Exhibit 10.1
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (this “Agreement”) is entered into effective
June 9, 2011 by and between Synthesis Energy Systems, Inc., a Delaware
corporation (hereinafter referred to as SES, which expression shall unless the
context otherwise required, include its successors) and Zuari Industries Ltd., a
company duly incorporated in India under the Companies Act 1956, with registered
office at Jai Kisaan Bhawan, Zuarinagar, Goa 403726 and a subsidiary of ZUARI
Industries Limited, (hereinafter referred to as ZUARI, which expression shall
unless the context otherwise requires mean and include its representatives,
successors, affiliates and subsidiaries). The parties to this Agreement are
sometimes referred to individually as a “Party” and together as the “Parties.”
RECITALS
WHEREAS:

1.  
SES is a company duly incorporated under the laws of the State of Delaware,
United States of America, and is a global energy and gasification technology
company that provides products and solutions to the energy and chemical
industries.

2.  
The authorized share capital of SES is 200,000,000 shares of common stock, par
value US$.01 per share (the “Common Stock”).

3.  
ZUARI is a company inter alia dealing with the manufacture and sale of
fertilizers and other agricultural inputs.

4.  
On June 9, 2011 SES, ZUARI and SIMON INDIA LIMITED entered into a Memorandum of
Understanding (the “MOU”), whereby ZUARI agreed, among other things, to invest
five million U.S. dollars (US$5,000,000) to purchase shares of the Common Stock.

5.  
The Parties are desirous of entering into this Agreement in order to set out the
rights and obligations of the Parties in relation to the purchase by ZUARI and
the issuance of the Shares by SES and other matters in connection therewith.

NOW, THEREFORE, In reliance of and based on certain representations, warranties
as mentioned in Schedules 2 and 3 herein, and covenants as set forth in this
Agreement, and subject to all the applicable statutory, corporate and other
approvals, and for other good and valuable consideration, the sufficiency of
which is acknowledged by the Parties, the Parties hereby agree as follows:
CLAUSE 1
DEFINITIONS AND INTERPRETATION

1.1  
In addition to the terms defined in the introduction and the text of this
Agreement, wherever used in this Agreement, unless the context otherwise
requires, the following words and terms shall have the meanings set out below:

“Affiliate” with respect to any Person, means any other Person which is a
holding company or Subsidiary of such Person, or any Person which, directly or
indirectly, (a) Controls such Person; (b) is Controlled by such Person; (c) is
Controlled by the same Person who, directly or indirectly, Controls such Person;
or (d) is a Subsidiary of the same Person of which such Person is a Subsidiary;

 

 

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“Agreement” means this Share Purchase Agreement and all instruments supplemental
to or in amendment or confirmation of this Agreement, entered into by the
Parties in writing, and the same as amended, modified or supplemented from time
to time;
“Agreement Date” means the date of this Agreement;
“Approvals” means all authorizations, consents, approvals and permissions
required by any Government Authority for or in respect of the purchase by ZUARI
of, and the sale by SES of, the Shares;
“Board” or “Board of Directors” shall mean the Board of Directors of SES;
“Common Stock” shall have the meaning set forth under No.2 of the Recitals
hereinabove;
“Control” in relation to a Person, whether natural or juristic, means the power,
direct or indirect, to direct or cause the direction of the management and
policies of such Person whether by Contract or otherwise and, in any event,
includes ownership, directly or indirectly, whether by itself or through
Affiliates, in excess of 25.00% of the voting securities, including preference
shares on which voting rights may have accrued in accordance with Law, of such
Person, and the words “Controlled” and “Controlling” shall have a correlative
meaning;
“Encumbrances” means any form of legal, equitable charge (whether fixed or
floating), or security interests, including but not limited to any mortgage,
assignment of receivables, debenture, lien, charge, pledge, title retention,
right to acquire, security interest, hypothecation, options, rights of first
refusal, proxies, voting trusts or agreements, restrictions on title or
transfer, any preferred arrangement (including title transfers and retention
arrangements or otherwise) and any other encumbrance or condition whatsoever or
any other arrangements having similar effect (and for the avoidance of doubt
includes any right granted by a transaction which, in legal terms, is not the
granting of security but which has an economic or financial effect similar to
the granting of security in each case under any applicable Law including comfort
letters, undertakings etc.), and the terms “Encumber”, “Encumbered” and
“Encumbering” shall be construed accordingly;
“Exchange Act” means the United States Securities Exchange Act of 1934, as
amended from time to time;
“Government Authority” means any national, federal, state, provincial, local or
other government authority, statutory authority, government department, agency,
commission, board, tribunal or court or other law, rule or regulation-making
entity (or any tribunal, board or court;
“Law” means any statute, notification, by-law, rules and regulation,
notification, guideline, policy, direction, directive, ordinance, order or
instruction having the force of law, enacted or issued by any Government
Authority;

 

 

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“Material Adverse Effect” shall mean any change or effect that is materially
adverse to the business, assets, liabilities, results of operations or condition
(financial or otherwise) of SES and its Subsidiaries, taken as a whole, except
any such effect resulting from or arising in connection with (i) conditions
affecting global coal, gasification or methanol industries generally,
(ii) events affecting the global economy or capital or financial markets
generally, (iii) changes in general economic conditions affecting the industries
in which SES or any of its Subsidiaries operate, (iv) changes in Law or changes
in accounting standards, (v) the effect of any war, act of terrorism, civil
unrest, act of God or similar event, (vi) the compliance by SES with the terms
of, or taking of any action contemplated or permitted by this Agreement,
(vii) actions and omissions of SES (or any of the SES’s Subsidiaries) taken with
the prior informed written consent of ZUARI in contemplation of the transactions
and (viii) the direct effects of compliance with this Agreement on the operating
performance of SES, in each case of clauses (i) through (v), that does not have
a materially disproportionate effect on SES and any SES Subsidiary to other
business entities similarly affected in the relevant jurisdiction or market;
“MOU” shall have the meaning set forth under No.4 of the Recitals hereinabove;
“Party” and “Parties” shall have the meaning set forth in the Preamble;
“Person” includes any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate and a natural person in his capacity as
trustee, executor, administrator, or other legal representative;
“Purchase Price” shall have the meaning set out in Clause 3 herein;
“SEC” means the U.S Securities and Exchange Commission;
“Securities Act” means the United States Securities Act of 1933, as amended from
time to time;
“Shares” means 2,222,222 shares of the Common Stock;
“Subsidiary” means each Person with respect to which another Person, directly or
indirectly, owns or Controls of outstanding securities or other interests having
by their terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions;
“US$” means United States dollars, the lawful currency of the United States of
America;

1.2  
Certain Rules of Interpretation.

In this Agreement:

  1.2.1  
The descriptive headings of Clauses are inserted solely for convenience of
reference and are not intended as complete or accurate descriptions of content
thereof and shall not be used to interpret the provisions of this Agreement;

  1.2.2  
The use of words in the singular or plural, or with a particular gender, shall
not limit the scope or exclude the application of any provision of this
Agreement to any Person or Persons or circumstances except as the context
otherwise permits;

  1.2.3  
The terms “hereof”, “herein”, “hereto”, “hereunder” or similar expressions used
in this Agreement mean and refer to this Agreement and not to any particular
Clause of this Agreement. The terms “Clause” or “sub-clause” mean and refer to
the Clause or sub-clause of this Agreement;

 

 

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  1.2.4  
The words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any right or interest in or to assets and properties of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible;

  1.2.5  
Wherever the word “include,” “includes,” or “including” is used in this
Agreement, it shall be deemed to be followed by the words “without limitation”;

  1.2.6  
Unless otherwise specified, where any warranty or any other provision refers to
the knowledge, information, belief or awareness (or similar expression) of a
Party to this Agreement, the Party shall be deemed to have such knowledge,
information, belief or awareness of a particular matter, where:

  (a)  
the Party actually had such knowledge, information, belief or awareness; or

  (b)  
a reasonable person in a similar position as the Party would have had such
knowledge, information, belief or awareness, based on it making all reasonable
and proper enquiries into the subject matter of that warranty or other
provision; and

  1.2.7  
The recitals and schedules of this Agreement form an integral part of this
Agreement.

CLAUSE 2
PURCHASE OF THE SHARES

2.1  
SES hereby issues the Shares to ZUARI and ZUARI, relying on SES’s
Representations and Warranties, hereby agrees to purchase the Shares on the date
hereof in exchange for the Purchase Price, free and clear of all encumbrances
and from all other rights or claims by third parties as guaranteed by SES. Upon
acquisition of the Shares, ZUARI will hold approximately 4.4% of the Common
Stock.

CLAUSE 3
PURCHASE PRICE

3.1  
The aggregate consideration paid by ZUARI to SES on the date hereof for the
issuance of the Shares is five million U.S. dollars (US$5,000,000), or US$2.25
per share (the “Purchase Price”), payable to a bank account specified in writing
by SES.

3.2  
Notwithstanding the above, the Parties agree that, should the closing market
price of the Common Stock (ticker symbol SYMX) on the NASDAQ Stock Market on
trading day immediately preceding the date of remittance of the aggregate
consideration by Zuari be lower than US$2.25 per share, the Purchase Price shall
be the reduced from US$2.25 per share to a per share equal to such lower price
and the number of shares of Common Stock to be purchased by ZUARI shall be
recalculated.

3.3  
The Parties agree that the Purchase Price represents the entire consideration
and no further amounts shall be payable by ZUARI to SES for the issuance of the
Shares in accordance with this Agreement.

 

 

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CLAUSE 4
CLOSING

4.1  
On or prior to the date hereof, to complete the issuance of the Shares to ZUARI,
the following actions have occurred:

  4.1.1  
No court or other Government Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any law, determination,
injunction or other (whether temporary, preliminary or permanent) that is in
effect and restrains, enjoins or otherwise prohibits consummation of the
transactions contemplated by this Agreement;

  4.1.2  
SES has provided ZUARI with certified true copies of the resolutions so passed
by the Board approving the transactions contemplated by this Agreement;

  4.1.3  
SES has obtained all the necessary approvals and consents under all applicable
laws or from Government Authorities, including that of corporate, creditors,
shareholders, and those under provisions of insurance policies, as may be
required for the consummation of the transactions contemplated by this
Agreement, other than blue sky filing under the Securities Act;

  4.1.4  
SES has provided to ZUARI true and correct copies of all policies relating to
directors’ and officers’ liability coverage, errors and omissions coverage, and
commercial general liability coverage insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of SES believes to be prudent and customary in the businesses in
which SES and its Subsidiaries are engaged;

  4.1.5  
ZUARI has provided SES with certified true copies of the resolutions so passed
by the board of directors and shareholders of ZUARI, as applicable, approving
the transactions contemplated by this Agreement;

  4.1.6  
ZUARI has obtained all the necessary approvals and consents under all applicable
laws or from Government Authorities as may be required for the consummation of
the transactions contemplated by this Agreement;

  4.1.7  
SES has provided ZUARI with new share certificates in respect of the Shares; and

  4.1.7  
SES shall issue irrevocable instructions to its transfer agent to issue
certificates, registered in the name of ZUARI or its nominee, for the Shares in
such amounts as specified from time to time by ZUARI to SES in accordance with
the terms thereof. Prior to registration of the Shares under the Securities Act
or the date on which the Shares may be sold pursuant to Rule 144 without any
restriction as to the number of Shares as of a particular date that can then be
immediately sold, all such certificates shall bear the restrictive legend
specified in Clause 1.2.4 of Schedule 2 of this Agreement. If ZUARI provides
SES, at the cost of ZUARI, with (i) an opinion of U.S. counsel in form,
substance and scope reasonably acceptable to SES, to the effect that a public
sale or transfer of such Shares may be made without registration under the
Securities Act and such sale or transfer is effected or (ii) ZUARI provides
reasonable assurances that the Shares can be sold pursuant to Rule 144, SES
shall permit the transfer, and, in the case of the Shares, promptly instruct its
transfer agent to issue one or more certificates, free from restrictive legend,
in such name and in such denominations as specified by ZUARI.

 

 

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CLAUSE 5
CONSEQUENCE OF BREACH

5.1  
Indemnity by SES: SES hereby agrees to indemnify and keep indemnified, save,
defend and hold harmless, ZUARI from and against any and all lawful losses,
claims, demands, notices of claims issued by any third party, actions, causes of
actions, suits, litigation, damages, and reasonable out of pocket costs and
expenses incurred in pursuing any of the foregoing and any proceeding in
relation to the foregoing in any jurisdiction promptly upon demand at any time
and from time to time, to the fullest extent permitted by applicable Law, which
may arise out of, result from or be payable by virtue of:

  5.1.1  
misrepresentation or breach of SES’s representations and warranties; or

  5.1.2  
any breach of or default of any SES’s covenants or obligations under this
Agreement; or

  5.1.3  
any breach of undertaking, confirmation, covenant or agreement of SES agreed to
be performed under this Agreement or in any certificate, instrument or document
delivered by SES pursuant hereto.

5.2  
Indemnity by ZUARI: ZUARI hereby agrees to indemnify and keep indemnified, save,
defend and hold harmless, SES from and against any and all lawful losses,
claims, demands, notices of claims issued by any third party, actions, causes of
actions, suits, litigation, damages, and reasonable out of pocket costs and
expenses incurred in pursuing any of the foregoing and any proceeding in
relation to the foregoing in any jurisdiction promptly upon demand at any time
and from time to time, to the fullest extent permitted by applicable Law, which
may arise out of, result from or be payable by virtue of:

  5.2.1  
misrepresentation or breach of ZUARI’s representations and warranties; or

  5.2.2  
any breach of or default of any covenants or obligations of ZUARI under this
Agreement; or

  5.2.3  
any breach of undertaking, confirmation, covenant or agreement of ZUARI agreed
to be performed under this Agreement or in any certificate, instrument or
document delivered by ZUARI pursuant hereto.

CLAUSE 6
MISCELLANEOUS

6.1  
The representations and warranties of the Parties in this Agreement shall
survive until the first anniversary of the date of this Agreement, after which
neither Party may make a claim against the other Party for a breach of
representations and warranties.

 

 

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6.2  
Each Party will obtain the approval of the other Party before issuing, or
permitting any agent or Affiliate to issue, any press releases or otherwise
making or permitting any agent or Affiliate to make any public statements with
respect to this Agreement and the transactions contemplated hereby; provided,
however, that the foregoing shall not restrict disclosures to the extent
(i) required (upon advice of counsel) by applicable securities or other laws or
regulations or the applicable rules of any stock exchange having jurisdiction
over the Parties or their respective affiliates or (ii) such Party has given the
other Party a reasonable opportunity to review such disclosure prior to its
release and no objection is raised; and provided, further, that, in the case of
clauses (i) and (ii), each Party shall use its commercially reasonable efforts
to consult with the other Party regarding the contents of any such release or
announcement prior to making such release or announcement.

6.3  
Each of the Parties shall pay their respective legal, accounting, and other
professional advisory and other fees, costs and expenses incurred in connection
with the acquisition of the Shares and the preparation, execution and delivery
of this Agreement and all documents and instruments executed pursuant to this
Agreement.

6.4  
Neither this Agreement nor any benefits or obligations under this Agreement
shall be assignable by any Party without the prior written consent of the other
Parties. Subject to the foregoing, this Agreement shall inure to the benefit of
and be binding upon the Parties and their respective successors (including any
successor by reason of amalgamation or merger of any Party) and permitted
assigns.

6.5  
Each Party, shall, with reasonable diligence do all such things and provide all
such reasonable assurances as may be required to consummate the transactions
contemplated by this Agreement and provide such further documents or instruments
required by any other Party as may be reasonably necessary or desirable to
effect the purpose of this Agreement and carry out its provisions after the
closing of the transactions contemplated by this Agreement, provided that such
co-operation shall not extend to joining in or commencing litigation or
arbitration proceedings.

6.6  
This Agreement, along with the Non-Disclosure Agreement among the Parties dated
June 30, 2010, constitutes the entire agreement between the Parties with respect
to the subject matter hereof. Neither this Agreement nor any provision hereof
shall be waived, modified, changed, discharged, terminated, revoked or canceled
except by an instrument in writing signed by the Party effecting the same
against whom any change, discharge or termination is sought.

6.7  
Notices required or permitted to be given hereunder shall be in writing and
shall be deemed to be sufficiently given when personally delivered or sent by
Federal Express and by e-mail (i) if to SES, to Synthesis Energy Systems, Inc.,
Three Riverway, Suite 300, Houston, Texas 77056, Attention: Kevin Kelly, e-mail:
Kevin.kelly@synthesisenergy.com, with a copy to Porter Hedges LLP, 1000 Main
Street, 35th Floor, Houston, Texas 77002, Attention: Robert G. Reedy, e-mail:
rreedy@porterhedges.com, or (ii) if to ZUARI, to ZUARI INDUSTRIES LIMITED, Jai
Kisaan Bhawan, Zuarinagar, Goa- India, 403 726, Attention: Mr. R. Y. PATIL,
e-mail: ryp@zuari.co.in.

6.8  
Failure of a Party to exercise any right or remedy under this Agreement or
otherwise, or a delay by a Party in exercising such right or remedy, will not
operate as a waiver thereof. No waiver by a Party will be effective unless and
until it is in writing and signed by such Party.

6.9  
This Agreement shall be enforced, governed and construed in all respects in
accordance with the laws of the State of Delaware, United States of America.

 

 

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6.10  
If any provision of this Agreement is found to be invalid or unenforceable, such
provision shall be reduced or modified to the extent deemed reasonable and
enforceable under the circumstances, and as so reduced or modified, shall remain
in full force and effect. The Parties further agrees that if any provision of
this Agreement is found to be invalid or against public policy, the remaining
provisions of this Agreement shall not be affected thereby, and shall remain in
full force and effect.

6.11  
Any dispute, controversy, claim or disagreement of any kind whatsoever, arising
out of this Agreement, between or among the Parties, which cannot be solved
amicably, shall be referred to arbitration as per arbitration rules established
by the International Chamber of Commerce to be conducted in English and the seat
of arbitration shall be at Singapore. Any award of the arbitrators shall be
final and binding on both Parties.

6.12  
Nothing expressed or implied in this Agreement is intended or shall be construed
to confer upon or give any Person, other than the Parties hereto any rights or
remedies under or by reason of this Agreement or any transaction contemplated by
this Agreement.

6.13  
This Agreement may be executed through the use of separate signature pages or in
any number of counterparts (including by facsimile or Portable Document Format
(pdf) transmission), and each of such counterparts shall, for all purposes,
constitute one agreement binding on all the Parties, notwithstanding that all
Parties are not signatories to the same counterpart.

[Signature Page Follows]

 

 

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IN WITNESS WHEREOF, SES and ZUARI have caused this Agreement to be executed by a
duly authorized officer on the day and year indicated at the beginning of this
Agreement.

                      SES    
 
                    By:   /s/ William E. Preston                  
 
      Name:   William E. Preston    
 
      Title:   Senior Vice President    
 
                    ZUARI    
 
               
 
  By:   /s/ N. Suresh Krishnan                  
 
      Name:   N. Suresh Krishnan    
 
      Title:  
 
Managing Director    
 
         
 
   

SIGNATURE PAGE TO SHARE PURCHASE AGREEMENT

 

 

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SCHEDULE 1
SUBSIDIARIES OF SES

•  
Synthesis Energy Holdings, Inc. (Florida Corporation)

  •  
Owns 100% of:

  •  
Synthesis Energy Systems, Inc. (British Virgin Islands corporation)

  •  
Owns 100% of:

  •  
Synthesis Energy Systems Investments, Inc. (Mauritius corporation)
    •  
Synthesis Energy Investment Holdings, Inc. (Mauritius corporation)
    •  
Synthesis Energy Technology Holdings, Inc. (Mauritius corporation)
    •  
SES New Energy Technologies, (Shanghai) Co., Ltd. (Chinese corporation)

  •  
Synthesis Energy Systems Technologies, LLC (Delaware limited liability company)

 

 

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SCHEDULE 2
REPRESENTATIONS, WARRANTIES AND GENERAL COVENANTS OF ZUARI

1.1  
Representations and Warranties. ZUARI hereby represents and warrants to, and
agrees with, SES as follows:

  1.1.1  
ZUARI is a corporation duly incorporated, validly existing, and in good standing
under the laws of India and has all requisite power and authority to own and
operate its properties and assets and to carry on its business as now conducted
and as presently proposed to be conducted, to execute and deliver this
Agreement, and to carry out the provisions of this Agreement.

  1.1.2  
All action on the part of ZUARI and its officers, directors and control persons
necessary for the authorization, execution and delivery of this Agreement and
the performance of all obligations of ZUARI hereunder has been taken. This
Agreement constitutes a valid and legally binding obligation of ZUARI,
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to the rights of creditors generally.

  1.1.3  
No further consent, approval, qualification, order or authorization of, or
filing with, any Governmental Authority is required on the part of ZUARI besides
those already obtained in connection with the execution, delivery, or
performance of this Agreement.

  1.1.4  
In connection with the transactions contemplated by this Agreement and the MOU,
including the joint venture between ZUARI and SES, neither ZUARI nor any of its
senior management or directors has taken any action in violation of the U.S.
Foreign Corrupt Practices Act of 1977, as amended.

  1.1.5  
The execution, delivery and performance of this Agreement by ZUARI and the
consummation by ZUARI of the transactions contemplated hereby will not
(i) conflict with or result in a violation of any provision of the
organizational documents of ZUARI, or (ii) violate or conflict with, or result
in a breach of any provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which ZUARI or any
of its Subsidiaries is a party, or (iii) result in a violation of any Law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and regulations of any self-regulatory organizations to
which

 

 

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ZUARI are subject) applicable to ZUARI or any of its Subsidiaries or by which
any property or asset of ZUARI or any of its Subsidiaries is bound or affected
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect). Neither ZUARI nor any
of its Subsidiaries is in violation of its organizational documents and neither
ZUARI nor any of its Subsidiaries is in default (and no event has occurred which
with notice or lapse of time or both could put ZUARI or any of its Subsidiaries
in default) under, and neither ZUARI nor any of its Subsidiaries has taken any
action or failed to take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which ZUARI or any of its Subsidiaries is a party or
by which any property or assets of ZUARI or any of its Subsidiaries is bound or
affected, except for possible defaults as would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect. The
businesses of ZUARI and its Subsidiaries, if any, are not being conducted, in
violation of any Law, ordinance or regulation of any Government Authority except
for possible violations as would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect. Except as specifically
contemplated by this Agreement, ZUARI is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency, regulatory agency, self regulatory organization or stock
market or any third party in order for it to execute, deliver or perform any of
its obligations under this Agreement, in accordance with the terms hereof or to
purchase the Shares in accordance with the terms hereof.

1.2  
General Covenants.

ZUARI acknowledges its understanding that the Shares is intended to be exempt
from registration under the Securities Act by virtue of Section 4(2) of the
Securities Act and the provisions of Regulation D promulgated thereunder
(“Regulation D”). In furtherance thereof but subject to terms and conditions
laid down in this Agreement, ZUARI represents and warrants to SES as follows:

  1.2.1  
ZUARI is acquiring the Shares solely for ZUARI’s own beneficial account, for
investment purposes, and not with a view towards, or resale in connection with,
any distribution of the Shares.

  1.2.2  
ZUARI has the financial ability to bear the economic risk of loss of ZUARI’s
investment, has adequate means for providing for its current needs and
contingencies, and has no need for liquidity with respect to an investment in
SES.

  1.2.3  
ZUARI will not sell or otherwise transfer any Shares without registration under
the Securities Act or an exemption therefrom, and fully understands and
acknowledges and agrees that the Shares have not been registered under the
Securities Act or under the securities laws of any state and, therefore, cannot
be resold, pledged, assigned or otherwise disposed of unless they are
subsequently registered under the Securities Act and under the applicable
securities laws of such states, or an exemption from such registration is
available. In particular, ZUARI is aware that the Shares are “restricted
securities,” as such term is defined in Rule 144 promulgated under the
Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144
unless all of the conditions of Rule 144 are met.

 

 

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  1.2.4  
ZUARI understands and agrees that the certificates for the Shares shall bear
substantially the following legend until (i) such Shares shall have been
registered under the Securities Act and effectively disposed of in accordance
with a registration statement that has been declared effective or (ii) in the
opinion of counsel for SES, such Shares may be sold without registration under
the Securities Act, as well as any applicable “blue sky” or state securities
laws:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE
OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED BY THE
ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION COVERING SUCH SECURITIES
UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
THAT SUCH REGISTRATION IS NOT REQUIRED.

  1.2.6  
ZUARI is unaware of, is in no way relying on, and did not become aware of, the
offering of the Shares through or as a result of, any form of general
solicitation or general advertising, including, without limitation, any article,
notice, advertisement or other communication published in any newspaper,
magazine or similar media or broadcast over television or radio, or electronic
mail over the Internet, in connection with the offering of the Shares and is not
subscribing for Shares and did not become aware of the offering of the Shares
through or as a result of any seminar or meeting to which ZUARI was invited by,
or any solicitation of a purchase by, a person not previously known to ZUARI in
connection with investments in securities generally.

  1.2.7  
ZUARI is, and on each date on which ZUARI continues to own restricted securities
from the Offering will be, an “Accredited Investor” as defined in Rule 501(a)
under Regulation D.

  1.2.8  
ZUARI shall not sell, assign or transfer any Shares for a period of 6 months
from the date of issue of shares by SES to ZUARI. Notwithstanding this, until
the eighteen month anniversary of the date of this Agreement, ZUARI shall sell
no more than 100,000 shares in a single day and no more than an aggregate of
400,000 shares in any seven day period.

  1.2.9  
ZUARI has been furnished by SES all information (or has been provided by SES
access to all information) regarding the business and financial condition of
SES, the attributes of the Shares and the merits and risks of an investment in
the Shares which ZUARI has requested or otherwise needs to evaluate the
investment in SES. ZUARI has had an opportunity to read the SEC Documents (as
defined in Clause 8 of Schedule 3).

  1.2.10  
ZUARI has not authorized any person or entity to act as its Purchaser
Representative (as that term is defined in Regulation D of the General Rules and
Regulations under the Securities Act) in connection with the Offering.

 

 

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SCHEDULE 3
REPRESENTATIONS, WARRANTIES AND GENERAL COVENANTS OF SES
Representations and Warranties. SES hereby represents and warrants to ZUARI
that:

1.  
Organization and Qualification

SES and each of its Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is formed, with full
power and authority (corporate and other) to own, lease, use and operate its
properties and to carry on its business as and where now owned, leased, used,
operated and conducted. Schedule 1 sets forth a list of all of the Subsidiaries
of SES and the jurisdiction in which each has been formed. SES and each of its
Subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which its ownership or use of property or
the nature of the business conducted by it makes such qualification necessary
except where the failure to be so qualified or in good standing would not
reasonably be expected to have a Material Adverse Effect.

2.  
Authorization; Enforcement

(i) SES has all requisite corporate power and authority to enter into and
perform this Agreement and to consummate the transactions contemplated hereby
and to issue the Shares, in accordance with the terms hereof, (ii) the execution
and delivery of this Agreement by SES and the consummation by it of the
transactions contemplated hereby have been duly authorized by the Board of
Directors and no further consent or authorization of SES, its Board of
Directors, or its stockholders is required, (iii) this Agreement has been duly
executed and delivered by SES by its authorized representative, and such
authorized representative is the true and official representative with authority
to sign this Agreement and the other documents executed in connection herewith
and bind SES accordingly, and (iv) this Agreement constitutes a legal, valid and
binding obligation of SES enforceable against SES in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to the rights of creditors generally.

3.  
Capitalization

As of the date hereof, the authorized capital stock of SES consists of
200,000,000 shares of Common Stock, of which 48,627,998 shares are issued and
outstanding. There are no authorized shares of Preferred Stock. All of such
outstanding shares of Common Stock are duly authorized, validly issued, fully
paid and non-assessable. No shares of capital stock of SES are subject to
preemptive rights or any other similar rights of the stockholders of SES or any
liens or Encumbrances imposed through the actions or failure to act of SES.
Except as set forth in the SEC Documents, as of the effective date of this
Agreement, (i) there are no outstanding options, warrants, scrip, rights to
subscribe for, puts, calls, rights of first refusal, agreements, understandings,
claims or other commitments or rights of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for any shares of
capital stock of SES or any of its Subsidiaries, or arrangements by which SES or
any of its Subsidiaries is or may become bound to issue additional shares of
capital stock of SES or any of its Subsidiaries, (ii) there are no agreements or
arrangements under which SES or any of its Subsidiaries is obligated to register
the sale of any of its or their securities under the Securities Act and
(iii) there are no anti-dilution or price adjustment provisions contained in any
security issued by SES (or in any agreement providing rights to security
holders) that will be triggered by the issuance of Shares.

 

 

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4.  
Issuance of Shares

The Shares are duly authorized and reserved for issuance and will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and Encumbrances with respect to the issue thereof (other than the resale
restrictions under the Securities Act acknowledged and agreed to by ZUARI
pursuant to this Agreement) and shall not be subject to preemptive rights or
other similar rights of stockholders of SES and will not impose personal
liability upon the holder thereof.

5.  
Subsidiaries and Investments

Except for the Subsidiaries set forth on Schedule 1, SES has no Subsidiaries.
Except as set forth in the SEC Documents, SES does not own, directly or
indirectly, any capital stock or other equity ownership or proprietary interests
in any other corporation, association, trust, partnership, joint venture or
other entity. Except as set forth in the SEC Documents, SES owns all of the
capital stock of the Subsidiaries, and there are no warranties, options,
agreements, convertible securities, preemptive rights to subscribe for or other
commitments pursuant to which any of the Subsidiaries may become obligated to
issue any shares of its capital stock or any other securities to any person
other than SES. No actions have been taken by SES or the Board of Directors with
respect to the sale or disposition of the stock, ownership interests or assets
of the Subsidiaries.

6.  
No Conflicts

The execution, delivery and performance of this Agreement by SES and the
consummation by SES of the transactions contemplated hereby will not
(i) conflict with or result in a violation of any provision of the Certificate
of Incorporation or Bylaws of SES, or (ii) violate or conflict with, or result
in a breach of any provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which SES or any
of its Subsidiaries is a party, or (iii) result in a violation of any Law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and regulations of any self-regulatory organizations to
which SES or its securities are subject) applicable to SES or any of its
Subsidiaries or by which any property or asset of SES or any of its Subsidiaries
is bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect). Neither SES nor any of its Subsidiaries is in violation of its
Certificate of Incorporation or Bylaws or other organizational documents and
neither SES nor any of its Subsidiaries is in default (and no event has occurred
which with notice or lapse of time or both could put SES or any of its
Subsidiaries in default) under, and neither SES nor any of its Subsidiaries has
taken any action or failed to take any action that would give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which SES or any of its Subsidiaries is a
party or by which any property or assets of SES or any of its Subsidiaries is
bound or affected, except for possible defaults as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. The
businesses of SES and its Subsidiaries, if any, are not being conducted in
violation of any Law, ordinance or regulation of any Government Authority except
for possible violations as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as specifically
contemplated by this Agreement and as required under the Securities Act and any
applicable state securities laws, SES is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency, regulatory agency, self-regulatory organization or stock
market or any third party in order for it to execute, deliver or perform any of
its obligations under this Agreement, in accordance with the terms hereof or to
issue and sell the Shares in accordance with the terms hereof.

 

 

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7.  
SEC Documents; Financial Statements

SES has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Exchange Act (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter referred to
herein as the “SEC Documents”). As of their respective dates, the SEC Documents
complied as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. To the knowledge of SES, none of the statements
made in any such SEC Documents is, or has been, required to be amended or
updated under applicable law (except for such statements as have been amended or
updated in subsequent filings prior to the date hereof). As of their respective
dates, the financial statements of SES included in the SEC Documents complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with United States generally
accepted accounting principles, consistently applied, during the periods
involved and fairly present in all material respects the consolidated financial
position of SES and its consolidated Subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the financial statements of SES included in
the SEC Documents, SES has no liabilities, contingent or otherwise, other than
liabilities as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

8.  
Absence of Certain Changes

Except as disclosed in the SEC Documents, since December 31, 2010, there has
been no material adverse change and no material adverse development in the
assets, liabilities, business, properties, operations, financial condition,
results of operations, or Exchange Act reporting status of SES or any of its
Subsidiaries.

9.  
Absence of Litigation

Except as disclosed in the SEC Documents, there is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
Government Authority, self-regulatory organization or body pending or, to the
knowledge of SES or any of its Subsidiaries, threatened against or affecting SES
or any of its Subsidiaries, or their officers or directors in their capacity as
such, that could reasonably be expected to have a Material Adverse Effect. SES
and its Subsidiaries are unaware of any facts or circumstances which might give
rise to any of the foregoing.

 

 

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10.  
Acknowledgment Regarding Purchase of Shares

SES acknowledges and agrees that ZUARI is acting solely in the capacity of arm’s
length purchasers with respect to this Agreement and the transactions
contemplated hereby. SES further acknowledges that ZUARI is not acting as a
financial advisor or fiduciary of SES (or in any similar capacity) with respect
to this Agreement and the transactions contemplated hereby and any statement
made by ZUARI or any of its respective representatives or agents in connection
with this Agreement and the transactions contemplated hereby is not advice or a
recommendation and is merely incidental to the purchase of the Shares by ZUARI.

11.  
No Integrated Offering

Neither SES, nor any of its Affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales in any security or
solicited any offers to buy any security under circumstances that would require
registration under the Securities Act of the issuance of the Shares to ZUARI.
The issuance of the Shares to ZUARI will not be integrated with any other
issuance of SES’s securities (past, current or future) for purposes of any
stockholder approval provisions applicable to SES or its securities.

12.  
No Brokers

Other than InfrastructureWorld, LLC, SES has taken no action which would give
rise to any claim by any person for brokerage commissions, transaction fees or
similar payments relating to this Agreement or the transactions contemplated
hereby.

13.  
Environmental Matters

There are, to SES’s knowledge, with respect to SES or any of its Subsidiaries or
any predecessor of SES, no past or present violations of any environmental Laws,
releases of any material into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual obligations which
may give rise to any common law environmental liability or any liability under
the Comprehensive Environmental Response, Compensation and Liability Act of 1980
or similar federal, state, local or foreign Laws, except in all cases for
violations as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, and neither SES nor any of its
Subsidiaries has received any notice with respect to any of the foregoing, nor
is any action pending or, to SES’s knowledge, threatened in connection with any
of the foregoing.

14.  
Foreign Corrupt Practices

To the knowledge of SES, neither SES, nor any of its Subsidiaries, nor any
director, officer, agent, employee or other person acting on behalf of SES or
any Subsidiary has, in the course of his actions for, or on behalf of, SES,
(i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or
(iv) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.

 

 

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15.  
No Immunity

To the knowledge of SES, SES are subject to civil and commercial Law and to suit
as to its obligations under this Agreement, and, to the knowledge of SES,
neither SES, nor any of the SES’s properties, assets or revenues have any right
of immunity, on the grounds of sovereignty, from any legal action, suit or
proceeding, from the giving of any relief in any such legal action, suit or
proceeding, from setoff or counterclaim, from the jurisdiction of any court, as
the case may be, from service of process, attachment upon or prior to judgment,
or attachment in aid of execution of judgment, or from execution or enforcement
of a judgment, or other legal process or proceeding for the giving of any relief
or for the enforcement of a judgment, in any such court, with respect to its
obligations or liabilities or any other matter under or arising out of or in
connection with this Agreement.

16.  
Solvency

As of the date of this Agreement, and after giving effect to the transactions
contemplated by this Agreement, SES is solvent (i.e., its assets have a fair
market value in excess of the amount required to pay its probable liabilities on
its existing debts as they become absolute and matured).
SES’s Covenants

1.  
Delivery of SEC Documents

Upon written request from ZUARI, SES will deliver to ZUARI true and complete
copies of the SEC Documents, except for such exhibits and documents incorporated
by reference therein.

2.  
Form D

SES agrees to file a Form D with respect to the Shares as required under
Regulation D and provide a copy to ZUARI. There are no other filings required
under the Securities Act in connection with the issuance of the Shares

3.  
Listing

SES shall promptly secure the listing of the Shares upon the NASDAQ Stock
Market.

4.  
No Integration

SES shall not make any offers or sales of any security (other than the Shares)
under circumstances that would require registration of the Shares being offered
or sold hereunder under the Securities Act or cause the offering of the Shares
to be integrated with any other offering of securities by SES for the purpose of
any stockholder approval provision applicable to SES or its securities.