer or director of
the Seller (other than Paul Rudling) or, any of its affiliates (other than
the Companies):
(a) any mortgage or pledge of, or any other lien, charge
or encumbrance of any kind created in respect of any of the assets, tangible
or intangible of the Companies other than in the ordinary course of
business;
(b) any sale or transfer of any assets, except for sales
of inventory in the ordinary course of business, or settlement, cancellation
or release of any indebtedness owing to any of the Companies;
(c) except as contemplated herein, any sale, license,
assignment or transfer by SP Systems or any Subsidiary of any patents,
trademarks, trade names or other similar intangible assets;
(d) except as contemplated herein, any amendments or
termination of any material contract, agreement or license to which any of
the Companies is a party or to which any of the Companies or any of their
respective assets are subject or bound that has or is likely to have a
material adverse effect on the properties, operations, liabilities, earnings
or financial condition of the Companies, taken as a whole;
(e) any legally binding commitment made (through
negotiations or otherwise) or any liability incurred to any labor
organization by any of the Companies;
(f) except for a principal payment of U.S. $350,000 with
respect to the Intercompany Advances (as defined herein), any payment,
declaration or setting aside by SP Systems of dividends or a return of
capital or any distribution by SP Systems of any cash or other assets in
redemption of or as the purchase price for any capital stock or equity or in
discharge or cancellation in whole or in part of any indebtedness owing
(whether in payment of principal, interest or otherwise) to any affiliate of
the Companies; and
(g) other than the guarantee to Gamesa (as defined herein)
referenced in Section 13.1(a), any incurrence by any of the Companies
(whether discharged or not) of any obligation or liability (whether accrued,
absolute, fixed or contingent) other than current liabilities incurred, and
obligations entered into, in the ordinary course of business consistent with
past practice.
Section 2.6 Power to Purchase its Own Shares. As of the date
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hereof, as of the Closing Date and after giving effect to the transactions
contemplated hereby, the Seller's net assets equal or exceed its stated
capital and no stated capital of the Seller is being applied by the Seller
to the purchase hereof of Common Stock pursuant to Sections 351.390, 351.015
and 351.200 of the General and Business Corporation Law of Missouri, as
amended.
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Section 2.7 Taxes. At no time during the period that the Seller has
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owned SP Systems has any officer or director of the Seller (other than Paul
Rudling) taken any action, or failed to take any required action, that could
cause SP Systems or its Subsidiaries (a) to be engaged in or conduct a U.S.
trade or business, (b) have a U.S. office or other place of business, (c)
earn U.S. source income, (d) make any payment that would be treated as a
payment of U.S. source income or (e) otherwise to incur any tax (including
any withholding tax) imposed by the United States (or any political
subdivision thereof or therein).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
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The Purchaser represents and warrants to the Seller and each of the
Shareholders as of the date hereof and as of the Closing Date, as follows:
Section 3.1 Organization. The Purchaser is a corporation duly
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organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate or other
power and authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power, authority and governmental approvals would
not have a material adverse effect on the Purchaser and its subsidiaries,
taken as a whole.
Section 3.2 Corporate Authorization; Validity of Agreement;
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Necessary Action. The Purchaser has full corporate power and authority to
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execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the
Purchaser of this Agreement and the consummation by the Purchaser of the
transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of the Purchaser and no other corporate action or
proceedings on the part of the Purchaser are necessary to authorize the
execution and delivery by the Purchaser of this Agreement and the
consummation by the Purchaser of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Purchaser, and,
assuming this Agreement constitutes valid and binding obligations of the
Seller and each of the Shareholders, constitutes valid and binding
obligations of the Purchaser, enforceable against the Purchaser in
accordance with its terms.
Section 3.3 Consents and Approvals; No Violations. Neither the
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execution, delivery or performance of this Agreement by the Purchaser nor
the consummation by the Purchaser of the transactions contemplated hereby
nor compliance by the Purchaser with any of the provisions hereof will (a)
conflict with or result in any breach of any provision of the organization
documents of the Purchaser, (b) require any filing with, or permit,
authorization, consent or approval of, any governmental entity, (c) result
in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, guarantee, other
evidence of indebtedness, lease, license, contract, agreement or other
instrument or obligation to which the Purchaser or any of its subsidiaries
is a party or by which any of them or any of their properties or assets may
be bound,
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or (d) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Purchaser, any of its subsidiaries or any of
their properties or assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each of the Shareholders individually represents and warrants to
the Seller and the Purchaser as of the date hereof and as of the Closing
Date as to himself only, as follows:
Section 4.1 Title to Common Stock. Such Shareholder owns all of the
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Common Stock set forth opposite such Shareholder's name on Exhibit B,
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beneficially and of record free and clear of all liens, charges, security
interests, adverse claims, pledges, encumbrances, and demands whatsoever and
the Common Stock shall, upon delivery to the Seller in accordance with the
Agreement, be owned by the Seller beneficially and of record free and clear
of all liens, charges, security interests, pledges, encumbrances and demands
whatsoever.
Section 4.2 Authorization; Validity of Agreement; Necessary Action.
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Such Shareholder has all necessary legal capacity, right, power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by or on behalf of such Shareholder, and, assuming this Agreement
constitutes valid and binding obligations of each of the Seller and the
Purchaser, constitutes valid and binding obligations of such Shareholder,
enforceable against such Shareholder in accordance with its terms.
Section 4.3 Consents and Approvals; No Violations. Neither the
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execution, delivery or performance of this Agreement by such Shareholder nor
the consummation by such Shareholder of the transactions contemplated hereby
nor compliance by such Shareholder with any of the provisions hereof will
(a) require any filing with, or permit, authorization, consent or approval
of, any governmental entity, (b) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, guarantee, other evidence of indebtedness, lease,
license, contract, agreement or other instrument or obligation to which such
Shareholder is a party or by which such Shareholder or any of its properties
or assets may be bound, or (c) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to such Shareholder or any of its
properties or assets.
ARTICLE V
[RESERVED]
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ARTICLE VI
COVENANTS OF THE SELLER
Section 6.1 Conduct of Business. From the date hereof to the
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Closing Date, except for transactions which are contemplated by this
Agreement or expressly approved in writing by the Purchaser, which the
Purchaser agrees will not be unreasonably withheld, the Seller shall not
take any action which would have the effect of:
(a) subjecting any of the Companies' assets and
properties, tangible or intangible, to any lien, encumbrance or other claim
of any kind, exclusive of existing liens disclosed to Purchaser as to which
there is no known default;
(b) except for sales of inventory in the ordinary course
of business, selling, assigning, transferring or otherwise disposing of any
of the Companies' assets or properties;
(c) other than in the ordinary course of business,
modifying, amending, altering or terminating (whether by written or oral
agreement, or any manner of action or inaction) any of the debt instruments,
Intellectual Property licenses or Contracts;
(d) declaring, setting aside or paying any dividends or
other distributions, directly or indirectly, to the Seller with respect to
the Shares;
(e) taking or permitting any other action that, if taken
or permitted immediately prior to the execution of this Agreement, would
constitute a breach of or an exception to the representations and warranties
in Section 2.5 hereof.
(f) For the purposes of this Agreement, "Intellectual
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Property" means in each case to the extent necessary to the conduct of the
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business or operations of the Companies, (i) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof,
(ii) all trademarks, service marks, trade dress, logos, trade names,
corporate names and Internet domain names, together with all translations,
adaptations, derivations and combinations thereof and including all goodwill
associated therewith, and all applications, registrations and renewals in
connection therewith, (iii) all copyrightable works, all copyrights, and all
applications, registrations and renewals in connection therewith, (iv) all
mask works and all applications, registrations and renewals in connection
therewith, (v) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier
lists, pricing and cost information, and business and market plans and
proposals), (vi) all computer software (including data and related
documentation), (vii) all other similar proprietary rights, and (viii) all
copies and tangible embodiments thereof (in whatever form or medium).
For the purposes of this Agreement, "Contract" means (i) written
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or oral contract, (ii) agreement, (iii) lease, (iv) license, (v) mortgage,
(vi) deed of trust, (vii) note, (viii) guaranty, (ix) instrument or
(x) understanding.
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Section 6.2 Affirmative Covenants Relating to the Companies and the
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Seller. From the date hereof to the Closing Date, the Seller shall use its
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reasonable best efforts to assure that the Companies shall:
(a) keep in the Companies' employ the present officers and
key employees, including the professional staff, of the Companies necessary
to preserve the goodwill of those having business relations with the
Companies; and
(b) operate its business only in the ordinary course with
the objective of preserving the Companies' business organizations intact,
including using its reasonable best efforts to retain the services of the
Companies' present officers and the goodwill of its suppliers, customers and
others having business relations with the Companies.
Section 6.3 Consents and Closing Conditions. The Seller shall use
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its reasonable best efforts (a) to obtain such third party and governmental
consents, authorizations, approvals, releases and terminations as may be
required by the Seller hereunder, and to take other actions as may be
appropriate in order to fulfill the closing conditions contained in this
Agreement and (b) to cause the representations and warranties of the Seller
to be true and correct in all material respects on and as of the Closing
Date.
Section 6.4 Cooperation; Communication. Each of the Companies and
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the Seller shall furnish to each of the Purchaser and the Representative
such information regarding the Companies and the Seller as either the
Purchaser or the Representative may reasonably request. In addition, each of
the Companies and the Seller shall promptly inform each of the Purchaser and
the Representative of any material communication from any governmental
entity regarding any of the transactions contemplated hereby. If any of the
Companies, the Seller or any affiliate thereof receives a request for
additional information or documentary material from any governmental entity
with respect to the transactions contemplated hereby, then each of the
Companies and the Seller shall endeavor in good faith to make, or cause to
be made, as soon as reasonably practicable and after consultation with each
of the Purchaser and the Representative, an appropriate response in
compliance with such request.
Section 6.5 Non-Solicitation. The Seller shall not, and shall
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direct each of its subsidiaries and their respective affiliates, officers,
employees, representatives, or agents not to on or before the second
anniversary of the Closing Date, (i) request, induce or attempt to influence
any current or future customer or supplier of the Purchaser or its
affiliates with regard to the Companies' business or to limit, curtail or
cancel its business with the Purchaser or its affiliates with respect to the
Companies' business or (ii) request, induce or attempt to influence any
current or future officer, director, employee, consultant, agent or
representative of the Purchaser or its affiliates with regard to the
Companies' business to (x) terminate his, her or its employment or business
relationship with the Purchaser or its affiliates or (y) commit any act
that, if committed by the Seller, would constitute a breach of any provision
hereof.
Section 6.6 Confidentiality of Information; Access to Information.
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Except as required by law, the Seller and their respective employees,
agents, auditors, attorneys and other authorized representatives shall not,
without each of the Purchaser's and the Shareholders' prior written consent,
communicate or divulge to any person or entity or use for their benefit any
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information, other than information which is otherwise available to the
Seller or the Companies, or which becomes public other than as a result of
their action, concerning the Companies' financial condition or business, or
concerning any marketing information, equipment, methods, research, clients,
contracts, suppliers, customers, contracts or other data of or related to
the Companies, or other confidential matters possessed, owned or used by the
Companies that may be communicated to, acquired by or learned by them or
other information required for filing tax returns on behalf of the
Companies. All correspondence, records, files, tax returns, financial
statements and other data relating to the Companies which shall come into
the possession of the Seller or their respective employees, agents,
auditors, attorneys and other authorized representatives shall remain and be
deemed to be the sole property of the Companies. If the transactions
contemplated hereby are not consummated for any reason, then the Seller or
its respective employees, agents, auditors, attorneys and other authorized
representatives shall return any and all of the foregoing material to the
Companies, together with any and all copies thereof made. Notwithstanding
the foregoing, for a period of seven (7) years after the Closing, or such
longer period as corresponds to the applicable statute of limitations, the
Purchaser shall preserve and keep all books and records of the Companies
relating to taxes, financial information or liabilities of the Companies
prior to the Closing. The Purchaser will afford to the Seller, including its
counsel and accountants during normal business hours after the Closing Date
full and complete access to, and copies of, such records of the Companies.
Section 6.7 Release of Liens on the Shares. The Seller covenants
------------------------------
that it shall obtain from Firstar Bank, N.A. (the "Seller's Bank") and
-------------
deliver to the Purchaser on or prior to the Closing Date a payoff letter in
a form approved by or on behalf of the Purchaser (the "Payoff Letter")
-------------
stating that any and all security interests and/or other liens, encumbrances
and charges against the Shares created in connection with that certain
Credit Agreement dated as of November 19, 1999 and Amended and Restated as
of May 31, 2000, by and among Zoltek Companies, Inc., Zoltek Corporation,
Zoltek Intermediates Corporation, Zoltek Properties, Inc., Cape Composites,
Inc. and Engineering Technology Corporation (collectively, the "Borrowers"),
---------
the Lenders party thereto (collectively, the "Lenders") and Firstar Bank,
-------
N.A. (as successor by merger to Firstar Bank Missouri, N.A., which was
formerly known as Mercantile Bank National Association), acting as agent for
the Lenders shall be terminated.
ARTICLE VII
COVENANTS OF THE PURCHASER
Section 7.1 Confidentiality of Information; Access to Information.
-----------------------------------------------------
Prior to the Closing Date, except as required by law, the Purchaser and its
employees, agents, auditors, attorneys and other authorized representatives
shall not, without the Seller's prior written consent, communicate or
divulge to any person or entity or use for their benefit any information,
other than information which is otherwise available to the Purchaser or
which becomes public other than as a result of its action, concerning the
Companies' financial conditions or business, or concerning any marketing
information, equipment, methods, research, clients, contracts, suppliers,
customers, contracts or other data of or related to the Companies or other
confidential matters possessed, owned or used by the Companies that may be
communicated to, acquired by or learned by them. All correspondence,
records, files, tax returns, financial statements and other
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data relating to the Companies which shall come into the possession of the
Purchaser or its employees, agents, auditors, attorneys and other authorized
representatives shall remain and be deemed to be the sole property of the
Companies. If the transactions contemplated hereby are not consummated for
any reason, then the Purchaser or its employees, agents, auditors, attorneys
and other authorized representatives shall return any and all of the
foregoing material to the Companies, together with any and all copies
thereof made. The confidentiality provisions of this Agreement shall
supplement, and not supersede, any contractual confidentiality requirements
by and among the Purchaser, the Companies, the Seller or the Shareholders
and such existing contractual confidentiality requirements shall remain in
full force and effect, as supplemented hereby, except as otherwise required
by law (including any required disclosure of the execution of this
Agreement).
Section 7.2 Receipt of Consents and Satisfaction of Closing
-----------------------------------------------
Conditions. The Purchaser shall use its reasonable efforts (a) to obtain
----------
such consents from third parties and to take other actions as may be
required in order to fulfill the closing condition contained in this
Agreement hereof and (b) to cause the representations and warranties of the
Purchaser in Article III to be true and correct on and as of the Closing
Date.
Section 7.3 Communication. The Purchaser shall promptly inform the
-------------
Seller of any material communication from any governmental entity regarding
any of the transactions contemplated hereby. If the Purchaser or any of its
affiliates receives a request for additional information or documentary
material from any governmental entity with respect to the transactions
contemplated hereby, then the Purchaser shall endeavor in good faith to
make, or cause to be made, as soon as reasonably practicable after
consultation with the Seller, an appropriate response with such request.
Section 7.4 Reserved.
--------
Section 7.5 Non-Solicitation. The Purchaser shall not, and shall
----------------
direct its affiliates, officers, employees, representatives, or agents not
to on or before the second anniversary of the Closing Date, (i) request,
induce or attempt to influence any current or future customer or supplier of
the Seller or its affiliates with regard to the Seller's business or to
limit, curtail or cancel its business with the Seller or its affiliates with
respect to the Seller's business or (ii) request, induce or attempt to
influence any current or future officer, director, employee, consultant,
agent or representative of the Seller or its affiliates with regard to the
Seller's business to (x) terminate his, her or its employment or business
relationship with the Seller or its affiliates or (y) commit any act that,
if committed by the Purchaser, would constitute a breach of any provision
hereof.
ARTICLE VIII
COVENANTS OF THE Shareholders
Section 8.1 Receipt of Consents and Satisfaction of Closing
-----------------------------------------------
Conditions. Each of the Shareholders shall use its commercially reasonable
----------
efforts to cause the representations and warranties of the Shareholders in
Article IV to be true and correct on and as of the Closing Date.
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ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1 Supply Agreement. The Purchaser and the Seller shall
----------------
cause to be entered into the Supply Agreement (the "Supply Agreement") in
----------------
the form of Exhibit G attached hereto, to provide for the Seller or its
---------
subsidiaries to supply SP Systems with all of its supply requirements
pertaining to commercial carbon fibers.
Section 9.2 Patent and Technology License Agreement. The Seller and
---------------------------------------
SP Systems shall enter into the Patent and Technology License Agreement in
the form of Exhibit H attached hereto, whereby SP Systems shall (i) grant a
---------
nonexclusive, nontransferable, nonassignable, nonsublicenseable license to
the Seller and certain of its subsidiaries to use resin technology and (ii)
supply SPRINT Resins (as defined therein) to Seller pursuant to the terms of
the agreement (the "Patent and Technology License Agreement").
---------------------------------------
Section 9.3 Unsecured Loan Note Instrument. The Purchaser shall issue
------------------------------
an Unsecured Loan Note Instrument in the form of Exhibit E attached hereto.
---------
ARTICLE X
PURCHASER'S CONDITIONS TO CLOSING
The obligations of the Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment to the
Purchaser's reasonable satisfaction of each of the following conditions on
or prior to the Closing Date:
Section 10.1 Continued Truth of Warranties. The representations and
-----------------------------
warranties of the Seller contained herein shall be true in all material
respects as of the date hereof and as of the Closing Date with the same
force and effect as though made as of the Closing Date, except for any
variations permitted by this Agreement.
Section 10.2 Performance of Covenants. The Seller shall have
------------------------
performed in all material respects all covenants and obligations and
complied in all material respects with all conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
Section 10.3 No Material Adverse Change. There shall have been no
--------------------------
material adverse change to the properties, operations, liabilities,
earnings, business condition (financial or otherwise) of the Companies taken
as a whole since September 30, 2000 other than changes in the ordinary
course of business or as the result of general economic or industry
conditions.
Section 10.4 Permits and Consents. The parties hereto shall have
--------------------
secured all necessary and appropriate orders, consents, approvals and
clearances, in form and substance reasonably satisfactory to the Purchaser,
by and from all third parties reasonably requested by the Purchaser.
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Section 10.5 Closing Documents. The Seller shall have delivered all
-----------------
documents required to be delivered by it at the Closing as set forth below,
in each case in form and substance satisfactory to the Purchaser:
(a) A certificate of incumbency and copies of the
resolutions adopted by the Board of Directors of the Seller, authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, duly certified as of the Closing Date by
the Secretary or an Assistant Secretary of the Seller;
(b) To the extent documented in writing, copies of all
orders, consents, approvals and clearances to be obtained by the Seller
pursuant to Section 10.4;
(c) An opinion of Thompson Coburn LLP, counsel for the
Seller and the Companies, as to the matters set forth in Exhibit C, which
---------
opinion shall contain a statement of reliance in favor of the Purchaser's
lenders;
(d) [Reserved];
(e) The original corporate minute books, stock transfer
books and corporate seals of the Companies;
(f) Stock certificate(s) representing the Shares with duly
executed and valid stock powers or such other evidence of ownership or
instruments of transfer as are customary and sufficient to convey ownership
of the Shares, attached in form for transfer to the Purchaser and otherwise
acceptable in form and substance to the Purchaser;
(g) The Supply Agreement and the Patent and Technology
License Agreement shall have been executed and delivered;
(h) An Amendment and Termination Agreement of the Stock
Purchase Agreement dated as of November 19, 1999, by and among Zoltek
Companies, Inc. and each of the holders of the issued and outstanding shares
of capital stock of Structural Polymer (Holdings) Limited as defined therein
(the "Amendment and Termination Agreement"), shall have been executed and
-----------------------------------
delivered;
(i) The Payoff Letter shall have been executed and
delivered; and
(j) Such other documents and instruments as the Purchaser
may reasonably request in connection with the consummation of the
transactions contemplated by this Agreement.
Section 10.6 Power of Attorney. The Seller will execute and deliver
-----------------
a power of attorney in favor of the Purchaser in the form attached as
Exhibit F hereto.
---------
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ARTICLE XI
THE SELLER'S CONDITIONS TO CLOSING
The obligation of the Seller to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment to the
Seller's reasonable satisfaction of the following conditions on or prior to
the Closing Date:
Section 11.1 Continued Truth of Warranties. The representations and
-----------------------------
warranties of each of the Purchaser and the Shareholders herein contained
shall be true in all material respects as of the date hereof and as of the
Closing Date with the same force and effect as though made as of the Closing
Date, except for any variations permitted by this Agreement.
Section 11.2 Performance of Covenants. Each of the Purchaser and
------------------------
the Shareholders shall have performed in all material respects all covenants
and obligations and complied in all material respects with all conditions
required by this Agreement to be performed or complied with by it on or
prior to the Closing Date.
Section 11.3 Permits and Consents. The parties hereto shall have
--------------------
secured all necessary and appropriate orders, consents, approvals and
clearances in form and substance reasonably satisfactory to the Seller, by
and from all third parties reasonably requested by the Seller.
Section 11.4 Loan Payment. The Purchaser shall cause to be
------------
delivered to the Seller an amount in cash equal to any and all amounts owed
to the Seller in the aggregate principal amount of U.S. $7,250,000
including, all related bank loan fees of U.S. $93,781 and all related
accrued interest (net of withholding tax required to be withheld) of U.S.
$479,908.90 representing intercompany advances between the Seller and SP
Systems outstanding as of the Closing Date (the "Intercompany Advances"), by
---------------------
wire transfer of immediately available funds to such account or accounts as
shall be designated by the Seller.
Section 11.5 Shareholders' Closing Documents. The Shareholders
-------------------------------
shall have delivered the Stock Consideration and all documents required to
be delivered by it at the Closing as set forth below, in form and substance
satisfactory to each of the Companies and the Seller:
(a) To the extent documented in writing, copies of all
orders, consents, approvals and clearances to be obtained by the
Shareholders pursuant to Section 11.3;
(b) [Reserved];
(c) Stock certificates representing the Common Stock with
duly executed and valid stock powers or such other evidence of ownership or
instruments of transfer as are customary and sufficient to convey ownership
of the Common Stock, attached in form for transfer to the Seller and
otherwise acceptable in form and substance to the Seller; and
(d) The Amendment and Termination Agreement shall have
been executed and delivered.
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Section 11.6 Purchaser's Closing Documents. The Purchaser shall
-----------------------------
have delivered the Purchase Price and all documents required to be delivered
by it at the Closing as set forth below, in form and substance satisfactory
to each of the Companies and the Seller:
(a) A certificate of incumbency and copies of the
resolutions adopted by the Board of Directors of the Purchaser, authorizing
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, duly certified as of the Closing Date by
the Secretary or an Assistant Secretary of the Purchaser;
(b) To the extent documented in writing, copies of all
orders, consents, approvals and clearances to be obtained by the Purchaser
pursuant to Section 11.3;
(c) [Reserved];
(d) An opinion of Bond Pearce, counsel for the Purchaser,
as to the matters set forth in Exhibit D;
---------
(e) The Supply Agreement and the Patent and Technology
License Agreement shall have been executed and delivered; and
(f) The Amendment and Termination Agreement shall have
been executed and delivered.
ARTICLE XII
SHAREHOLDERS' CONDITIONS TO CLOSING
The obligations of the Shareholders to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment to the
Shareholders' reasonable satisfaction of each of the following conditions on
or prior to the Closing Date:
Section 12.1 Continued Truth of Warranties. The representations and
-----------------------------
warranties of the Seller contained herein shall be true in all material
respects on and as of the date hereof with the same force and effect as
though made as of the date hereof, except for any variations permitted by
this Agreement.
Section 12.2 Performance of Covenants. The Seller shall have
------------------------
performed in all material respects all covenants and obligations and
complied in all material respects with all conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
Section 12.3 No Material Adverse Change. There shall have been no
--------------------------
material adverse change to the properties, operations, liabilities,
earnings, business condition (financial or otherwise) of the Companies taken
as a whole since September 1, 2000 other than changes as the result of
general economic or industry conditions.
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Section 12.4 Permits and Consents. The parties hereto shall have
--------------------
secured all necessary and appropriate orders, consents, approvals and
clearances, in form and substance satisfactory to the Shareholders, by and
from all third parties reasonably requested by the Shareholders.
Section 12.5 Closing Documents. The Seller shall have delivered all
-----------------
documents required to be delivered by it at the Closing pursuant to Section
10.5, and the Purchaser shall have issued the SP Group Shares in each case
in form and substance satisfactory to the Shareholders.
ARTICLE XIII
INDEMNIFICATION
Section 13.1 Indemnification of Each of the Purchaser and the
------------------------------------------------
Shareholders. Subject to the provisions of this Article XIII, by execution
------------
of this Agreement, the Seller hereby acknowledges that each of the Purchaser
and the Shareholders shall be entitled to full indemnification by the Seller
of the following and the Seller hereby agrees to indemnify and hold harmless
the Purchaser and the Shareholders from:
(a) any and all losses, liabilities or damages (including
judgments and settlement payments) (a "Loss") incurred by (i) any of the
----
Purchaser and the Shareholders incident to, arising in connection with or
resulting from any misrepresentation, breach, nonperformance or inaccuracy
of any representation, warranty or covenant set forth in this Agreement by
the Seller made or contained in this Agreement or in any exhibit, schedule,
certificate or other document executed and delivered to each of the
Purchaser and the Shareholders by the Seller or by or on behalf of the
Companies under or pursuant to this Agreement or the transactions
contemplated herein or (ii) Structural Polymer Systems Limited (a subsidiary
of the Purchaser) or any of the Companies, incident to, arising in
connection with or resulting from the guarantee provided by Structural
Polymer Systems Limited to Gamesa Eolica SA ("Gamesa") in relation to
------
repayment of an advanced payment made by Gamesa to Entec Composite Machines
Inc. (a subsidiary of the Seller) of U.S. $114,660 on May 22, 2000 or any
payment thereunder;
(b) any and all reasonable costs and expenses and all
other Losses incurred in claiming, contesting or remedying any breach,
misrepresentation, nonperformance or inaccuracy described in this Section
13.1, or in enforcing their rights to indemnification hereunder, including,
by way of illustration and not limitation, all reasonable legal and
accounting fees, other reasonable professional expenses and all filing fees
and reasonable collection costs incident thereto and all such reasonable
fees, costs and expenses incurred in defending claims which, if successfully
prosecuted, would have resulted in a Loss.
Section 13.2 Indemnification of the Seller. (a) Subject to the
-----------------------------
provisions of this Article XIII, by execution of this Agreement, the
Purchaser hereby acknowledges that the Seller shall be entitled to full
indemnification by the Purchaser of the following and the Purchaser hereby
agrees to indemnify and hold harmless the Seller from:
(i) any and all Losses incurred by the Seller
incident to, arising in connection with or resulting from any
misrepresentation, breach, nonperformance or
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inaccuracy of any representation, warranty or covenant by the
Purchaser made or contained in this Agreement or in any exhibit,
schedule, certificate or other document executed and delivered to
the Seller by the Purchaser; and
(ii) any and all Losses incurred in claiming,
contesting or remedying any breach, misrepresentation,
nonperformance or inaccuracy described above, or in enforcing its
rights to indemnification hereunder, including, by way of
illustration and not limitation, all reasonable legal and
accounting fees, other reasonable professional expenses and all
filing fees and reasonable collection costs incident thereto and
all such reasonable fees, costs and expenses incurred in defending
claims which, if successfully prosecuted, would have resulted in a
Loss.
(b) By execution of this Agreement, such Shareholder
hereby acknowledges as to such Shareholder only that the Seller shall be
entitled to full indemnification by such Shareholder of the following and
such Shareholder hereby agrees to indemnify and hold harmless the Seller
from:
(i) any and all Losses incurred by the Seller
incident to, arising in connection with or resulting from any
misrepresentation, breach, nonperformance or inaccuracy of any
representation, warranty or covenant set forth in this Agreement by
such Shareholder made or contained in this Agreement or in any
exhibit, schedule, certificate or other document executed and
delivered to the Seller by such Shareholder under or pursuant to
this Agreement or the transactions contemplated herein; and
(ii) any and all reasonable costs and expenses and
all other Losses incurred in claiming, contesting or remedying any
breach, misrepresentation, nonperformance or inaccuracy described
above, or in enforcing its rights to indemnification hereunder,
including, by way of illustration and not limitation, all
reasonable legal and accounting fees, other reasonable professional
expenses and all filing fees and reasonable collection costs
incident thereto and all such reasonable fees, costs and expenses
incurred in defending claims which, if successfully prosecuted,
would have resulted in a Loss.
Section 13.3 Notice of and Procedures for Collecting
---------------------------------------
Indemnification. (a) Initial Claim Notice. When either the Purchaser, the
--------------- --------------------
Shareholders or the Seller, becomes aware of a situation which may result in
damages for which it or they would be entitled to be indemnified hereunder,
the Purchaser, the Shareholders or the Seller (the "Indemnitee") shall
----------
submit promptly a written notice (the "Initial Claim Notice") to the other
--------------------
party from which indemnification may be forthcoming pursuant to Section 13.1
or 13.2 (the "Indemnitor") to such effect after it first becomes aware of
----------
such matter and shall furnish the Indemnitor with such information as it has
available demonstrating its right or possible right to receive indemnity. If
the potential claim is predicated on, or later results in, the filing by a
third party of any action at law or in equity (a "Third Party Claim"), the
-----------------
Indemnitee shall provide promptly to the Indemnitor a supplemental Initial
Claim Notice not later than twenty (20) calendar days prior to the date on
which a responsive pleading must be filed, and shall also furnish a copy of
such claim (if made in writing) and of all documents received from the third
party in support of such claim. In addition, each Initial Claim Notice shall
name, when known, the person or persons making the assertions which are the
basis for such claim. Failure by the Indemnitee to deliver an
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Initial Claim Notice or an update thereof in a timely manner shall not
relieve the Indemnitor of any of its obligations under this Agreement except
to the extent that actual and material prejudice to the Indemnitor.
(b) Rights of Indemnitor. If, prior to the expiration of
--------------------
thirty (30) calendar days from the mailing of an Initial Claim Notice (the
"Claim Answer Period"), the Indemnitor shall request in writing that such
-------------------
claim not be paid, the same shall not be paid, and the Indemnitor shall
settle, compromise or litigate in good faith such claim, and employ
attorneys of its choice to do so; provided, however, that Indemnitee shall
-------- -------
not be required to refrain from paying any claim which has matured by court
judgment or decree, unless appeal is taken therefrom and proper appeal bond
posted by the Indemnitor, nor shall it be required to refrain from paying
any claim where such action would result in the foreclosure of a lien upon
any of its assets or a default in a lease or other contract except a lease
or other contract which is the subject of the dispute. The Indemnitee shall
cooperate fully to make available to the Indemnitor and its attorneys,
representatives and agents, all pertinent information under its control. The
Indemnitee shall have the right to elect to settle or compromise all other
contested claims with respect to which the Indemnitor has not, within the
Claim Answer Period, acknowledged in writing (i) liability therefor, and
(ii) its election to assume full responsibility for the settlement,
compromise, litigation and payment of such claim.
(c) Final Claims Statement. At such time as damages for
----------------------
which the Indemnitor is liable hereunder are incurred by Indemnitee by
actual payment thereof or by entry of a final judgment, the Indemnitee shall
forward a final claims statement (the "Final Claims Statement") to the
----------------------
Indemnitor setting forth the amount of such damages in reasonable detail on
an itemized basis. The Indemnitee shall supplement the Final Claims
Statement with such supporting proof of loss (e.g., vouchers, canceled
checks, accounting summaries, judgments, settlement agreement, etc.) as the
Indemnitor may reasonably request in writing within thirty (30) calendar
days after receipt by the Indemnitor of a Final Claims Statement. All
amounts reflected on Final Claims Statements shall be paid promptly by the
Indemnitor to the Indemnitee and the Indemnitee shall have the right to
immediate payment of proceeds from insurance policies paid to the Indemnitor
in connection with the claim for which the indemnification right arose.
Section 13.4 Payment of Claims for Indemnification. Any amounts
-------------------------------------
payable to each of the Purchaser and the Shareholders, as the case may be,
pursuant to the provisions of Section 13.1 shall be the responsibility of
the Seller as provided in Section 13.1. Any amounts shall be paid promptly
upon notice of the Purchaser or the Representative (as herein defined), as
the case may be, to the Seller of incurrence of such loss, liability, cost,
expense or damage and an explanation of the losses for the Purchaser's or
the Shareholders' (as the case may be) demand for indemnification under
Article XIII of this Agreement. Any amounts payable to the Seller pursuant
to the provisions of Section 13.2(a) of this Agreement shall be the
responsibility of the Purchaser and shall be paid promptly upon notice of
the Seller to the Purchaser of incurrence of such loss, liability, cost,
expense or damage and an explanation of the losses for the Seller's demand
for indemnification under Section 13.2(a) of this Agreement. Any amounts
payable to the Seller pursuant to the provisions of Section 13.2(b) of this
Agreement shall be the responsibility of the applicable Shareholder and
shall be paid promptly upon notice of the Seller to the Representative of
incurrence of such loss, liability, cost, expense or damage and an
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explanation of the losses for the Seller's demand for indemnification under
Section 13.2(b) of this Agreement.
Section 13.5 Survival of Indemnification. Any other provision
---------------------------
hereof to the contrary notwithstanding, the parties agree that the
representations and warranties of the parties contained in this Agreement
and any certificates delivered pursuant to this Agreement shall survive
indefinitely.
Section 13.6 Exclusive Remedy. The sole and exclusive remedy of
----------------
each of the Purchaser, the Shareholders and the Seller hereunder or
otherwise in connection with the transactions contemplated hereby shall be
restricted to the indemnification rights set forth in this Article XIII.
ARTICLE XIV
FEDERAL AND OTHER SECURITIES LAWS
Section 14.1 Investment Representations. (a) This Agreement is made
--------------------------
with the Seller in reliance upon the Seller's representations to each of the
Purchaser and the Shareholders, in reliance upon the Purchaser's
representations to each of the Seller and the Shareholders, and in reliance
upon the Shareholders' representations to each of the Purchaser and the
Seller (as used in this Article XIV, each of the Seller, the Purchaser and
the Shareholders are referred to herein as an "Investor") which by its
--------
execution hereof the Seller hereby confirms, that the Common Stock
transferred as the Stock Consideration, the Purchaser hereby confirms, that
the purchase of the Shares and the Shareholders hereby confirm, that the SP
Group Shares (the Stock Consideration, the Shares, and the SP Group Shares
are referred to in this Article XIV as the "Securities") to be received by
----------
it will be acquired for investment for its own account, not as a nominee or
agent, and not with a view to the sale or distribution of any part thereof,
and that the no Investor has any present intention of selling, granting
participation in, or otherwise distributing the same. By executing this
Agreement, the Investor further represents that it does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer, or grant participations to such person or to any third person,
with respect to any of the Securities.
(b) The Investor understands that the Securities are not
registered under the 1933 Act on the ground that the sale provided for in
this Agreement should be exempt from registration under the 1933 Act and
that the Purchaser's, the Shareholders' or the Seller's reliance, as the
case may be, on such exemption is predicated on the Investor's
representations set forth herein. The Investor realizes that the basis for
the exemption may not be present if, notwithstanding such representations,
the Investor has in mind merely acquiring the Securities for a fixed or
determinable period in the future, or for a market rise or for sale if the
market does not rise. The Investor confirms that it has no such intention.
(c) The Investor represents that it is an "accredited
----------
investor" within the meaning of Rule 501 under the 1933 Act and that the
--------
Investor is experienced in evaluating and investing in companies, is able to
fend for itself in the transactions contemplated by this Agreement, has such
knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment and has the ability to
bear the economic risks of its
18
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investment. The Investor further represents that it has had access, during
the course of the transaction and prior to its purchase of the Securities,
to the information filed by the Purchaser, the Shareholders or the Seller,
as the case may be, with the Securities and Exchange Commission and that it
has had, during the course of the transaction and prior to the Investor's
execution hereof, the opportunity to ask questions of, and to receive
answers from, the Purchaser, the Shareholders or the Seller, as the case may
be, concerning the terms and conditions of the offering of the Securities
and to obtain additional information necessary to verify the accuracy of any
information furnished to it or which it has had access. The Investor is
aware that a significant portion of any future revenues of the Purchaser,
the Shareholders or the Seller, as the case may be, may be adversely
affected by market and regulatory forces. The Investor acknowledges that it
has had the opportunity to obtain additional information as desired in order
to evaluate the merits and risks inherent in purchasing and holding the
Securities.
(d) The Investor understands that the Securities may not
be sold, transferred or otherwise disposed of without registration under the
1933 Act or an exemption therefrom, and that in the absence of an effective
registration statement covering the Securities or an available exemption
from registration under the 1933 Act, the Securities must be held
indefinitely. In particular, the Investor is aware that the Securities may
not be sold pursuant to Rule 144 promulgated under the 1933 Act unless all
of the conditions of that Rule are met. The Investor represents that, in the
absence of an effective registration statement covering the Securities, it
will sell, transfer or otherwise dispose of the Securities only in a manner
consistent with its representations set forth herein and then only in
accordance with the provisions of Section 14.1(e) hereof.
(e) The Investor agrees that in no event will it make a
transfer or disposition of any of the Securities (other than pursuant to an
effective registration statement under the 1933 Act), unless and until (i)
the Investor shall have notified the Seller, the Purchaser or the
Representative, as the case may be, of the proposed disposition and shall
have furnished the Seller, the Purchaser or the Representative, as the case
may be, with a statement of the circumstances surrounding the disposition
and assurance that the proposed disposition is in compliance with all
applicable laws and (ii) if reasonably requested by the Purchaser, the
Representative or the Seller, as the case may be, at the expense of the
Investor or the transferee, it shall have furnished to the Purchaser, the
Representative or the Seller, as the case may be, an opinion of counsel,
reasonably satisfactory to the Purchaser, the Representative or the Seller,
as the case may be, to the effect that such transfer may be made without
registration under the 1933 Act.
Section 14.2 Legends; Stop Transfer. (a) All certificates for the
----------------------
Stock Consideration and the Shares may bear the following or a substantially
similar legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED
EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT RELATING
TO THE SECURITIES WHICH IS EFFECTIVE UNDER THE SECURITIES
ACT OF 1933, (ii) RULE 144 UNDER SUCH ACT, OR (iii) AN
OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO [THE
SHAREHOLDERS] [ZOLTEK COMPANIES, INC.], THAT ANOTHER
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EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT
IS AVAILABLE.
(b) The certificates for the Securities may also bear any
legend required by any applicable state securities or other law.
(c) In addition, the Purchaser, the Representative or the
Seller, as the case may be, shall cause its transfer agent to make a
notation regarding the restrictions on transfer of the Securities in their
respective records and the Securities shall be transferred on the books of
the Purchaser or the Seller, as the case may be, only if transferred or sold
pursuant to an effective registration statement under the 1933 Act covering
such shares or pursuant to and in compliance with the provisions of Section
14.1(e) hereof.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Appointment of Representative. (a) Powers of Attorney.
----------------------------- ------------------
Each Shareholder irrevocably constitutes and appoints Paul Rudling (the
"Representative") as such Shareholder's true and lawful agent, proxy and
--------------
attorney-in-fact and agent and authorizes the Representative acting for such
Shareholder and in such Shareholder's name, place and stead, in any and all
capacities to do and perform every act and thing required or permitted to be
done in connection with the transactions contemplated by this Agreement, as
fully to all intents and purposes as such person might or could do in
person, including, without limitation:
(i) deliver all notices required to be delivered by
the Shareholders under this Agreement in connection with the foregoing;
(ii) receive all notices required to be delivered to
the Shareholders under this Agreement in connection with the foregoing;
(iii) take any and all action on behalf of such
Shareholder from time to time, as the Representative may deem
necessary or desirable to defend, pursue, resolve and/or settle
claims under this Agreement in connection with the foregoing; and
(iv) engage and employ agents and representatives for
the Shareholders (including accountants, legal counsel and other
professionals) and to incur such other expenses as he deems
necessary or prudent in connection with the administration of the
foregoing.
Each Shareholder grants unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing necessary or
desirable to be done in connection with the transactions contemplated by
this Agreement, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that the
Representative may lawfully do or cause to be done by virtue hereof. Each
Shareholder will, by executing this Agreement, agree that such agency, proxy
and power of attorney are coupled with an interest, and are therefore
irrevocable without the consent of the Representative and shall
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survive the death, incapacity, or bankruptcy of such Shareholder. Each
Shareholder acknowledges and agrees that upon execution of this Agreement,
any delivery by the Representative of any waiver, amendment, agreement,
opinion, certificate or other documents executed by the Representative or
any decisions made by the Representative pursuant to this Section 15.1, such
Shareholder shall be bound by such documents or decisions as fully as if
such Shareholder had executed and delivered such documents or made such
decisions.
(b) Liability of Representative. The Representative shall
---------------------------
not have by reason of this Agreement a fiduciary relationship in respect of
any Shareholder, except in respect of amounts received on behalf of such
Shareholder. The Representative shall not be liable to any Shareholder for
any action taken or omitted by him or any agent employed by him hereunder or
under any other related document referred to herein, or in connection
therewith, except that the Representative shall not be relieved of any
liability imposed by law for gross negligence or willful misconduct. The
Representative shall not be liable to the Shareholders for any apportionment
or distribution of payments made by him in good faith, and if any such
apportionment or distribution is subsequently determined to have been made
in error, the sole recourse of any Shareholder to whom payment was due, but
not made, shall be to recover from the other Shareholders any payment in
excess of the amount to which they are determined to have been entitled. The
Representative shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions
of this Agreement.
(c) Replacement of the Representative. Upon the death,
---------------------------------
disability, incapacity or resignation of the initial Representative
appointed pursuant to Section 15.1(a) above, each Shareholder acknowledges
and agrees that the remaining Shareholders shall elect within 30 days one of
the remaining Shareholders to serve as the Representative pursuant to this
Section 15.1. Any substituted representative shall be deemed the
Representative for all purposes of this Agreement.
(d) Actions of the Representative; Liability of the
-----------------------------------------------
Representative. Each Shareholder agrees that the Purchaser and the Seller
--------------
shall be entitled to rely on any action taken by the Representative, on
behalf of the Shareholders, pursuant to Section 15.1(a) above (each, an
"Authorized Action"), and that each Authorized Action shall be binding on
-----------------
each Shareholder as fully as if such Shareholder had taken such Authorized
Action. Each of the Purchaser and the Seller agrees that the Representative
shall have no liability to the Purchaser and the Seller for any Authorized
Action, except to the extent that such Authorized Action is found by a final
order of a court of competent jurisdiction to have constituted fraud or
willful misconduct. The Shareholders jointly and severally agree to pay, and
to indemnify and hold harmless each of the Purchaser and the Seller from and
against any losses which it may suffer, sustain, or become subject to, as
the result of any claim by any person that an Authorized Action is not
binding on, or enforceable against, the Shareholders. In addition, the
Shareholders hereby release and discharge the Purchaser and the Seller from
and against any liability arising out of or in connection with the
Representative's failure to distribute any amounts received by the
Representative on the Shareholders' behalf to the Shareholders.
(e) Allocation of Payments. Whenever the Shareholders are
----------------------
entitled to receive any payments hereunder or are obligated to make any
payments hereunder (including those
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specified in Section 15.1(a)(i), each Shareholder shall be entitled to
receive from each of the Purchaser and the Seller or shall be obligated to
pay to each of the Purchaser and the Seller such a pro rata portion of any
payment determined in accordance with each such Shareholder's percentage
ownership of the Common Stock calculated by dividing the number of shares of
Common Stock owned by such Shareholder by the total number of shares of
Common Stock, each as set forth on Exhibit B to this Agreement.
---------
Section 15.2 Termination. This Agreement, other than the
-----------
obligations contained in Sections 6.6, 7.1, 15.1 and 15.10 which shall
survive any termination of this Agreement, may be terminated by the parties
hereto, prior to Closing as follows:
(a) by mutual written consent of the Purchaser, the
Representative and the Seller and the transactions contemplated herein
abandoned;
(b) upon written notice from the Purchaser or the
Representative, as the case may be, to the Seller if any of the conditions
precedent to the Purchaser's or Shareholders' (as the case may be)
obligations hereunder shall have become incapable of fulfillment through no
fault of the Purchaser or the Shareholders, as the case may be;
(c) upon written notice from the Seller to the Purchaser
and the Representative if any of the conditions precedent to the Seller's
obligations hereunder shall have become incapable of fulfillment through no
fault of the Seller;
(d) by the Purchaser, on the one hand, or the Seller, on
the other hand, in the event of a breach by any other party to this
Agreement of any representation, warranty or agreement contained herein,
which breach is not cured within thirty (30) days after written notice
thereof is given to the breaching party by the non-breaching party or is not
waived by the non-breaching party during such period; or
(e) at the election of the Purchaser or the Seller if the
Closing has not occurred on or prior to November 15, 2000.
Termination of this Agreement as provided in this Agreement shall not affect
any other rights or remedies any party may have at law, in equity or
otherwise for breach of this Agreement or otherwise.
Section 15.3 Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which will be deemed to be an original but all of
which together will constitute one and the same document.
Section 15.4 Right of Inspection. From and after the date of this
-------------------
Agreement to the Closing Date, the Seller will give to the Purchaser and its
counsel, accountants and other representatives, full access during normal
business hours to the offices, properties, agreements, records and affairs
of the Companies, and will furnish copies of all Contracts and other
instruments as the Purchaser or its counsel may reasonably request. Such
investigation will not affect the warranties of the Seller under this
Agreement. All such information will be treated confidentially and will be
used only for the purposes intended. If the transactions contemplated under
this Agreement do not take place, all documents and other property of the
Companies or
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the Seller will be returned and all disclosures and information given to
Purchaser as contemplated under this Agreement will be treated as
confidential and not disclosed to others unless disclosed publicly by the
Seller or other third parties without fault on the part of the Purchaser, or
unless otherwise required by law.
Section 15.5 Entire Agreement. This Agreement, including any
----------------
certificate, schedule, exhibit or other document delivered pursuant to its
terms, constitutes the entire agreement between the parties. There are no
verbal agreements, representations, warranties, undertakings or agreements
between the parties, and this Agreement may not be amended or modified in
any respect, except by a written instrument signed by the parties to this
Agreement.
Section 15.6 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal substantive laws and not the
choice of law rules of the State of Missouri.
Section 15.7 Press Releases. Prior to the Closing, none of the
--------------
parties, will issue or cause the publication of any press release or other
public announcement with respect to this Agreement or the transactions
contemplated under this Agreement without the prior consent of each of the
other parties first obtained which consent will not be unreasonably withheld
or delayed; provided, however, that nothing in this Agreement will prohibit
-------- -------
any of the parties from issuing or causing publication of any press release
or public announcement to the extent that such action is required by law or
any regulatory authority, in which case the party making such determination
will, if practicable under the circumstances, use reasonable efforts to
allow the other parties reasonable time to comment on such release or
announcement in advance of its issuance.
Section 15.8 Currency. Any references in this Agreement to
--------
"dollars" shall mean U.S. Dollars.
-------
Section 15.9 Assignment, Third Parties, Binding Effect. The rights
-----------------------------------------
under this Agreement are not assignable nor are the duties delegable by a
party without the written consent of the other party first having been
obtained, and any attempted assignment or delegation without such consent
will be null and void; provided, however, that (i) the Purchaser may assign
-------- -------
its rights or delegate its duties hereunder to any wholly-owned subsidiary
of the Purchaser and (ii) to its lenders. Nothing contained in this
Agreement is intended to convey upon any person or entity, other than the
parties hereto and their successors in interest and permitted assigns, any
rights or remedies under or by reason of this Agreement unless expressly
stated. All covenants, agreements, representations and warranties of the
parties contained in this Agreement are binding on and will inure to the
benefit of the Purchaser, the Shareholders, and the Seller and each of their
respective successors and permitted assigns.
Section 15.10 Expenses. Each of the Purchaser, the Shareholders and
--------
the Seller will bear its own expenses in connection with the preparation and
negotiation of, and transactions contemplated under, this Agreement,
including, without limitation, counsel and accountants' fees, except that
the Purchaser will reimburse Seller, at the time of Closing, for up to
$100,000 of such expenses of the Seller. Notwithstanding the foregoing, the
Purchaser shall pay any and all
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taxes, registration fees or other expenses included in connection with
effecting the transfer of the Shares.
Section 15.11 Waivers. Any failure by any of the parties to comply
-------
with any of the obligations, agreements or conditions set forth in this
Agreement may be waived by the other party or parties, but any such waiver
will not be deemed a waiver of any other obligation, agreement or condition
contained herein.
Section 15.12 Captions and Section Headings. Captions and section
-----------------------------
headings are for convenience only, are not a part of this Agreement and may
not be used in construing it.
Section 15.13 Notices. All notices, requests, demands and other
-------
communications under this Agreement must be in writing and will be deemed
duly given, unless otherwise expressly indicated to the contrary in this
Agreement, (i) when personally delivered, (ii) if sent by reputable
overnight air courier (such as DHL or Federal Express) two (2) days after
having been posted, (iii) if sent by registered or certified mail in the
United States, return receipt requested, upon receipt, (iv) if sent by
facsimile transmission, with a copy of same mailed in the manner provided
above, when transmitted and receipt is confirmed by telephone. Such delivery
shall be addressed to the parties at the following addresses (or at such
other address or number as is given in writing by either party to the other)
as follows:
To Purchaser: Structural Polymer Group Limited
c/o Structural Polymer (Holdings) Limited
St. Cross Business Park, Newport
Isle of Wight, PO3O 5WU
Facsimile No.: (0)1983 828215
Attention: Mr. Paul Brown
With a copy to: Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
Facsimile No.: 212-858-1500
Attention: Mr. Kenneth E. Adelsberg
Bond Pearce
Town Quay House, 7 Town Quay
Southampton, England S014 2PT
Facsimile No.: 02380 222480
Attention: Messrs. Moray Macpherson and
Graham Jeffries
To Shareholders: Mr. Paul Rudling
c/o Structural Polymer (Holdings) Limited
St. Cross Business Park, Newport
Isle of Wight, PO30 5WU
Facsimile No.: (0) 1983 828215
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With a copy to: Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
Facsimile No.: 212-858-1500
Attention: Mr. Kenneth E. Adelsberg
Bond Pearce
Town Quay House, 7 Town Quay
Southampton, England S014 2PT
Facsimile No.: 02380 222480
Attention: Messrs. Moray Macpherson and
Graham Jeffries
To Seller: Zoltek Companies, Inc.
3101 McKelvey Road
Bridgeton, Missouri 63044
Facsimile No.: 314-291-8536
Attention: Mr. Zsolt Rumy
With a copy to: Thompson Coburn LLP
One Mercantile Center
St. Louis, Missouri 63101-1693
Facsimile No.: 314-552-7000
Attention: Mr. Thomas A. Litz
and
Blake Lapthorn
New Court
1 Barnes Wallis Road
Segensworth Fareham
Hampshire PO I5 5UA
Facsimile No.: (0)1489 579 126
Attention: Mr. Mark Shepherd
[the remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement
on the date first above written.
PURCHASER:
STRUCTURAL POLYMER GROUP LIMITED
By: /s/ A. P. Brown
-----------------------------------------
Name: A. P. Brown
Title: Director
SELLER:
ZOLTEK COMPANIES, INC.
By: /s/ Daniel D. Greenwell
-----------------------------------------
Name: Daniel D. Greenwell
Title: Chief Financial Officer
SHAREHOLDERS:
/s/ Paul Rudling
----------------------------------------------
Paul Rudling
/s/ Andy Day
----------------------------------------------
Andy Day
/s/ Giovanni Belgrano
----------------------------------------------
Giovanni Belgrano
/s/ Derek Ness
----------------------------------------------
Derek Ness
<PAGE>
<PAGE>
/s/ Paul Brown
----------------------------------------------
Paul Brown
/s/ James Austin
----------------------------------------------
James Austin
/s/ Adrian Williams
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Adrian Williams
/s/ Graham Harvey
----------------------------------------------
Graham Harvey
/s/ Simon Grosser
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Simon Grosser
/s/ Michael Turner
----------------------------------------------
Michael Turner
/s/ Nicholas Partington
----------------------------------------------
Nicholas Partington
/s/ Paul Lyon
----------------------------------------------
Paul Lyon
/s/ Richard Willoughby
----------------------------------------------
Richard Willoughby
/s/ Hallkvist Trading ApS
----------------------------------------------
Hallkvist Trading ApS
/s/ David Cripps
----------------------------------------------
David Cripps
